What is a Salary?

An employer's regular payment to employees for their employment. What is a Salary? It is usually paid on a monthly or annually basis Particulary to white collar workers, Managers, directors, professionals.

Salaried employees are paid a fixed amount each monthly. They often receive paid vacations or public holidays, as well as healthcare insurance for countries with limited coverage.

It is common to compare the salaries of similar employees in the same sector and region when determining what salary ranges. The majority of large employers have different levels of pay rates, which can be linked to hierarchy or time served.

Salary are affected by supply and demande in many countries. It is the ratio of the number of job vacancies in a given area to the number that could fill the position.

What determines the salaries rates?

The law and tradition also play a role in determining salaries. In the United States, for example, pay levels are influenced mainly by market forces, while in Japan senority, social structure and tradition play a greater role.

Even in countries where market forces dominate, studies have shown that there are still variations in how monetary payments are arranged for work based on gender or raciality. Men tend to earn more than the women and white employees generally make more than other ethnicities.

In 2007, the US Bureau of Labor Statistics reported that women of all races earned 80% of the median wage of their male counterparts. Experts believe that total equality will not be achieved in the next five decades, even though the gender gap is closing slightly.

A minimum wage cannot be less than the national minimum wage. If the minimum wage is $10 an hour and the employee works 40-hours per week, the annual salary of the employee cannot exceed $20,800 ($10 x 40 hours per weeks x 52 week).

Differential between salary and wage

Wages and salary can often be interchanged and, in some contexts, they have the same meanings - but not always.

A salary is fixed on a weekly and monthly basis. Salary are calculated annually and divided by twelve each month. In certain countries, people are paid twice in December. For these cases, the annual salary of an employee is divided by 13 and two months' pay is added to their December paycheck.

Wages, on the other hand, are calculated on the nuber of hours worked that week, fortnight or month. Employers pay wages weekly, fortnightly and monthly. Wages are linked to how long the employee worked. But this is not true for salaries. The monthly income of salaried employees is constant.

Managers, for example are paid a monthly salary and not wages. They do not get a raise if they work overtime. Overtime is often paid to blue-collar workers as well as production-line employees. It varies based on how many hours they have worked in a week or month.

We can say, "His salary is $60,000/year" for an office worker whose annual income is $60,000; however, it is uncommon to say "His pay is $60,000/year".

Salary employees are not required to keep track their hours the same way hourly workers do.

Overtime work is typically covered by wages and workers get paid time-and half. Employers might pay double the amount for overtime work on weekends or holidays. I can recall when I was a college student that I worked at a gasoline station (UK petrol) on Christmas Day. This was where I received quadruple pay.

A salary vs a wage: pros and cons

Paying a salary has the disadvantage that you can't earn overtime. This means that overtime is not an option.

Some lower-salary positions in the United States are still eligible for overtime rates based upon federal and state laws. The UK has different rules. Stipendiary personnel can be paid overtime for additional work depending on the terms of their employment contract.

It is typically more difficult for salaried employees to disconnect work from home than it is for wage workers. Hourly workers find it easier for them to turn off their work-mode when they finish their shift.

Being able to plan ahead is one of the greatest benefits of a salary. The amount each paycheck will go towards is known in advance. This makes it easier to plan for the future. This makes it much easier to determine how much to borrow, what kind of vacation you can afford for next years, what type and when to purchase a car, and other things.

Salary workers are more likely receive benefits. These include paid vacations, non-contributory health insurance, pension schemes, and company cars.

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