A piece rate system is a form of remuneration where workers are paid on the basis of the number of units produced.
It is a remuneration structure where employees are paid for each unit of output they produce, rather than for the number of hours they work.
In this system, employees are paid a fixed amount for each unit of work they complete, regardless of how much time it takes them to finish the work.
Unlike the time rate system where employees are paid based on time worked, the piece rate system involves paying workers based on the number of outputs produced.
The basic principle of a piece-rate system is that the workers are paid for their productivity, rather than the number of hours they work.
This means that if an employee produces more units, he earns more money, and if he produces fewer units, he earns less.
This type of wage structure provides incentives for employees to work more efficiently and effectively, as they are directly rewarded for their efforts.
The formula to calculate wages under the piece rate system is the number of units produced multiplied by the piece rate.