Wages | Meaning and Definition

What are wages?

Wages refer to the payment reimbursed to employees for serving the employer with their energy and skills where the use and method of skills and energy are done at the employer’s discretion. The payment amount is done in correspondence with the conditions and terms stipulated in the employment contract. Wage can be seen as the basis for making and estimating employees’ compensation. The term “wage” refers to payment provided for services furnished by the employee. The labor can be physical as well as mental, and the wages are based on the quantity of output or number of hours worked. Generally, wages are utilized to refer to reimbursements made for services provided by non-clerical staff and non-supervisory staff or that given by manual labor. 

P.M Stohank defines wages as “the labor’s remuneration which creates utility”. On the flip side, salary implies a payment paid by the employer to managerial personnel or clerical personnel on an annual or monthly basis. Nowadays, the terms wages and salary are used interchangeably, as all employees are deemed as human resources.

Let’s understand the difference between wage and salary by an example:

Kate and Jane are friends, where Kate is employed in a factory and earns 100 Rs/ hr of work, while Jane works as an office secretary and earns Rs. 15,000 per month. Here if Kate works for 6 hours a day and 30 days a month, she must earn 6* 100 * 30= Rs. 18,000, however, the amount she gets is Rs. 100 for every hour of work.

Salary is reimbursed on the basis of the month and is incumbent upon the number of hours. On the contrary, wages are paid on the basis of the number of hours of work done by an employee and thus are provided on a weekly basis. The person who receives wages is a non-exempt worker. Both salary and wages are monetary in nature and are an operating cost to the company.