Understanding Piece Rate Salaries: How Do You Handle Different Scenarios and Benefits?

Hi Friends, I am working in a garment manufacturing unit, and I will have to set piece rate salaries. Some workers are earning more than Rs. 15,000 per month, while some are below Rs. 15,000. I am seeking brief details regarding piece rate salaries and would like to address some queries.

1. If a worker works half a day and earns Rs. 300.

2. If a worker works a full day and earns Rs. 600.

3. If a worker works a full day and earns Rs. 550 in a day.

4. If a worker receives a salary over Rs. 15,000 per month.

5. If a worker receives a salary below Rs. 15,000 per month.

6. If a worker works only 15 days and receives a salary averaging Rs. 580 per day.

7. What about Gratuity, Bonus, Leave, etc.?

Is the piece rate calculation formula: Total piece rate amount of the month divided by 26 correct?

If it is correct, what will be the calculation for months with 31 days and only 4 weekly offs? Will it be Total piece rate salary divided by 27 if a worker works 27 physical days in a month?

I kindly request your assistance in resolving my concerns and providing me with comprehensive details regarding the piece rate policy. Please reply as soon as possible. I am looking forward to your kind information.

Thanks & Regards,

Bijender Sharma

Firstly, I am confused. The wage rates you have specified seem to be as per Daily Time Rate/Wage. Piece rate is essentially a rate per piece/item produced irrespective of the time taken.

Considerations for Piece Rate Work

With piece rate work, there are only the following considerations to be taken into account:

1. Ensure that there is a fallback rate, i.e., if the worker does not get enough pieces supplied to him/her during the normal working hours of the day, then a rate should be set that is in accordance with the Minimum Wages for that category of work and skill level—which should be the minimum guarantee for the worker. [This should be clearly stated in their written appointment orders.]

2. Ensure that there is a system of proper recording of output/production of the piece rate workers by measuring their output vs. target.

3. All statutory obligations for social security, entitlements, etc., would be applicable.

Time-Rated Workers

If time-rated workers, then the issue of calculation of the daily wage rate is based on either 26 days without separate payment of weekly off days, or based on days of the month with payment for weekly off days. The choice is yours; however, it must be made clear at the time of appointment of such category of workers.