Wage plans are mainly micro plans and each company may devise any of the wage plans. Basically there are two methods for wage payments, viz. (1) Time rate wage system; and (2) Piece rate wage system. The wage paid to labor has to perform important functions in the economic system. It should be such as to make the worker capable and willing to be efficient and involved in the job. There should be link, wherever feasible between emoluments and productivity; and fair parity between wage differentials and skill differential. The plan should act as an incentive to improve the efficiency, and it should attract the worker wherever demanded or needed.

Whatever may be the method of wage payment but the wage plan should contain following ingredients:

• It should be simple and understandable 
• It should be capable of easy computation 
• It should be capable of motivating the employees 
• It should be attractive enough for new talent in the organization. 
• It should be fair, just and stable to all the employees.

The fundamental plans of wage payment are:

I. Time Rate Wage System: It is the oldest and the simplest form of wage fixing. Under this system, workers are paid according to the work done during a certain period of time at a rate of per hour, per day, per week, per fortnight, or per month or any other fixed period of time. According to the section4 of the Payments of Wages Act,1936, not more than one month must elapse between two wage period. Time wage system adopts time as the basis of worker remuneration without taking in to account the units produced. The worker is guaranteed a specified sum of money for a fixed period of his time taking no account of the quality or quantity of the work done. Evaluation on the basis benefits and weaknesses is as under:

Merits: 

• It is simple and understandable and easy for calculation of wages, since wages under this system is equal towage per hour* numbers of hours worked by an employee. 
• There is no time limit for completion of job, workman are not in hurry to finish it and this may mean that they may pay p enough attention to the quality of work, effective handling of machinery and utilization of resources in an optimum manner. 
• All workers are given same treatment in terms of equal wage payment, so grievances, ill will; jealousy can be avoided among them. 
• Time rate system provides regular and stable income to workers, so they can adjust and manage their budget accordingly. 
• It requires less administrative attention as this system provide good faith and mutual understanding and trust between employer and employee.

Demerits: 

• It does not take in to account the ability and capacity of the workers so the skilful and more capable workers who have higher production efficiency will demoralize. 
• Time rate system is unrelated to the productivity and does not provide extra motivation for extra efforts by the workers. 
• The labor charges for a particular job do not remain constant. This put the management in a difficult position in the matter of quoting rates for a particular piece of work. 
• There is a possibility of systematic evasion of work by the workers, since there is no specific target or demand for specific quantity of work by the management. 
• Time rate system does not ask for maintaining individual workers record, it becomes difficult for the employer to determine his relative efficiency for the purpose of performance evaluation for future promotion or rewards. Thus it does injustice to the outstanding employees.

Suitability: Time rate system is suitable when the output contributed by the worker is difficult to measure and cannot be recorded in an individual basis. It is also suitable when by cultivating mutual trust and confidence and by giving fair and equal treatment to all the employees, management can get the work done in an appropriate manner.

II. Piece Rate Wage System: Under this system, workers are paid according to the amount of work done or numbers of units produced or completed, the rate of each unit being settled in advance, irrespective of the time taken to do the work. This does not mean that the workers can take any time to complete a job because of his performance far exceeds the time which his employer expects he would take, the overhead charges for each unit of article will increase. There is an indirect implication that a worker should not take more than average time.

Merits: 

• The main advantage of this system is recognition of merit, as efficient is rewarded, It is therefore more equitable then time rate system. 
• It pays workers as per their efficiencies, ability, capacity or performance, so it gives direct stimulus and motivation to the employees for extra efforts, which may result into more productivity. 
• It requires less managerial supervision as total remuneration depends upon units produced, and not on time spent in an organization. 
• Being interested in continuity of his work, a workman is likely to take greater care to prevent breakdown in the machinery or in the work shop. It is a gain to the management since it reduces maintenance expenditure in an organization. 
• As the direct labor cost per unit of production remains fixed and constant, calculation of cost while filling tenders and estimates becomes easier. 
• It results in to not only increase in the output and wages ,but the methods of production too are also improved, as workers demand material and tools free from defects and machinery in perfect operating condition. 

Demerits: 

• If rates of wages are not scientifically fixed and acceptable to the workers, would result into workers exploitation and may prove counterproductive 
• As workers are interested in completion of the job with a greatest speed, may damage the machinery, quality of output or may increase rate of hazards in an organization. 
• Trade unions generally do not like this system of wage payment; they may not have full support and acceptance. It may be the major issue for industrial dispute.

Suitability: It can be introduced generally in jobs of a repetitive nature, when task can be easily measured, inspected and counted. It is practically suitable for standardized processes, and it appeals to skilled and efficient workers who can increase their earnings by working to their best capacity.

III. Balance and Debt System: This system combines time rate and piece rate. Under it a minimum weekly wage is guaranteed for a full weeks’ work, with an alternative piece-rate determined by the rate fixed on the assumption that the worker would put enough effort to earn his minimum wage. If the wages calculated on piece bases are in excess of the time rate, the worker earns the excess. If the piece rate wages are less than the time-rate earnings, he would still get weekly wage, but on the condition that he shall have to make good the excess paid to him out of the subsequent wage he would earn. Suppose a worker is expected to complete at least 10 pieces during the week in order to earn the minimum wage of rs.60, the piece rate has been fixed at a rate of Rs.6 per unit. If the worker produces 12 units within the week, his earning will be Rs.72. If on the other hand he produces only 9 units , he will still be paid Rs. 60 his minimum weekly wage but as on the basis of piece rate his earning should amount to only Rs. 54, the sum of Rs. 6 paid in excess will be debited to him to be deducted out of his subsequent earnings. Thus under this system workers’ wages are determined, by both the number of hours he works and the pieces he produces. So it a hybrid system producing the same benefits and limitations of both the time rate and piece rare system.