Q.What is a Premium Bonus Scheme? Explain the Halsey Premium Bonus Scheme, stating its formula for computing Bonus and Total Earnings.

A Premium Bonus Scheme guarantees a worker's Time Rate wage for the time actually taken, and adds an extra bonus for finishing sooner than the standard Time Allowed — Halsey pays that bonus as a fixed 50% share of the time saved.

Under Halsey, Time Saved = Time Allowed − Time Taken; the worker is paid Time Taken × Time Rate as basic wages plus a bonus of 50% of the money value of the time saved. If Time Taken equals or exceeds Time Allowed, Time Saved (and the bonus) is Nil.

A Premium Bonus Scheme is a wage system that combines the guarantee of a Time Rate system (the worker is always paid at least for the time actually taken) with an incentive for efficiency: an extra bonus is paid whenever the worker completes the job in LESS time than a standard Time Allowed fixed for it. Both the worker (higher earnings) and the employer (job finished sooner) benefit from any time saved.

The Halsey Premium Bonus Scheme, devised by F. A. Halsey, is one such scheme. Under Halsey:

• Basic Wages = Time Taken × Time Rate.
• Time Saved = Time Allowed − Time Taken (Nil if Time Taken ≥ Time Allowed).
• Bonus = 50% × Time Saved × Time Rate (the 50% share is the standard convention; a problem may specify a different percentage).
• Total Earnings = Basic Wages + Bonus = (Time Taken × Time Rate) + [50% × (Time Allowed − Time Taken) × Time Rate].

The scheme guarantees the worker never earns less than plain Time Rate wages (since the bonus is always zero or positive, never negative), while sharing the value of any time saved equally between worker and employer.

Students sometimes apply the 50% bonus share to the TOTAL time taken (or the total time allowed) instead of only the TIME SAVED, or forget that if Time Taken is equal to or exceeds Time Allowed, Time Saved — and therefore the bonus — is Nil, never a negative amount that reduces the worker's basic wage.