Salary vs Wages

Difference Between Salary and Wages

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 pre-defined amount and wages are somewhat different from the salary, where wages are paid as compensation to work for any organization for a specific period of time.

What is Salary?


What are Wages?

  • Wages are generally paid depending on the amount of time worked, mostly it is hourly and hence the term hourly worker.
  • The type of job which is paid hourly or wage driven are unskilled and lower level; jobs like a security guard, parking garage guard, librarian, and so on are paid on an hourly basis depending on the hours they clock in.
  • Several hours worked is specifically recorded in a timesheet which records in the IN time and OUT time for every individual employee, this sheet acts as a record to calculate the pay the worker gets at the end of the week.
  • Overtime wage is an added feature which the employee gets if he/she ticks in more hours than defined in the employment contract. The number of extra hours must be paid accordingly by the employer.
  • The minimum wage rate is decided by the government, like in the United States. The minimum hourly rate is $12, which binds the employee to pay at least $12 to every employee regardless of the skill set.

Salary vs. Wages Infographics


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Key Differences

The term 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 is evenly distributed throughout the whole 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 timesheet is not associated with white-collar employees earning a salary; it is used by the blue collared employees to record the number of hours worked.

Salary vs. Wages Comparative Table

Skills RequiredHigh 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 structurePaid at a fixed rateRate is variable
Frequency of paymentMonthly at a predetermined annual amount, which is equally distributed in 12 months throughout the year.Daily or weekly, depending upon the employment.
Basis of PaymentA fixed amount is paid as decided, and the variable factor depends on the performance.The hourly rate is decided as per the industry trends.
RecipientsSalaried workers are generally referred to as employees.Waged workers are referred to as Labor.
Nature/Type of jobsOffice and administrative jobsManufacturing or process-related work;
Performance reviewMost 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.
ResignationA salaried class generally has a notice period to serve, which will allow the employer to find the replacement with the same skillset.There is no such thing as a notice period here since the labor worker is easily replaceable.
PurposeIn exchange for salary an individual is expected to increase the revenue of the firm directly or indirectlyWage workers don’t need to generate any revenue; they just need to get the work done.
LeavesA 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 professionDoctors, Lawyers, BankersConstruction workers, Bus driver, Delivery services, Carpenter, Welder, Electrician


Salary and wages are a type of compensation paid to the employees for the kind of services they offered to the company, while the type of employment for both are very different also the skill set required varies a lot.

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