Types of incentive schemes: incentive schemes are many and varied. The international labour organization (ILO) classifies all the schemes of payment by the result into four categories. They are:

1. Schemes where the workers earnings very in the same proportion as output.

2. Schemes where earning very less than output.

3. Schemes where earning very more than output.

4. Schemes where earnings differ at different levels at output.

Incomes varying in proportion to output: the chief characteristics of the Schemes where the Incomes varying in proportion to output is that any gains or losses resulting directly from a worker's output accrue to him / her (leaving to the employer any gains or losses in overhead costs per unit of output). In contract, when the worker is paid by the hour, day or month, all gains or losses resulting from changes in his / her output accrue to the employer.