Lump-Sum Payment System

Wages are usually charged either for hours worked, or for the amount of output produced. However, in some industries, it is more rational to pay for the full range of work than for current indicators. In this case, a lump sum system of labor payment is suitable.

The essence of the lump-sum system

The essence of this system is that the payment is made based on the total amount of work performed, regardless of the time spent on it. The use of such a system is rational in construction, repair, research projects. Since the lump - sum payment system is characterized by a temporary economy of work performance, it is also advisable to periodically introduce it at enterprises in those cases when:

• The firm does not comply with the contractual deadlines for the delivery of the facility, while breach of contract threatens with significant fines;
• If necessary, the elimination of emergency circumstances (fire, flood) that could lead to a halt in production;
• In the case of production need to introduce new equipment, technologies.

The lump sum payment envisages the following mechanism for the formation of the salary fund:

• Identify the main and auxiliary production processes;
• The necessary amount of work is calculated;
• Time for its implementation is determined, and piece-rate pricing is also output;
• Calculate the product of quotations for the amount of work on the list;
• The amount of the necessary salary is determined by adding up the payments for each item.

The salary fund is allocated to the entire team (brigade) and is distributed within it at piece rates, fixed in the contract tariffs or the coefficient of labor participation. The way of distribution of earnings, the amount of payment, the list of works for fulfillment and the terms of delivery of the order are fixed in labor contracts concluded between employees and the employer-contractor.

Types and features of the system

A lump-sum salary system can be simple and premium. In the first case, wages are calculated at pre-established fixed rates for the amount executed, regardless of other additional conditions and factors. In the second case, it is allowed to charge the premium, for example, for reducing the time, for saving materials, for high-quality performance of particularly complex works, etc.

In addition, the lump sum system of labor can be individual, that is, established for one particular employee, or collective - for the whole team (site).

When applying the brigade method of payment, the employer must provide employees with a number of conditions:

• Presence of the proper amount of work prescribed in the contract;
• Necessary technical and instrumental support;
• Timely and sufficient supply of energy sources (electricity, gas);
• Creation of comfortable and safe working conditions (provision of overalls, light, heat, water, observance of employees' rights to rest and lunch breaks).

A lump-sum salary system does not relieve the employer of the obligation to pay wages twice a month: in advance and in the form of a total amount. Therefore, in an employment contract, it is necessary to provide for intermediate salary payments, if the production process lasts more than a month. It should also be taken into account that in the event of the termination of the employee and the failure to complete the full amount of lump-sum works, the advance payment is not refundable. Therefore, it is necessary to pay the salary on the basis of the order and the certificates of the executed work for the actually executed volumes. Payment for a lump-sum system can not be less than the minimum wage in the region (or in the country).