Salary vs Hourly

1 minute read | 6 April 2022

Receiving a salary or an hourly paid wage can mean two very different things for you. At Boardrm, we believe in supporting you throughout your career. Therefore, we will be explaining the difference and the benefits of both salary and hourly pay.

The main difference between salary and hourly is the fact that a salary is a fixed amount agreed on by both the employee and the employer. Wages, on the other hand, vary depending on the hours the employee works.

In most circumstances, you won’t be able to choose which one you would rather have. However, if you have a strong preference towards one, this might be something to look for in future job applications.

Hourly Pay.

Benefits of hourly pay

  • Payment for hours: The biggest advantage is that the employees get paid the number of hours they work. So, if you work overtime, you will get paid for that as well.
  • In addition to that, there is normally bonuses on working on holidays and weekends.
  • Quicker pay: Overall employees on hourly paid, get the pay check faster than employees on salary. For example, most hourly paid workers get paid weekly whilst employees on salary get paid monthly.

Disadvantages of hourly pay
  • Cut hours: when you are an hourly paid employee, you are susceptible to having your hours cut down. The number of hours you do is decided by your employer but that will depend on the business circumstances such as if there’s enough work for you and if the business is well financially.
  • Lack of benefits: hourly paid workers don’t have the same benefits and salaried employees such as tax, pension and national insurance. This will depend on your employers, but the standard is for it to be discrepancy. This will take a significant importance if for example an employee is absent for work (even for medical reasons) and in most cases they won’t be paid for those hours.

Salary Pay.

Benefits of salaried pay

  • Consistency: as an employee, you are guaranteed a certain salary every month which makes financial stability and financial planning significantly easier.
  • Additional perks: Salaried employees are entitled to several paid days off every year. The amount of days off and other benefits depend on your employer but this can include private healthcare, pension contributions, paid maternity/ paternity leave and gym memberships.
  • Higher wages: Salary workers generally have higher salaries comparing to hourly paid workers.

Disadvantages of a salary
  • Lack of overtime: although this will depend on your employer, you probably won’t be paid for overtime work. Whereas an hourly wage worker can be paid overtime for hours worked in addition to their baseline contract, a salaried employee will often have to work those hours but will not get paid any more than their salary.
  • Risk of pay cuts: there will also be a risk of salary cuts which can lead to a situation where you are still working the same number of hours but receiving less monetary compensation.

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