Premium Pay

Premium pay refers to the higher pay rate given to employees for working outside of “normal” office hours or under less desirable working conditions.

The most common example of premium pay in action is the commonly known overtime (OT).

This is when employees work more than the official office hours. The additional hours put in after the regular hours would be on a premium pay rate.

This is often 50% to 100% more than the regular pay rate.

Staff who work weekends also usually make higher per hour wage compared to those who only work on weekdays.

Sometimes also known as penalty pay, premium pay can often also be observed for staff who work during the holidays, doing late shifts, or even taking on more hazardous work.

While some people who work regular office hours might sometimes complain about the lower pay rate they get compared to those who are on premium pay, most would quietly understand why certain employees earn a better salary per hour.

It is due to the personal sacrifices that they have to make for working irregular hours.

For example, a person working night shifts would means that he would have to sacrifice spending time with his family. This can be even more valuable when a husband has dependents to take care of at home.

This is why staff who are working regular hours are often given a choice to work irrugular hours if they wish to earn premium pay.

And most would be willing to accept regular pay so that they don’t have to make these personal sacrifices.

Nature of job

For a lot of businesses, having a workforce that works odd hours is just part and parcel of the nature of business.

For example, brokerages that track trades all over the world might require brokers on standby all the time. Customer service call centers might also require representatives on the phone 24/7 when they serve a global customer base.

Yet even though operating 24 hours a day might be part and parcel of some companies, requiring their employees to work odd hours would also usually enable such employees to command premium pay.

Again, this is because if given a choice, most people would probably prefer to work regular office hours as their social and personal life would be negatively affected if they work outside of office hours.

If a company refuses to offer a pay rate above the normal pay rate, then it might find it very difficult to hire staff who can deliver what is required.

Another type of premium pay is for those who work under hazardous conditions.

The extra risks that employees expose themselves to makes premium pay justified.

For example, an electrician working on light bulbs indoors is going to be safer than an electrician who is doing work on top of cell towers. Or an engineer working in a common factory would face a lesser safety hazard than one who does his work in a chemical plant.

People willing to work under such potentially hazardous conditions would usually have their premium pay rate easily justified.

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