What Is Salary Pay And How Can It Affect Your Company


Businesses will not thrive without the help of reliable and competent employees. It is, therefore, crucial for companies to hire and retain staff that can assist the company in achieving its goals.

One of the most important things to consider when hiring employees for your business is the salary.

The salary of an employee depends on whether they’re employed on a salary basis or an hourly one. Each type of employee, whether hourly or salaried, has benefits and drawbacks for businesses.

What is Salary Pay?

Salary pay is a type of remuneration wherein the employee receives wages in fixed intervals. The wages of a salaried employee is fixed regardless of the number of hours put in.

Employees with fixed monthly salaries receive their salaries based on a yearly amount offered by the employer. The annual salary of the employee is given in monthly, bi-weekly, or weekly increments, depending on the number of pay periods.

Salary vs. Hourly: How it Works

  • Salaried employees usually are staff working full-time
  • The annual compensation of full-time employees is divided equally based on the number of pay periods in a year
  • Salaried employees typically work 2,080 hours every year
  • A predetermined salary is given regardless of the number of hours worked
  • A salary paid employee is entitled to company benefits

On the other hand, hourly workers are paid based on the number of hours put in.

  • The wages of hourly employees depend on how many hours they worked
  • Usually, hourly employees are not entitled to the benefits that regular employees receive
  • Hourly wages apply to part-time and seasonal workers

How Does Salary Pay Affect Your Company?

Business owners are obliged to follow the law and industry standards when it comes to paying hourly and salaried employees. Do salaried employees perform better than hourly workers? Will hiring a salary vs. hourly workers have a significant impact on business operations and organization?

  1. It’s Simpler To Keep Track of Regular Salaried Employees

Calculating the wages of a salaried employee is less complicated than keeping track of the hours worked by part-time staff. Employees with a predetermined salary require very little timekeeping because the wages are fixed every pay period.

Employing an hourly worker, on the other hand, need more work because the payroll department must verify the exact number of hours worked before the salary can be released.

  1. Hiring An Hourly Employee May Not Be As Cost-effective

Some companies may think that hiring an hourly worker saves them money. Salaried employees are entitled to company benefits, such as health insurance, paid leaves, and insurance, which may mean additional costs for your company. However, part-time workers are entitled to overtime pay, which can increase staffing costs instead of reducing them.

Giving benefits and perks to full-time employees is a way of taking care of them. Satisfied and happy employees perform better and are more reliable than those who are not.

  1. Avoid Surprise Payroll Costs

A large portion of a company’s expenses is due to employee benefits and compensation. These expenses are necessary since businesses need workers to thrive, and no one will want to work for free.

Hiring a part-time worker allows companies to save money on wages. However, depending on how an hourly worker performs, businesses will not be sure of the salary they have to pay an independent contractor until their tasks are completed. Since hourly workers can claim overtime pay for working beyond the expected turnaround time of functions, it can be challenging to set a budget for payroll when part-time workers are hired.

Companies have a better idea of how much to allocate for pay when they hire salaried employees.

  1. You Can Expect More Loyalty From Salaried Employees

We’re not trying to put down hourly workers. Part-time employees are a necessity in almost every industry. However, companies benefit more from hiring salaried workers because these people are looking to build a career rather than just a side gig. A salaried employee has more reason to become loyal to the company, which positively affects work attitude and performance.

Salaried employees will work beyond their hours because they care for the business and want the company to succeed.


Business owners and hiring managers must consider different factors before deciding to hire an hourly worker versus a regular employee. Hourly workers are necessary, especially if your business has fluctuating demand due to changes in seasons. It’s alright to hire hourly workers to meet the short-term requirements of the company. Salaried employees, however, are more reliable in the long run because they naturally exhibit loyalty to the company.


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