A salary is a form of payment given by an employer to the employee for the services rendered by the employee, it can be dependent on an employment contract or a predefined amount, and wages are somewhat different from the salary, where wages are paid as compensation to work for any organization for a specific period. You are free to use this image on your
website, templates, etc., Please provide us with an attribution linkArticle Link to be HyperlinkedDifference Between Salary and Wages
What is Salary?
What are Wages?
Salary vs. Wages Infographics
For eg:
Source: Salary vs Wages [wallstreetmojo.com]
Key Differences
The terms salary and wage serve the same purpose of paying the employee, but there are some key differences we should discuss.
- A Salary is a fixed amount to be paid and can be changed yearly or semi-annually and evenly distributed throughout the year. At times employees are also entitled to receive a year-end bonus, which is also decided based on the salary. At the same time, wages are very short-sighted, where the amount is decided weekly, bi-weekly, or annually and can be changed fortnightly as per the requirement. The number of hours decides the amount worked in that particular period.
- White-collar employees like managers or directors have a fixed remuneration. They are not entitled to receive any extra amount for overtime and draw a fixed salary every month. At the same time, wages are generally given to blue-collared employees where overtime is a factor to be considered while deciding on the end-of-week pay.
- The concept of a timesheet is not associated with white-collar employees earning a salary; the blue-collar employees use it to record the number of hours worked.
Salary vs. Wages Comparative Table
Skills Required | High skill set, Licensed Professionals such as lawyers, doctors also termed as white-collared employees. | Unskilled or semi-skilled workers, often known as Blue collared employees. |
Cost structure | Paid at a fixed rate | Rate is variable |
Frequency of payment | Monthly at a predetermined annual amount, which is equally distributed in 12 months throughout the year. | Daily or weekly, depending upon the employment. |
Basis of Payment | A fixed amount is paid as decided, and the variable factor depends on the performance. | The hourly rate is decided as per the industry trends. |
Recipients | Salaried workers are generally referred to as employees. | Waged workers are referred to as Labor. |
Nature/Type of jobs | Office and administrative jobs | Manufacturing or process-related work; |
Performance review | Most salaried guys have their performance reviewed at periodic intervals, which decide on their increment of salary. | No performance review system here; labor works correctly on an hourly rate basis. |
Duration | Salary once decided stays the same throughout the year. | The wage rate can change any time, and it can be effective as per the prevailing rate. |
Resignation | A salaried class generally has a notice period to serve, which will allow the employer to find the replacement with the same skill set. | There is no such thing as a notice period here since the labor worker is easily replaceable. |
Purpose | In exchange for salary an individual is expected to increase the revenue of the firm directly or indirectly | Wage workers don’t need to generate any revenue; they just need to get the work done. |
Leaves | A salaried worker has a predefined schedule of the paid leaves. | A wage worker has no such schedule, and every day off is a day without any wage. |
Examples of profession | Doctors, Lawyers, Bankers | Construction workers, Bus driver, Delivery services, Carpenter, Welder, Electrician |
Conclusion
Salary and wages are a type of compensation paid to the employees for the kind of services they offer to the company. At the same time, the types of employment for both are very different. Also, the skill set required varies a lot.
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