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ToggleWhen discussing employment, it is important to understand the difference between wages and salary. While these two terms are often used interchangeably, there is a distinct difference between them that is important for any worker or employer to understand. This article will explore what exactly the differences are, as well as their advantages and disadvantages.
Wages are paid by an employer to the worker depending on the total hours spent doing the job and the work completed during those hours by them. They are flexible and can be changed based on the work completed and the hours spent doing the job.
Usually, production industry workers are given daily remuneration and wages. Although paid based on hourly work, one can be paid wages for a specific time, like the decided amount for the month or week.
Since wages are paid based on the hours spent doing the job and the work done, higher work hours mean you will get paid more. And an absence of work hours means you won’t get the wages for that day.
Below are some of the main benefits of wages:
While there are advantages of wages, it also comes with some disadvantages, such as:
A salary is a decided amount of money given to an employee of a company every month in exchange for their work and services provided to the employer. It’s an income negotiated between the employee and employer when hiring and can be increased yearly based on performance.
Salary is usually decided based on the employee’s roles, responsibilities, experience, and qualifications. Unlike wages, salary is a predetermined amount given to the employee regardless of the hours worked.
So, what makes wages and salaries differ from each other? Here are some points of differences you should be aware of:
Differences | Wages | Salary |
Skills | Workers on wages may or may not require a good educational degree | Professionals should hold a degree, certain skill sets, and sometimes even a license |
Cost Structure | Erratic, depends on the hours put in and amount of work done | Fixed and negotiated at the time of recruitment |
Payment Frequency | Weekly or daily, depending on the employer | Given monthly at the decided annual amount, which is equally distributed over 12 months |
Payment Basis | Hourly and according to the industry standards | Based on role, experience, qualifications, and industry average |
Nature of the Job | Administrative and corporate jobs | Manufacturing jobs |
Performance Review | No performance review for wage workers | Salaried employees get periodic performance reviews |
Purpose | Wage workers are expected to get the work done | Salaried employees are expected to have a role in increasing the company’s revenue |
Paid Leaves | No paid leaves | Have a proper paid leaves schedule that differs from company to company |
Notice Period | Wage workers don’t have to serve a notice period or give a structured resignation | Salaried individuals have to serve a notice period that acts as a time limit for the company to replace them |
Duration | Changes as per the existing rate and hours done | Stays the same throughout the year; unless there’s a performance bonus or promotion |
Examples | Bankers, lawyers, doctors | Carpenters, electricians, construction workers, welders |
Conclusion
Wages and salaries are two forms of remuneration used to compensate employees for their work. While salaries provide more stability and predictability, wages offer more flexibility in terms of hours worked. Understanding the differences between wages and salary is important for employers and employees alike, as each comes with its own advantages and disadvantages.
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