Salary usually involves:
- Full-time hours
- Permanent positions
- Fixed working patterns
Hourly is more common in:
- Retail, hospitality and contract-based work
- Flexible week by week hours
Knowing the difference between wages and salary is important for determining what’s best for your business as an employer, or your lifestyle as an employee. Below we will discuss the differences as well as the pros and cons of the two.
What’s a salary?
A fixed regular payment, typically paid on a monthly basis but often expressed as an annual sum, made by an employer to an employee. A salary is usually a fixed amount per year, so for example, you may have a salary of £24,000 a year, which breaks down to £2,000 a month.
Your overall salary is your gross salary, and the money you take home after taxes and contributions is your net salary.
Advantages of salary pay:
- Consistent pay
- Better benefits
- Salaried workers often have more flexibility and can usually leave work occasionally if needed for medical appointments or family obligations
Disadvantages of salary pay:
- Lack of overtime
- Risk of pay cuts
- Some workers who advance to salaried positions find they get paid less per hour
What’s an hourly rate?
An hourly rate is the set pay you receive per hour worked. Your hourly rate will be outlined in your employment contract, which may include a minimum number of hours that you work each week. … If you’re paid an hourly rate, your monthly earnings will vary depending on the hours worked each month. For example, if you are paid £9.50 per hour and work on average 30 hours per week your gross salary will be £285 per week before tax.
Advantages of hourly pay:
- Overtime and holiday pay
- Quicker payments
- Working 40 hours or less a week may help hourly employees avoid burnout
Disadvantages of hourly pay:
- Cut hours
- Lack of benefits
- Unpredictable schedules and less flexibility
