Salary definition
/What is a Salary?
A salary is a fixed amount that is paid to an employee at regular intervals, irrespective of the hours or amount of work performed. The amount of a salary is usually stated as the full annual amount to be paid, such as $80,000 per year. Salaries are usually paid at bi-weekly, semi-monthly, or monthly intervals. A salaried employee is typically paid through the date of each paycheck, since the amount paid never varies. The annual salary amount to be paid is frequently stated in an offer letter or employment contract.
Characteristics of a Salary
The key characteristics of a salary are as follows:
Fixed payment. Salaries are predetermined and agreed upon between the employer and employee, typically specified as an annual amount.
Regularly scheduled payments. Salaries are paid at consistent intervals, such as monthly, biweekly, or weekly, depending on company policy.
Exempt from hourly tracking. Salaried employees often do not need to track hours worked, as their compensation is not tied to specific hours.
Based on role or position. Salaries are often determined by the responsibilities, qualifications, and seniority associated with the role. Salaries are more commonly associated with professional or full-time jobs, as opposed to wages, which are typical for hourly workers.
Not dependent on overtime. Salaried positions are often classified as exempt, meaning employees are not eligible for overtime pay under labor laws in many jurisdictions. However, non-exempt salaried employees may still qualify for overtime.
Excludes variable pay. Unlike commission-based pay, a salary is fixed and does not fluctuate based on performance, unless bonuses or profit-sharing are included.
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FAQs
How Does a Salary Differ from Wages?
Someone who is paid a wage instead of a salary is usually paid based on the hours or amount of work performed, and is typically paid on a more frequent basis. The amount paid is usually as of several days prior to the date of the paycheck, since it takes time to calculate wages, which may vary by paycheck. In addition, those who are paid a wage typically have less control over how their work is conducted than someone who is paid a salary.
Are Bonuses Included in Salary?
Bonuses are generally not included in salary because they are variable payments tied to performance or company results. Salary represents a fixed, regular amount paid to an employee, while bonuses are additional rewards. However, some employers may present “salary packages” that list both base pay and expected bonuses together for clarity.