Wage, Salary, Commission, and Piecework Overview

Overview

This lesson explains the main types of income: wage, salary, commission, and piecework. It covers their definitions, how they are calculated, and provides practical examples.

Wage

• A wage is payment for work done, based on time, task, piece, or commission, under a written or unwritten contract.
• Types:
  • Hourly wage: Earned for each hour worked.
  • Daily wage: Earned for each day worked; does not include rest days, holidays, or leaves unless required by law or company policy.
• Wages are usually paid weekly but may be quoted as hourly or daily rates.
• Formulas:
  • Wage = hourly rate × hours worked
  • Wage = daily rate × days worked
• Example:
  • A worker earns Php550 per day and works 12 days: 550 × 12 = Php6,600.

Salary

• A salary is a fixed, regular payment, typically paid monthly, semi-monthly, or weekly, for professional, managerial, or administrative jobs.
• Types:
  • Annual salary: Total earned in a year.
  • Monthly salary: Annual salary ÷ 12.
  • Semi-monthly salary: Monthly salary ÷ 2.
  • Weekly salary: Annual salary ÷ 52 or daily wage × 6.
• Examples:
  • Annual salary of Php420,000: 420,000 ÷ 12 = Php35,000 per month.
  • Monthly salary of Php50,000: 50,000 ÷ 2 = Php25,000 semi-monthly.

Overtime, Holiday, and Night Shift Pay

• Overtime: Extra pay for working beyond 8 hours, at 25% above the regular wage.
• Rest day or special holiday: Daily rate × 1.3.
• Regular holiday: Daily rate × 2.0 (double pay).
• Regular holiday on a rest day: Daily rate × 2.6.
• Night shift: Pay for work between 10 p.m. and 6 a.m.; rate × 1.10.
• Overtime pay examples will be discussed in the next lesson.

Commission Income

• Commission is pay based on a percentage of sales, sometimes added to a basic salary.
• Common jobs: Real estate agents (2–5% of sale), sales representatives, travel agents, loan officers, insurance agents.
• Example:
  • Sales agent earns Php8,000 per month plus 5% commission.
    If sales = Php100,000: 5% of 100,000 = Php5,000; total income = 8,000 + 5,000 = Php13,000.

Piecework Earnings

• Piecework is pay based on the number of items completed, not time worked.
• Common jobs: Sewers, tailors, shoe assemblers, handicraft makers, agricultural workers.
• Formula: Piecework earnings = rate per piece × number of pieces completed.
• Example:
  • Paid Php3 per mango, packs 500: 3 × 500 = Php1,500.

Key Terms & Definitions

• Wage: Pay for work based on time, task, piece, or commission.
• Salary: Fixed, regular pay for professional or administrative roles.
• Commission: Pay as a percentage of sales, sometimes with a basic salary.
• Piecework: Pay based on the quantity of items completed.
• Overtime pay: Extra pay for hours beyond the regular schedule.
• Night shift differential: Extra pay for night work (10 p.m. to 6 a.m.).

Action Items / Next Steps

• Review overtime pay examples in the next lesson.
• Practice solving problems using the formulas.
• Ask questions if you need clarification.