When you are new to the workforce, you may earn an income per year in opposition to getting hourly income. To know how salary pay works ,makes it simpler to know what to expect as a salaried employee.
In this following article, we discuss salary, also explain the dissimilarity between hourly pay and salary and exempt employees also, process for working out pay for salaried employees and explain the advantages of salaried job.
What does salary mean?
A fixed amount of money or compensation that employees get every year from their employer for performing their work is known as salary. Even so, if you earn this regular payment on a monthly or biweekly basis frequently, you often see your salary as an annual sum.
Difference between salary and hourly pay?
A salary means a fixed amount of pay you get every year. This implies that you earn the certain fixed amount of money for every payment you get and you will get your fixed salary no matter how many hours you do work during each week. As a salaried employee, you generally get the same amount of salary for the time you are in that position, or until your employer changes your salary according to the quality of the work performed.
On the other hand, hourly pay implies the hourly rate you get. If you work more than the 40 hours every week with an hourly employee position you will get overtime. This usually means you will get a minimum of time and a half for every extra hour you work. Also, salaried employees who qualify as exempt employees don’t have to keep track of their hours like hourly employees do.
Difference between salary and exempt employees
A salaried employee refers to an employee that receives a fixed amount of compensation from their employer each year. For instance, salaried employees may get from $30,000 to $70,000 every year. Salaried employees get a certain fixed amount of money weekly, biweekly or monthly on a regular period. Aside from the money they get, they may also get extra paid vacation days, healthcare and other certain other employee benefits.
Generally, receiving paid salary implies you’re also an exempt employee. An exempt employee means to an employee who isn’t allowed overtime or minimum wage. As of Jan. 1, 2020, federal guidelines state that employees need to earn at least $684 each week or $35,568 per year to receive a salary and perform certain duties to be exempted from overtime requirements. To determine how overtime works in your state, check with your state’s department of labor.
How to calculate pay for salaried employees
Dissimilar to the non-exempt employees, salaried employees get a fixed amount of money or income each year. Follow the given process to work out pay for salaried employees. Let’s have a look:
1. Know your gross pay
Always know your gross pay, as you usually get to know about your annual pay at the time you get hired. If you don’t know about your annual salary then check at your pay end to identify your annual pay.
2. Understand your payroll schedule
Find out how many pay stubs you are expecting to get every year. As every company has their different payment schedule, inquire your HR department or your employer if you’re not confirmed of how many times you’ll get paid every year.
3. Calculate any overtime
The most important step is to calculate your overtime. Most of the salaried employees don’t get overtime, but some salaried employees get overtime. If you’re allowed for overtime money, then include your overtime amount to your basic pay.
4. Calculate your annual salary
Multiply the gross pay you determine in the first step by how many paychecks you expect to receive per year. This calculation results in your annual salary.
5. Add any bonuses
If certain bonuses assigned to you beside your fixed pay then include these to your salary calculations.
Advantages of a salary job
Before finding a job, it’s important for you to know the advantages of a salaried job. Considering these pros can prove to be helpful to find out whether you want to do employment with a salary or hourly position. Below, some of the advantages of a salaried jobs are mentioned:
- More financial security: It will provide you more financial security to receive a fixed salary for each of your payroll checks as a salaried employee.
- Greater chance of earning employee benefits: As a salaried employee, you choose to get a good advantage package from your supervisor. Beside these,salaried employees also get vacation time and personal time off days all over the year.
- Higher considered status: Salaried positions usually have greater status in comparison to other position like hourly pay. If you have a past of more professional work, it becomes easier for you to search for career opportunities in future.
Don’t miss out! Check our previously published article on How does salary pay work if you miss a day?
What are the disadvantages of salaried pay?
There are many disadvantages of a salaried position. You also need to consider disadvantages that can help you make a good decision concerning the type of job you want to follow. Below, few of the disadvantages of salaried pay are mentioned:
- Not allowed for overtime: As we know most of the salaried employees regarded as exempt employees, you are most probably won’t eligible for overtime pay with this kind of position.
- longer hours definitely: If you want to pursue a salaried job, you have to complete your work no matter how long it will take . This implies you have to work overtime without any additional pay.
- Very less time for personal life: In this position, you need to work for longer hours and it becomes hard for you to balance between your job and your personal life. If your job takes away from your ability to enjoy life, you may find less enjoyment in it.
Frequently asked questions
There is no fixed number of hours a salaried employee is required to work but most employers set 40 hours a week to be the compulsory hours of a full-time salaried job.
There are few things that can affect your salary even though it is fixed. These things can change your pay during one or more pay period. Some examples of items affecting salary pay include:
Commission pay
Deductions for certain benefits like health care and for retirement savings
Extra bonuses on the basis of work performance
Conclusion
Calculating salary pay is very easy and straightforward process, you just need to keep few things in your mind while working out your salary pay including overtime pay, extra bonuses etc. Usually, salary pay is fixed amount of money which are given to employees every month or year. Also check: Is it commonplace to take a pay cut when going to salary? Hope this article will help you to understand salary pay in better way.
