Employers can calculate worker earnings using several different methods.
Employers can calculate worker earnings using several different methods. At Salsa, we refer to these methods as amount strategies, and they include "fixed amount", "percentage", and "rate based". Each amount strategy provides a way to calculate earnings for workers per pay period. We explain each below.
Fixed amount
The fixed amount strategy allows employers to calculate worker pay based on a set dollar amount for a single pay period, irrelevant to hours worked, sales made, etc. Common fixed amount scenarios include those where workers are paid tips, bonuses, flat commissions and/or salaries.
Percentage
The percentage amount strategy allows employers to calculate worker pay based on a percentage of a gross amount. A great example is a commission that is calculated based on a percentage of a gross amount such as sales achieved.
Rate based
The rate based amount strategy allows employers to calculate worker pay based on a set pay rate per time period. The most common use of the rate based amount strategy is pay rate per hour (i.e. hourly employees), but other uses include pay rate per week or pay rate per month.
Example
An employee is paid $10 per hour and works 30 hours in a week.
The total earnings for this employee is $300 ($10 per hour multiplied by 30 hours).