Bases of Pay

1. Flat Pay: The flat rate or straight basis of pay is common in unionized firm where wages are established by collective bargaining. For example, all clerk typist might be paid Tk. 10 per hour, regardless of their seniority or performance.

2. Incentive basis pay: Incentive basis of pay is also known as variable pay, merit-based pay or skill-based pay. It is a compensation plan that ties pay to productivity or some other measure of the firm’s profitability.

Pay Policies /Systems: There are two systems of paying (compensation/pay) individual employee: open system and secret system.
Open Pay Policy /System: Traditional practice is open system i.e. co-workers know what others are getting. Generally, unionized organizations follow open pay system.

Secret Pay Policy /System: The secret pay system is a recent phenomenon in which pay is regarded as privileged information known only to the employee, his or her superior, and staff employees. Here, pay is negotiated and kept secret to others of the organization.

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