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How Salary Differs from Wages — Here’s What to Know

(Photo: The Balance)

(Photo: Inc. Magazine)

The primary distinction between a salary and a wage is that wage earners are paid by the hour, whereas salaried employees are paid in fixed amounts each pay period.

For example, if a person who works at a managerial level earns 60,000 dollars annually and receives monthly payments, he will reach 5,000 dollars each.

People who earn a salary are paid a set amount each payroll, and the total of these regular payments over the course of a year equals the wage. These workers are classified as exempt employees. But there is no relationship between the amount paid and the number of hours worked.

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(Photo: Govt Vacancy)

There are no differences in compensation based on the amount of overtime worked.

As a result, the salary recipient is not compensated differently based on whether they work fewer hours or more.

When someone is paid, their hourly rate is multiplied by the number of hours they work.

If a worker receives wages and works more than 40 hours weekly, he is also entitled to 1.5 times his regular compensation rate as overtime.

Different Payment

Wages and salaries differ in terms of how fast they are paid. A person’s salary is a fixed pay rate; payroll staff can easily calculate it if paid up to and including the payday.

However, a person’s hourly may change, and the payroll staff would need a few days to compute the pay. The worker is typically paid through a date a few days before the pay date.

If a worker’s pay has been delayed between his last day and his pay date, the difference will be added to his next paycheck. On the other hand, a worker who receives a salary does not experience any delays since he is paid through the pay date.

Another difference that affects employees is that a salary provides a fixed, guaranteed income. In contrast, a wage provides a variable gain that may be higher or lower than a salary’s annual pay rate.

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