HR Glossary / Salary VS Hourly

A salary is the total fixed amount of money paid to an employee over a given period of time, generally a year. In contrast, the hourly wage is the amount of money paid to an employee for every hour of work performed.


What Are the Benefits of Salary and Hourly Pay?

A salary earner is paid a fixed amount of money regardless of the number of work hours, meaning they will be paid whether or not they work. They will also not receive additional money to compensate for overtime, but can often bank those hours.

Hourly workers are only compensated for the number of hours they work. Their pay can also vary depending on their work hours. They received additional money to compensate for their overtime, which gives them the opportunity to earn more over the year.

How to Calculate Salary and Hourly Wages per Pay Cycle?

To calculate the amount of money earned by a salaried worker each pay period, the annual salary of the worker is divided by the number of pay cycles for an entire year. For example, an employee who earns $50 000 a year and is paid on a biweekly basis would collect a paycheck of $1923.08 before deductions.

To calculate the amount of money earned by an hourly worker each pay cycle, the hourly wage of the worker is multiplied by the number of hours worked during the pay period. For example, an employee who works 40 hours a week at a rate of $15 per hour would earn a biweekly pay of $1200 before deductions.

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