Wages

The major difference between salary and wages is that a salaried person is paid a fixed amount per pay period and a wage earner is paid by the hour. Someone who is paid a salary is paid a fixed amount in each pay period, with the total of these fixed payments over a full year summing to the amount of the salary. Someone who is paid wages receives a pay rate per hour, multiplied by the number of hours worked. Here we have listed the major differences between the two:

Basis for Comparison	Salary	Wages
Meaning	A fixed pay that an individual draws for the work done by him on an annual basis	A variable pay that an individual draws on the basis of hours spent in completing a certain amount of work
Skills	Skilled personnel	Semi-skilled or unskilled
Type of Cost	Fixed	Variable
Payment Cycle	Monthly	Daily
Rate of Payment	Fixed Rate	Wage Rate
Basis of Payment	Performance Basis	Hourly Basis
Nature of Work	Administrative-office work	Manufacturing-process work

It can be easily concluded from the above comparison that salary is a fixed amount of money paid at regular intervals to an individual for the work done by him in a given period of time whereas wage is a variable pay given to an individual for the number of hours spent by him in completing a certain amount of work.

The minimum wages in India differ in every state, and are categorized under multiple criteria, such as region, industry, skills level, and nature of work. Until last year, the minimum wage was regulated under the purview of the Minimum Wages Act, 1948. This changed last year after the parliament passed the Code on Wages Act, 2019 in August.

The Code on Wages Act replaces four labor regulations – Minimum Wages Act, 1948; Payment of Wages Act, 1936; Payment of Bonus Act, 1965; and Equal Remuneration Act, 1976.

The new wage code prohibits employers from paying workers less than the stipulated minimum wage. Further, minimum wages must be revised and reviewed by the central and state government at an interval of not more than five years. 

India has set a national-level minimum wage at around Rs. 176 per day, which works out to Rs. 4,576 per month. Further, some state governments, like Andhra Pradesh, offer tax breaks for companies generating local employment.

It must be noted that India’s minimum wage and salary structure differs based on the following factors: state, area within the state based on development level (zone), industry, occupation, and skill-level. This offers foreign investors a range of options when choosing where to locate their set up. 

Wages are of the following types:

Types	Description
Minimum Wages	The minimum wage may be defined as the lowest wage necessary to maintain a worker and his family at the minimum level of subsistence, which includes food, clothing, and shelter. Minimum wage in a country is fixed by the government in consultation with business organizations and trade unions.
Piece Wages	Piece wages are the wages paid according to the work done by the worker. To calculate the piece wages, the number of units produced by the worker is taken into consideration.
Time Wages	If the person is paid for his services according to time, it is called time wages. For example, if the labor is paid Rs. 35 per day, it will be termed as time wage.
Cash Wages	Cash wages refer to the wages paid in terms of money. The salary paid to a worker is an instance of cash wages.
Wages in Kind	When an individual is paid in terms of goods rather than cash, it is called the wage in kind. These types of wages are popular in rural areas.
Contract Wages	Here, the wages are fixed in the beginning for complete work. For instance, if a contractor is told that he will be paid Rs. 55,000 for the construction of a building, it is termed as contract wages.
Overtime Wages	An employer is required to pay overtime wages to non-exempt employees who work more than 40 hours in one workweek.

The following are the two main concepts of wages:

Nominal Wage

The total amount of money received by the worker in the process of production is called the money wages or nominal wages.

Real Wage

Real wages mean the translation of money wages into real terms or in terms of commodities and services that money can buy. They refer to the advantages of a worker’s occupation, i.e. the amount of the necessaries, comforts, and luxuries of life which the worker can demand in return for his services. For example, X receives Rs. 500 p.m. as money wages during the year. Suppose that midway through the year the prices of commodities and services that the worker buys go up, on average, by 50%. It means that though the money wages remain the same, the real wages (consumption basket in terms of commodities and services) are reduced by 50%. Real wages also include extra supplementary benefits along with the money wages

Difference between Nominal wages and Real Wages: Money Wages are paid in terms of the quantity of money whereas Real Wages are paid in terms of necessaries of life. Therefore money wages are expressed in terms of money and that of real wages in terms of goods and services.

PROS	CONS
Hourly wages directly tie into hours worked. Employees are actually paid for their true working hours, which benefits both employees and employers, especially employers with a large part-time workforce.	Waged employees are paid for hours worked, which can be an advantage, but it can also be a disadvantage if you aren’t getting enough hours to make what you need to earn.
Hourly employees are not typically bound by contracts that require them to stay with a company under any conditions. Because of this, they can move to another job if they want to.	Team members who are waged are less likely to have benefits like paid time off. This can be a detriment to employees, but it is one of the reasons companies choose to work with hourly wage labor.

What do I need to know about complying with legal regulations in terms of employee wages?

There are numerous laws that deal with the restrictions and mandates surrounding employee wages, many of which concern the paying of minimum wage, which is regulated by your state, and compensating youth workers the appropriate amount

What is the Minimum Wage?

Wages fixed or revised by the Government in respect of scheduled employment from time to time which consists of Basic wage + variable dearness allowance.

What is Variable Dearness Allowance?

It was recommended in the Labour Ministers’ Conference held in 1988, to evolve a mechanism to protect wages against inflation by linking it to a rise in the Consumer Price Index. The Variable Dearness Allowance came into being in the year 1991. The allowance is revised twice a year, once on 1st April and then on 1st October. In the State Sphere, 26 States/Union Territories have provisions for Variable Dearness Allowance, at present.

What are the hours of work in a day?

The no. of hours which shall constitute a normal working day in case of an adult, nine hours including a lunch break of one hour. The employer shall allow a day of rest after six days of work with wages to the employees every week. If the employer extracts work for more than four hours and less than eight hours the employer has to pay full day wages.

When is the workman entitled to overtime wages?

Any employee on any day having worked excess of no. of hours prescribed, is entitled to overtime at double the wage except in agriculture wherein it is 1 ½ time of the wage.

How is the Minimum Wage rate fixed in India?

Under Section 5 of Minimum Wages Act, 1948 there are basically two methods of fixation/revision of Minimum Wages (1) Committee Method (2) Notification Method. Revision of Minimum Wages should not exceed an interval of 5 years. Section 3 empowers the appropriate Government to fix the minimum rates of wages in the scheduled employments.