for unit of producing pay rate is called piece rate. for 
per hour producing products is called time rate

PIECE RATE

	Piece rate or piecework is defined as work paid for 
according to a set rate per unit.  Webster’s Collegiate 
Dictionary.  A piece rate must be based upon an 
ascertainable figure paid for completing a particular task 
or making a particular piece of goods. The piece rate 
earned must equal or exceed the State’s minimum wage rate 
for all hours worked.  (See appropriate IWC Order and 
Minimum Wage Order)

Time rates are used when employees are paid for the amount 
of time they spend at work. This is the most common method 
of payment in the UK.
The usual form of time rate is the weekly wage or monthly 
salary. Usually the time rate is fixed in relation to a 
standard working week (e.g. 35 hours per week). 
The employment contract for a time-rate employee will also 
stipulate the amount of paid leave that the employee can 
take each year (e.g. 5 weeks paid holiday).
Time worked over this standard is known as overtime. 
Overtime is generally paid at a higher rate than the 
standard time-rate – reflecting the element of sacrifice by 
an employee. However, many employees who are paid a monthly 
salary do not get paid overtime. This is usually the case 
for managerial positions where it is generally accepted 
that the hours worked need to be sufficient to fulfil the 
role required.
The main advantages of time-rate pay are:
• Time rates are simple for a business to calculate and 
administer
• They are suitable for businesses that wish to employ 
staff to provide general roles (e.g. financial management, 
administration, maintenance) where employee productivity is 
not easy to measure
• It is easy to understand from an employee’s perspective
• The employee can budget personal finance with some 
certainty
• Makes it easier for the employer to plan and budget for 
employee costs (e.g. payroll costs will be a function of 
overall headcount rather than estimated output)
The main disadvantages of time-rate pay are:
• Does little to encourage greater productivity – there is 
no incentive to achieve greater output
• Time-rate payroll costs have a tendency to creep upwards 
(e.g. due to inflation-related pay rises and employee 
promotion.

peice rate in the sense the company decides to pay certain 
price for the  peices  they produced as to encourag  the 
workers  by paying the scale as decided per peace


time rate generally means the working hours in the company 
as the working hours exceeds the additional hours will be 
treated as o.t