Features of Profit-sharing

Features of Profit-sharing:

1. Method/Technique of extra-payment:

Profit-sharing is a technique under which extra payment is given to workers (in addition to usual wages and allowances It is the reward for joint /collective efforts of employees in raising the profitability of the company.

2. Payment out of net profit:

Profit is paid out of the net profits and as per the agreement between the employer and employees.

3. Status of workers remains the same:

In profit-sharing, ‘the employees get monetary benefit, but their status remains unchanged. They remain as wage earners,

4. Benefit to majority of workers:

The benefit of profit-sharing is given to majority of employees of all categories and also irrespective of their individual skill and efficiency.

5. Payment on yearly basis:

The profit-sharing agreement is made generally for one year and is renewed year after year.

6. Develops workers loyalty:

Profit-sharing provides encouragement to workers to work efficiently and to raise the net profit of their enterprise. It also develops loyalty and devotion among employees.

7.      Raises profitability:

Profit-sharing is a collective effort for raising profitability of an enterprise. Here, employer and all employees join hands and share the benefits jointly.