What Is a Salary? Explained Salary, Wage and Hourly Pay

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What is a Salary?

A salary is the fixed amount that is given by an employer to their employee on a regular interval. The employee must complete his task to get this payment on time. The time can be different like Annually or monthly as decided by mutual consent. Generally, the world follows the default rule, which means salary is paid to an employee on monthly basis.

Deferent companies have different salary structures, but they all follow the government rules of salary structures in that areas. This is the one type of secured income that is getting by people even if they get the amount for public holidays etc.

You May Like: What is a Good Salary?

People prefer to get a job in good companies, which are giving other benefits apart from the fixed salary. Some attractive offers make the company’s profile good. They offer to their employee other benefits like health insurance, life insurance, other utility bills like phone and transportation facilities along with annual bonuses based on the companies profit margins.

An individual’s salary is decided by the average salary in that industry in the same region following the government rules. Its major depends on the work profile of a person and the designation of the employee. In simple terms, we can say it’s all about the demand and supply concept also.

According to Dictionary.com, the definition of a salary is:

“A fixed compensation periodically paid to a person for regular work or services.”Andrew Jones

What is considered a Good Salary?

There is not a fixed definition for a good salary, It depends on person to person and location to location also. Multiple factors work behind payment considered a good salary.

For more understanding, we assume James has only one child and is happy in his life with just $5000 per month. He meets all the monthly expenses in this salary and can even save some money from his salary. So it can be considered as a good salary for him.

But Let’s suppose Martin Living in a rented apartment and he has 2 children and a wife. They all depend on his single monthly income. He also gets a monthly payment of $5000. He hardly meets the regular expenses each month in this amount. So it’s not considered as a good salary here.

In short, You have to decide what is good for you, then it is called a good salary for you. Let’s understand this scenario of living standards with the salary you are getting.

  • Living Salary: If you are fulfilling all the basic needs such as food, utility bills, transportation cost, and housing. But no savings apart from these expenses. It’s the salary for your living only.

  • Comfortable Salary: Suppose you meet all the basic needs like housing rents, transportation, utility bills, and other regular expenses. That means you are in a very comfortable zone, this salary is comfortable for you.

  • Ideal Salary:  When Your salary is more than the cost of basic needs, all standard living life. You have a good amount of reserve funds saving in each month also. Whenever you want you can spend money on travel and entertainment also. This will be an ideal salary for you.

What is Base Salary?

Base salary is the minimum salary which is decided by the government for an employee at any certain level or post.  It is also called the basic salary. All other allowance like TA (Traveling Allowance), DA (Daily allowance), HRA (House Rent Allowance), and Other Allowance is also calculated on the base salary. Then it becomes the gross pay, and after your tax deduction in each month, it’s called the Monthly net Pay.

What Is Gross Salary?

When you work in a company you will get a fixed amount each month that is called a salary, But There are some deductions from the salary also like taxes. So the total Annual amount you get without any deduction of taxes is called a Gross Salary. For example, when an employer pays you an annual salary of $48,000 per year, this means you have earned $48,000 in gross pay.

What is a CTC Salary

CTC stands for Cost to Company, It is the total amount calculated by a company which is spent for an employee including everything like gross pay, other allowance, other benefits like insurance cover and transportation costs, etc. It also includes each resource cost which employees use during the job done. In short, CTC Is the total employee cost for Company.

What is Starting Salary?

Starting salary means, the amount you receive in the first month of your job. what the company offers you at the time of recruitment is called an offered salary, but when you got this amount, salary is your first starting salary.

What is the difference between a salary and an hourly wage?

These two words “salary and wages” are similar in means in most contexts but it’s not always similar.

As A fundamental rule, the salary is the fixed amount given to employees every month. It can not be calculated in any other intervals like weekly or monthly. But it’s only calculated on a yearly basis and then divided by 12 to calculate monthly salary. It must be given each month by the employer to his employee.

Wages are other than salary is calculated as the number of hours that work duration. It can be calculated on a weekly, fortnightly, or monthly basis also. Now it’s companies terms and conditions how, employers want to pay, like weekly, fortnightly or monthly basis. There is not a fixed amount always, it all depends on the working hours.

While in case of the salaried employee – The amount is fixed as a monthly salary. High position jobs always offer a good salary instead of wages.

Salary employees do not need to keep track of their working hours in the way but hourly workers do – there is no need for them to sign a time register.

While Workers on wages are typically paid time-and-one-half for every hour of extra work called overtime work. At weekends and public holidays, some employers may even pay double time.

Salary vs. Wage & Their Pros and Cons

Both have their own advantages and disadvantages. Salaried employees can not get any extra money in most cases even they work for more time. It is just because their salary is fixed. In any emergency or need, you have to work for extra time without any extra pay.

It is generally harder for salaried personnel to separate home from work life than for workers on wages. Hourly employees typically find it easier to switch off completely from work mode as soon as their working day or shift ends

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