Lesson Note on Methods of Paying Wages: Rates, Procedures and Payroll for SS 2

Class: Senior Secondary School 2 (SS2 / SSS 2)
Term: Second Term
Week: 6
Age: 16 years
Duration: 45 minutes
Subject: Office Practice
Curriculum Theme: Business Operations and Financial Literacy
Previous Lesson: Wages and Salaries: Meaning, Differences and Wages Office Role.
Topic: METHOD OF PAYING WAGES
Subject Matter: Methods of paying wages (time rate, piece rate, profit sharing method, commission, bonus, premium bonus), procedures for paying wages (analyse cash, determine withdrawal, prior notice to bank, prepare payroll, disbursement)

Specific Objectives

By the end of the lesson, pupils should be able to:

Cognitive Domain:

• Define wages and enumerate different methods of paying wages.
• Explain the procedures involved in paying wages.
• Identify the documents used in wage payment.

Affective Domain:

• Appreciate the importance of fair and accurate wage payment.
• Participate actively in class discussions about wage payment methods.
• Value the systematic approach to financial transactions in an office.

Psychomotor Domain:

• Prepare a simple payroll sheet.
• Identify appropriate denominations for cash analysis.
• Demonstrate how to fill a basic bank withdrawal form for wage payment.

Social Domain:

• Discuss the impact of different wage payment methods on employee motivation.
• Collaborate with peers to solve practical wage payment scenarios.

Reference Materials

The following resources were used in planning this lesson:

• Senior Secondary Schools Education Curriculum
• State Unified Scheme of Work
• Egbe, A. A., & Agba, A. O. (2018). Office Practice for Senior Secondary Schools. University Press PLC.
• https://www.education.gov.ng
• https://www.waeconline.org.ng

Instructional Materials

The teacher will teach this lesson with the aid of:

• Sample payroll forms
• Cash analysis sheet
• Bank withdrawal forms
• Calculator
• Whiteboard and markers

Rationale for the Lesson

This lesson helps pupils understand how employees are paid and the different ways businesses manage salaries. It enables them to grasp the systematic procedures involved in wage payment, preparing them for future roles in business administration and financial management.

Prerequisite/Previous Knowledge

Pupils have a basic understanding of employment, money, and simple arithmetic operations.

Lesson Content/Board Summary

METHODS OF PAYING WAGES

Introduction to Wages

Wages are the payment made by an employer to an employee for work done or services rendered. They are typically paid on a daily or weekly basis, while salaries are often paid monthly.

Methods of Paying Wages

The following are common methods of paying wages:

• Time Rate: This method pays employees based on the number of hours or days they work, regardless of the output. It is suitable for jobs where quality is more important than quantity, or where output is hard to measure.
• Piece Rate: Employees are paid based on the number of units or pieces of work they complete. This method encourages higher productivity but may compromise quality if not properly supervised.
• Profit Sharing Method: Employees receive a share of the company’s profits in addition to their regular wages. This motivates employees to contribute to the company’s success.
• Commission: This is a payment made to an employee, often a salesperson, based on a percentage of the sales they generate. It directly links pay to performance.
• Bonus: An extra payment given to employees as a reward for good performance, meeting targets, or as a gesture of appreciation. It is usually paid in addition to regular wages.
• Premium Bonus: A bonus system where employees are paid a percentage of the time saved on a job, in addition to their hourly rate for the actual time worked.

Procedures for Paying Wages

Paying wages involves several systematic steps to ensure accuracy and proper disbursement:

1. Analyse Cash: This involves determining the exact denominations of currency (e.g., N50, N100, N200, N500, N1000 notes) needed to pay each employee their net wage. The goal is to minimize change and ensure efficient payment.
2. Determine Withdrawal: After cash analysis, the total amount of cash required for payment is determined. This is the amount that will be withdrawn from the bank.
3. Prior Notice to Bank: For large cash withdrawals, the bank must be given prior notice to ensure the required denominations and amount are available.
4. Prepare Payroll: A payroll is a list of all employees showing their gross pay, deductions (e.g., tax, pension), and net pay (the actual amount to be paid). This document is crucial for record-keeping and calculating the total wage bill.
5. Disbursement: This is the actual process of distributing the cash or transferring funds to employees. It involves careful checking of identities and obtaining signatures as proof of receipt.

Worked Example: Simple Payroll and Cash Analysis

QuickServe Ltd. needs to pay 3 employees for the week. Each employee has a fixed deduction of NGN 1,000.

• Employee A: Gross Pay = NGN 15,000
• Employee B: Gross Pay = NGN 12,000
• Employee C: Gross Pay = NGN 10,000

Step 1: Prepare Payroll (Calculate Net Pay)

Employee A:
Gross Pay: NGN 15,000
Deduction: NGN 1,000
Net Pay = NGN 15,000 – NGN 1,000 = NGN 14,000

Employee B:
Gross Pay: NGN 12,000
Deduction: NGN 1,000
Net Pay = NGN 12,000 – NGN 1,000 = NGN 11,000

Employee C:
Gross Pay: NGN 10,000
Deduction: NGN 1,000
Net Pay = NGN 10,000 – NGN 1,000 = NGN 9,000

Total Net Pay to be disbursed: NGN 14,000 + NGN 11,000 + NGN 9,000 = NGN 34,000

Step 2: Cash Analysis (for NGN 34,000)

The company needs to withdraw NGN 34,000. Here’s a possible cash analysis:

• NGN 1000 notes: 30 notes (NGN 30,000)
• NGN 500 notes: 4 notes (NGN 2,000)
• NGN 200 notes: 5 notes (NGN 1,000)
• NGN 100 notes: 10 notes (NGN 1,000)

Total Cash: NGN 30,000 + NGN 2,000 + NGN 1,000 + NGN 1,000 = NGN 34,000

Note: The specific combination of denominations may vary, but the total must match the net pay.

Teaching Methods/Instructional Techniques

Discussion, Lecture, Demonstration, Question and Answer, Visual Aids

Instructional Procedures

Step 1: Introduction

Time: 5 minutes
Teaching Skill: Set Induction
Teacher’s Activity: The teacher greets the pupils and asks them how their parents or guardians receive payment for their work. The teacher then introduces the topic: Methods of Paying Wages, linking it to real-life situations.
Pupils’ Activity: Pupils respond to the teacher’s questions and listen attentively to the introduction.
Learning Point: Pupils are introduced to the concept of wages and the lesson topic.

Step 2: Explanation of Wage Payment Methods

Time: 10 minutes
Teaching Skill: Explanation/Lecture
Teacher’s Activity: The teacher defines wages and explains each method of paying wages (time rate, piece rate, profit sharing, commission, bonus, premium bonus) using simple examples. The teacher also explains when each method is typically used.
Pupils’ Activity: Pupils listen, ask questions for clarification, and take notes on the definitions and examples.
Learning Point: Pupils understand the various methods by which employees are paid.

Step 3: Discussion of Wage Payment Procedures

Time: 10 minutes
Teaching Skill: Explanation/Discussion
Teacher’s Activity: The teacher explains the systematic procedures for paying wages: cash analysis, determining withdrawal, prior notice to bank, preparing payroll, and disbursement. The teacher emphasizes the importance of accuracy at each stage.
Pupils’ Activity: Pupils participate in the discussion, ask about challenges in each step, and record the procedures in their notes.
Learning Point: Pupils learn the step-by-step process of wage payment in an organization.

Step 4: Practical Demonstration/Examples

Time: 8 minutes
Teaching Skill: Demonstration/Illustration
Teacher’s Activity: The teacher uses the board to demonstrate a simple payroll calculation and a cash analysis example, as shown in the board summary. The teacher also shows samples of payroll forms and bank withdrawal forms.
Pupils’ Activity: Pupils observe the demonstration, ask questions about the calculations, and try to follow the steps.
Learning Point: Pupils see practical application of wage payment procedures and document usage.

Step 5: Class Activity/Exercise

Time: 7 minutes
Teaching Skill: Guided Practice
Teacher’s Activity: The teacher gives a short exercise involving a simple payroll calculation and cash analysis for a small number of employees. The teacher moves around the classroom to provide guidance.
Pupils’ Activity: Pupils work on the given exercise in their notebooks, applying the learned procedures.
Learning Point: Pupils practice applying the wage payment procedures.

Step 6: Review and Correction

Time: 5 minutes
Teaching Skill: Feedback/Correction
Teacher’s Activity: The teacher reviews the solutions to the class exercise on the board, correcting common errors and clarifying any misunderstandings.
Pupils’ Activity: Pupils check their answers, make corrections, and ask further questions if needed.
Learning Point: Pupils consolidate their understanding through corrected practice.

Step 7: Evaluation/Review

Time: 5 minutes
Teaching Skill: Questioning/Assessment
Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

1. Define wages.
2. List three methods of paying wages.
3. State any three procedures for paying wages.
4. Why is cash analysis important when preparing to pay wages?

Pupils’ Activity: Pupils answer orally and in writing.
Learning Point: Pupils demonstrate understanding of the lesson.

Step 8: Conclusion

Time: 2 minutes
Teaching Skill: Summarization
Teacher’s Activity: The teacher summarizes the key learning points on wage payment methods and procedures, emphasizing their importance in office administration. The teacher gives pupils homework to research advantages and disadvantages of each wage payment method.
Pupils’ Activity: Pupils listen to the summary and copy down the homework.
Learning Point: Pupils recap the lesson and are given further tasks.

Lesson Keywords

• Wages – Payment for work, usually on a daily or weekly basis.
• Time Rate – Payment based on hours or days worked.
• Piece Rate – Payment based on units of work completed.
• Profit Sharing – Employees receive a share of company profits.
• Commission – Payment based on a percentage of sales.
• Bonus – Extra payment for good performance.
• Payroll – A list of employees and their earnings and deductions.
• Disbursement – The act of paying out money.

Differentiation

For pupils who grasp concepts quickly, the teacher can challenge them to calculate deductions based on different tax rates. For pupils needing more support, the teacher can provide simplified examples and a checklist for each wage payment procedure.

Note for teachers using this lesson plan

Ensure that actual sample forms (payroll, withdrawal) are brought to class to enhance practical understanding. Encourage pupils to relate the concepts to businesses in their local community. Emphasize the ethical considerations of fair wage payment and the importance of accurate record-keeping.