Which term refers to compensation based on the number of units an employee produces?

The term that refers to compensation based on the number of units an employee produces is piece work. This payment method directly ties an employee’s earnings to the amount they produce, meaning workers receive a specific amount of money for each unit they create or complete. This approach incentivizes higher productivity since employees' earnings increase with greater output.

For example, in industries such as manufacturing or assembly line work, workers are often paid a certain amount for each item they assemble or produce. This system contrasts with other compensation models, such as salary or hourly pay, which provide a fixed amount regardless of productivity levels. Commission usually relates to sales roles, where employees earn a percentage of the sales they generate, rather than being directly tied to the number of units produced.