At each enterprise, there is a certain system of organizing the payment of the labor potential of employees. It can have several components or contain only a share of wages in the form of a salary.
To avoid conflicts in the workplace, it is necessary to motivate employees to increase labor productivity in the workplace by rational organization of wages, one of which is a tariff-free system.
Essence
The tariff-free wage system at the enterprise is a developed system, the essence of which is that the wage of each employee depends on the productivity and efficiency of his work and the work of his team as a whole. In advance, the staff is not aware of the amount that will be issued to him upon completion of work.
An exceptional characteristic of a tariff-free wage system is the ability to motivate employees to increase their productivity.
The tariff-free system is a methodology for determining the remuneration of an employee of a company taking into account its individual coefficient. This indicator is not constant. The calculation takes into account not only the duration of the service, but also the professional status of the employee, his level of qualification, his share in the common business, compliance with the level of success of the team as a whole, as well as specific results of human activity.
The salary of employees is allocated from the accrued total salary fund. The team that carries out specific operations or sales forms the amount of the wage fund from part of the revenue. The share of each employee is calculated based on his personal qualifications.
There are no unified rules for calculating this coefficient. Calculation rules must be fair, realistic, simple and understandable.
So, having fulfilled or overfulfilled the established plan, an employee can rely not only on a standard salary, but also on a bonus, if this is provided for by an employment contract.
Nevertheless, the essence of a tariff-free wage system ignores the minimum wage, overpayment for night shifts and holidays. The employee will receive exactly as much as he has gained.
A tariff-free system is a system in which the remuneration of employees is established from the general payroll, formed by the total performance indicators of personnel.
The main elements of a tariff-free wage system are: the total amount of wages for all employees, the coefficient of labor participation as a personal contribution of each employee to the final results of labor.
When examining this coefficient, the following points can be taken into account:
- employee qualifications: the ratio of the salary of the employee to the minimum wage;
- the share of the employee’s personal contribution to the common cause;
- labor participation of the employee;
- the complexity of the work performed by the employee;
- volume and number of operations performed by the employee.
The non-tariff wage system also includes several other criteria. They can be summarized all in a single integrated indicator called a rating.
The basis of the tariff-free wage system is the concept of labor achievements. Both collective and individual labor achievements are taken into account. Most often, it is effective in small companies where employees must fulfill the established plan during the reporting month.
The essence of the tariff-free wage system is made up of monthly payments, which enable employees to receive their bonus part of the salary. At the same time, the total amount is not divided into equal shares between employees, but in proportion to the positions of employees. For example, the director - 1.3; Deputy Head - 1.0; for workers and workers - 0.8.
This system of payments includes special individual payments, which are formed under the influence of several factors:
- employee qualification level;
- KTU;
- work time.
Many believe that this system excludes wages in terms of salary. However, it is not.
Every month, employees receive an official salary that barely exceeds the minimum wage. The bonus part is issued separately for each employee.
The main elements of the studied earnings system are calculated on the basis of many indicators:
- work efficiency for the last reporting period;
- percentage of plan implementation, productivity improvement;
- maximum employment of staff.
In the case of a staff of more than 20 people, the collective result is taken into account. Depending on personal achievements, it is much easier to charge the premium separately.
For this, the head of the unit in the report card indicates not only the hours worked by the employee, but also the coefficient of labor participation. Usually it is within the range of 0.5–1.2, but it may have other indicators from different firms.
Scope of application
The non-tariff method of calculating wages may not always be applied, and therefore a number of restrictions should be noted:
- for large enterprises, where the calculation of the coefficient for each employee will be difficult;
- for companies where the activities of workers are individualized.
This system is most effective in cases with employees:
- brigades temporarily engaged in general labor activities (shift work);
- companies with several structural units;
- small companies.
Kinds
There are various varieties of a tariff-free wage system in which various forms are applied. The choice of the most suitable one depends on the characteristics of the enterprise.
Option number 1. The coefficient of the worker consists of a permanent qualification component and a dynamic indicator of personal productivity. This combined form is useful if people with different experience and professional skills work in the same team.
Option number 2. It is only possible to use the coefficient KTU in the presence of clear indicators of employee participation in the overall activities of the team.
Option number 3. The coefficient is calculated based on the number of operations performed and their level of complexity. It is most rational to calculate wages according to this formula in organizations where labor activity is individually collective.
You can also distinguish the following types of tariff-free wage system:
- Collective pay system.
- Commission payments.
- The system of "floating coefficients".
Consider the main forms of a tariff-free wage system in more detail.
Collective system
In a collective form, the amount of income directly depends on the final indicators of the joint work of all employees. Most organizations take into account only the successful completion of the activities of the entire unit as a whole. The professional achievements of individuals are not taken into account.
In the framework of the collective system, wages are paid depending on the accumulations in the fund. The amount is divided proportionally between all employees, depending on the KTU and the qualification coefficient.
Is such a system beneficial for ordinary workers? On the one hand, yes. If the team is single, it is configured to receive a good salary, it is not difficult to achieve the total expected results.
Another thing is that in one team everyone is only responsible for themselves and for their actions. In this case, the effective work of one or two workers will not allow them to receive higher than average wages.
Commission
Among the types of tariff-free wage system, we separately distinguish the commission system. Currently, the commission system is very popular. It is found in private companies and among professions such as broker, realtor, etc.
The system of commission payments differs in that the salary is paid on the basis of the results of the work performed and depends not so much on the quality of the conditions provided, but on the quantity.
The employee receives a commission for the reporting period or after the presentation of the result. The commission system perfectly motivates employees to increase productivity and improve their performance.
Floating odds
Another type of tariff-free system is a floating form in which earnings are determined at the end of the reporting period based on the results of the work performed.
This system is applicable to managerial positions. The rate depends directly on the quality of work performed by subordinate personnel.
Many large companies practice the so-called contract pay. This is due to the preparation of an employment contract in which the employer clearly prescribes the level of salary, its size and the bonus part.
The contract system can operate for 1 month, but more often the contract is concluded for a period of up to six months. During this time, the employer has no right to change the terms of payment. This applies to wage cuts. But paying extra bonuses or a thirteenth salary is not prohibited.
Fields of application
The non-tariff wage system has its difficulties, which is why it is used in medium and small enterprises. The users of the system are, first of all, manufacturing enterprises, private agencies when working with private individuals, and trade organizations.
Sometimes, large companies can also use this type of pay . This is possible only if the organization is divided into units, each of which has its own immediate supervisor.
This system is often used in trade. The principle of the trade organization: the more it is sold, the higher the salary. In trade, there is KTU, the length of service coefficient, etc.
At large enterprises, it is not practical to practice a tariff-free system, since it is impossible to assess the quality of work performed by each employee separately.
Exceptions are teams that have a specific work plan for the reporting period. But working people like this system, provided that the team does not have lazy colleagues who want to get high salaries at the expense of their team.
System benefits
We highlight the main positive aspects of the studied pay system:
- This system is interesting for many employers in that it allows you to determine the salary on the basis of the already formed payment fund. Initially, the size of payroll is calculated in the prescribed manner, after which the share of each employee is determined.
- The system touches on issues of stimulation and promotion of labor: with an increase in the benefits of the entire enterprise, each employee will receive more. This means that there is no need to use and implement an incentive payment system in addition, which greatly simplifies the process of calculating salaries.
- There are clear benefits for employees too. In the end, products or services also become more expensive, which leads to an increase in the company's profits, which means that the wages of each employee automatically increase without additional settlement from the management.
- Equally important is the fact that ease of computing is also attractive to the company.
System flaws
Like any economic phenomenon, this system has its drawbacks.
- Each employee must take a responsible approach to the implementation of their part of the work, as errors in its activities can provoke a deterioration in the final results of the work of the entire team and, as a result, a decrease in earnings for all employees at once.
- When using this system, the calculation of the coefficients is a certain difficulty for large enterprises due to the large number of employees. In order to eliminate this drawback in such enterprises, it is possible to establish coefficients in units, rather than the entire enterprise, and assign a utility coefficient to each unit throughout the entire production.
- A tariff-free system is dangerous due to the possibility of subjective assessment of employee labor. If you simply evaluate the effectiveness of a faceless workplace, then not every manager, excluding emotions and personal attachments, can determine how much this or that worker is useful for the enterprise.
- The total amount of earnings for the employee remains an unknown amount until he receives a salary, which does not allow the employee to predict their income and possible expenses.
Calculation formula
Most often, the following formula for calculating a tariff-free wage system is applicable to all types:
FROM = SCS * COP / FOT, where:
- OT - earnings of a specific employee;
- - share of a certain employee;
- PHOT - the total value of the wage fund;
- SCS is the sum of the shares of all employees.
The rules for calculating the remuneration of employees of a company should be recorded in the documentation of the employer and communicated to employees without fail. Only then will they be considered valid and legal.
Example
To understand how the system works, it is worth considering a specific example of a tariff-free wage system.
The salary of each of the employees of the company depends on the KTU coefficients for these employees, which are defined as follows:
- CEO - 1.8;
- deputy director - 1.5;
- sales manager - 1.4;
- assistant sales manager - 1.2;
- worker - 1.
Suppose that in July 2017 the payroll amounted to 450,000 rubles.
We calculate the total CTU by the addition method:
OKTU = 1.8 + 1.5 + 1.4 + 1.2 + 1 = 6.9.
Salary can be determined by the formula:
FZP / OKTU * KTU employee.
We carry out payroll for each employee:
- CEO: 450,000 / 6.9 * 1.8 = 117,391 rubles.
- Deputy: 450,000 / 6.9 * 1.5 = 97,826 rubles.
- manager: 450,000 / 6.9 * 1.4 = 91,304 rubles.
- assistant manager: 450,000 / 6.9 * 1.2 = 78,261 rubles.
- worker: 450,000 / 6.9 * 1 = 65,217 rubles.
The above example relates to remuneration at which the fund of the company is formed. Do not forget that the official salary should be issued to employees under any circumstances.
This may be a certain amount that all employees of the enterprise will receive regardless of their position.
Summary
The tariff-free wage system is a special system that allows you to reward each employee separately, motivating him and all staff to work productively.
This method of calculating wages can be used in almost any enterprise, regardless of the nature of the company.
The only thing that is required from the employer is to notify newly arrived employees of the current pay system.
If you want to motivate employees, you should not save on bonuses for them. An unexpected cash bonus paid for productive work for an employee is an excellent motive for productive work.
The main fundamental point in the application of the system under study is the fact that each employee has a certain share, depending on the personal contribution in the total amount of wages to all employees. With the growth of personal contribution, the calculation and its share, and hence earnings.