Salary vs Wages
When someone asks your income, if you are in a private or government service, he is obviously referring to your salary. But when we talk about the income of blue collar workers or others who earn daily through their work, we invariably talk in terms of wages. Though wages are income, and salary is also nothing else but income of an individual, there are subtle differences between salary and wages that will be highlighted in this article.
There are people who use the terms salary and wages interchangeably without realizing that the difference between the two terms goes beyond monthly earnings. Wages are mostly associated with hourly compensation, and the employee gets money on the basis of number of hours put in by him multiplied by hourly rates. If there is an electrician in a company who puts in 50 hours of work and has a contract saying he would get an hourly rate of $20, he would get 50×20 = $1000 at the end of the month. The paycheck (paycheque) an employee gets is always based upon actual number of hours put in by the employee.
Salary is a concept that is always either in monthly or annual basis, though it may be paid weekly or fortnightly . When there is salary, you hear about yearly packages, bonuses, incentives and perks based upon performance. You have the CEO’s, directors, government employees and many others who earn their salaries, not wages. Salaried employees are not entitled to any additional income if they put in additional hours of work in a week or month as it is considered to be a part of their job. On the other hand, employees working on the basis of hourly wages get bonus once they put in the agreed number of hours (generally 40 hours) in a week. A salaried employee will not be getting a lower salary in a month if he has put in lesser number of hours as there is no criterion of deciding income on the basis of hours put in. Employee working on hourly wages gets 1.5 times or twice his hourly rates for all hours besides the minimum 40 hours that he is required to put in.
What is the difference between Salary and Wages?
· Wages and salary both pertain to the income of a person, though being different concepts.
· Wages are mostly associated with employees hired at hourly rates, while salary is associated with employees who get yearly packages.
· We have an electrician hired at $20 per hour, while we also have a government servant working for a salary of $3000 per month
· Salaried employees do not get any additional money if they put in higher number of hours, but employees working on hourly wages get 1.5 times or twice their hourly rates for all hours in addition to the minimum agreed number of hours (usually 40 hours) in a week.