Key Difference – Salary vs Hourly
Salary and hourly wage are two different systems used by employers for remunerating an employee between which some differences can be identified. While salary is the more commonly use term used for remuneration from a job, hourly wages are also given in many professions. While this may not make much of difference in the total amount of compensation received at the end of the pay, there are significant differences between the two systems in terms of employee benefits and the rights of the employee. It is better to know the differences between salary and hourly when joining an organization so as not to feel disappointed later on. This article attempts to provide the reader with a comprehensive understanding of the nature of salary and hourly as well as to highlight the differences.
What is Salary?
In a salary system, you get a fixed amount every month no matter how many hours of work you have put in. Hours do not come into picture when you are salaried, and you get paid a fixed amount every month. A salaried person may work on weekends and even in nights but he will receive the same pay. This is a disadvantage for the salaried person. However, salaried employee can take a day off on medical grounds and his salary remains the same whereas if he is hourly and reports sick for a day, he may have to forego his remuneration for the day.
One profession where this difference between salary and hourly is exemplified is the teaching profession. Teachers, though many perceive them to be getting lots of holidays, work more than in other professions as they sweat it out even when the school or college is closed for vacations as they prepare grades of students and also their assignments. But they receive the same salary no matter how much work they put in during vacations.
What is Hourly?
If you are working on an hourly contract, you get compensation for a number of hours you clock plus any overtime you have done in the week. You also get extra for the holidays. A person employed on an hourly basis will receive overtime at the decided rate for any extra hours of work he puts in a week. This is one advantage that hourly employees have over salaried employees.
If you have an option of choosing between a salary and an hourly wage system, you can decide based upon how time-consuming the job is. If there are a number of hours, it is better if you accept the hourly system.
There is another advantage that the hourly system has over salary system. While salaried people can be fired easily by their employers, hourly employees need to be given in writing and are difficult to be fired. This highlights that there is a clear difference between salary and hourly. Now let us summarize the difference between the two compensation systems as follows.
What is the Difference Between Salary and Hourly?
Definitions of Salary and Hourly:
Salary: A fixed regular payment made by an employer to an employee.
Hourly: Hourly is a system of compensation to employees that are not fixed.
Characteristics of Salary and Hourly:
Nature of Payment:
Salary: A salaried person gets fixed amount at the end of the month no matter how much work he has put in.
Hourly: An hourly employee receives remuneration depending upon the number of hours he has clocked in and also gets overtime for any extra hours he has clocked.
Firing of employees:
Salary: Salaried people can be fired easily by their employers.
Hourly: Hourly employees need to be given in writing and are difficult to be fired.
1. US Navy 020614-N-0552D-001 SPAWAR award winning employee By U.S. Navy photo by Corinna Duron. [Public domain], via Wikimedia Commons