• The most important being the bargaining capacity of the employer and employees.


• Standing of the particular organisation and its financial capacity to pay higher wages.


• The prevailing rates of wages for similar type of work in the market (i.e. level of competition) as well as the prevailing condition of the economy.


• If a job requires specialised skills and training,wages should be accordingly higher.


• The nature and type of the work done by the workers. For example, higher wage rates should be paid for complicated and hazardous jobs.


• Productivity of workers like workers who are more efficient and experienced should get higher wages.

Given the above considerations, the three important methods of wage payment may be as follows:-

• Time Rate System: It is one of the simplest and oldest methods of wage payment. Under it,remuneration is based upon the amount of time spent on the work. The wage rate increases with an increase in hours of work done and vice-versa. Here wages are calculated on hourly,daily,weekly,monthly or yearly basis and are usually prescribed in advance.


• Piece Rate System:- This method takes into consideration the efficiency of the workers. Under it,wages are based upon the amount of work done by the workers. The wage rate rises or falls with increase or decrease in the output of the worker. Here wage rates are prescribed per piece.


• Incentive Wage Plan:- It is the co-ordinated form of both the above mentioned methods for wage payment. Under it, the workers get additional wages based upon their efficiency in addition to the minimum guaranteed wages. Incentive wage rate rises or falls with increase or decrease in the quantity of production.

In India, setting up of "The Committee on Fair Wage" was a major landmark in the history of formulation of wage policy. Its recommendations set out the key concepts of the `living wage', "minimum wage" and "fair wage", besides laying down the guidelines for wage fixation. 'Minimum wage' is the wage which provides for the bare sustenance of life and preservation of the efficiency of the work. 'Living wage' is the wage which provides a standard of living to the workers. 'Fair wage' is the wage which is above the minimum wage but below the living wage. According to it, workers should get reasonable and fair wages, which are sufficient to meet the needs of the worker and his family.

But, still there is no uniform and comprehensive wage policy for all sectors of the economy. Wages in the organized sector are determined through negotiations and settlements between employer and employees. But, in unorganised sector, minimum rates of wages are fixed both by Central and State Governments in the scheduled employments falling within their respective jurisdictions under the provisions of the Minimum Wages Act,1948. Minimum Wages under Central sphere are enforced through Central Industrial Relations Machinery (CIRM). At the State level,the State Industrial Relations Machinery ensures enforcement of the Minimum Wages Act. The Act binds the employers to pay to the workers the minimum wages so fixed from time to time.

Another legislation, the Payment of Wages Act,1936 was enacted to regulate payment of wages to workers employed in industries and to ensure a speedy and effective remedy to them against illegal deductions and/or unjustified delay caused in paying wages to them. The Act decides about the wage period upto which wage payment is to be made. All wages must be paid in current legal tender.The wages can also be paid by cheque or credited to the employees' bank accounts. The enforcement of the Payment of Wages Act is mainly the responsibility of the State Governments.The Act was amended by The Payment of Wages (Amendment) Act, 2005.

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