Difference Between Wages and Salaries
Are wages and salaries the same? You’ve probably asked yourself that before. But there is a difference between wages and salaries that many are not aware of.
Wages and salaries stand for one thing above all: money that arrives in the account at the end of the month. However, many employers do not understand what the difference is between the two forms of payment. Is there one at all?
One thing is certain: wages and salaries are a form of remuneration that employers pay their employees and workers in return for the work performed. Today, the two terms are mostly used interchangeably, but there is actually a difference between salary and wages.
What is Salary?
Salary is mostly paid to employees. Salary is usually paid to employees such as office clerks or engineers who receive a fixed monthly salary each month. The overtime worked is usually not paid out, but credited to a flextime account.
In terms of salary, it also makes no difference whether the employee was on vacation or not, the basic salary remains the same every month.
For example, if there is an electrician in a company that sets in 50 working hours and has a contract that says it will get an hourly rate of $ 20, it would have 50 × 20 = $ 1000 at the end of the month.
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What are Wages?
Wages are paid to workers are paid according to the work done. The wages are based on the work actually performed. That is why it can vary from month to month. This remuneration model is mainly used for workers who work in the manufacturing industry or mini-jobbers like waiters in restaurants.
The contract or collective agreement determines whether wages or salaries are paid. The distinction depends not only on the division into white-collar and manual workers but often also on the industry.
Differences Between Wages And Salaries
When someone asks about your income, whether you are in a private or government service, it obviously refers to your salary. But when we talk about the income of labor workers or others who earn daily through their work, we are always talking about wages.
Wages and salaries also apply to a person’s income, although they are different concepts. The main difference between the salary and wages are as follows:
- Salary is a fixed amount paid for an employee’s performance. Wages are a variable compensation that is paid based on the number of hours spent on a certain amount of work.
- Salaries are paid to eligible individuals who apply their skills in related fields and generate revenue for the company. While semi-skilled or unskilled workers like carpenters, welders, electricians, etc. who work on an hourly basis are paid wages.
- In the case of salaries, the cost is fixed, ie a fixed monthly amount is paid. In wages, costs vary because they can vary from person to person.
- The salary is fixed as soon as the decision is made. Whereas in the wage system the rate of wages is constantly changing which is paid to the individual according to the current rate of wages.
- Salaries are usually paid at regular intervals, ie monthly. While the wage is paid according to the number of hours spent.
- Salary is paid based on an individual’s performance. While wages are paid on an hourly basis, ie the amount of work done per hour.
- Salary is paid to those employees who have the skills and ability to perform administrative work. Wages are paid to workers who are engaged in the production process and work on an hourly basis.
- This salary is paid to those who work in administrative or managerial jobs. While wages are paid to those who work in the production process who need unskilled or semi-skilled workers.
- A salaried person usually has KRA, which is an important product area for fish on which their performance is evaluated. While the employee has no KRA and this is decided on an hourly basis.
- Salaries for overtime are not compensated. While the beneficiary gets extra compensation for the overtime allotted by him.