Are you wondering whether to take up the hourly pay or salary in a job?

Do you find yourself confused between the two?

After reading this blog you will not be.

Who is an Hourly Employee?

An hourly employee is paid based on the number of hours he/she works. Hourly employees are paid at a set hourly rate which is multiplied by the hours worked during any given period. 

 For example- if a worker has an hourly rate of $11 and works 40 hours in a week, then his/her wage, for that week, will be 40 x $11 that is $440.

Hourly employees do not usually have a contract and are only paid for hours worked. The working hours for each week are decided by the employer. Employees are required to document their work by using a time-card system or filling out a timesheet, which the employer verifies. Whichever timekeeping method you use it must be complete and accurate.

There is no Federal law or policy that determines the number of work hours per week for an hourly employee. Employees working less than full-time are considered part-time, and they may have different pay, benefits, and paid time off than full-time hourly employees. 

Who is a Salaried Employee?

A salaried employee is paid a fixed amount (salary) each year irrespective of the number of hours worked. Such employees have a set minimum annual level of compensation which is informed at the time of offering a job. That annual amount is divided by the number of pay periods (determined by employer/company) to arrive at their weekly, bi-weekly, or monthly pay-check.

 For example- if an employee is hired at a salary of $45000, that is paid weekly, his/her each pay-check would be $865.38 (without deductions). If the employee is exempt from overtime pay, that amount will not change, regardless of the number of hours worked.

Salaried employees are given an employment contract. While hourly employees are paid a fixed amount for the exact amount of time they work, salaried employees get paid for the hours they worked extra, that the standard 40-hour workweek.

Exempt and Non-exempt Salaried Employees

Being an exempt salaried employee means that you will not be paid extra for the additional hours you work past the 40-hour/week standard. Many salaried employees are exempt employees, but not always. For this reason, employers do not usually keep track of the number of hours worked by salaried employees.

Some employers may offer overtime pay, or instead of payment they may offer compensatory time off or some other benefits.

If a salaried employee is classified as a non-exempt worker, then he/she is entitled to get paid for any number of hours worked over 40 hours in a week.

Most provinces and territories do not limit the number of hours worked extra than the weekly minimum, given that the right wage is paid and agreed between employer and employee. In Alberta, the daily limit is 12 hours, while employees in Quebec can refuse to work more than 4 hours than their usual daily hours.

Hourly Wages in Canada

In Canada, a minimum wage per hour is set by all the provincial and territorial governments. Hourly wage employees have to be paid according to this.

Pros and Cons of being a Salaried Employee

Pros

• Salaried employees are guaranteed a certain dollar amount pay-check without any fluctuations.
• Your salary will not be affected regardless of the number of hours you worked or holidays.
• Overall compensation is higher than hourly wage employees.
• You are likely to get additional benefits like healthcare, retirement contributions, bonuses, and more paid vacation time than hourly employees.
• You get vacation days and a more flexible schedule.
• Starting salaries are often far above the hourly rates, this enables you to invest money in other things or buying luxuries for you and your family.
• Salaried employees tend to have a more regular schedule.
• Job security is higher.

Cons

• Salaried employees are usually not eligible for overtime when they work weekends and late nights.
• Salaried jobs are significantly more stressful than hourly jobs.
• Salaried employees struggle to strike a balance between personal and professional lives. Even if you are on a vacation with family, you are required to be at constant contact with your office.

Pros and Cons of Hourly Jobs

Pros

• The main advantage of hourly pay is you are paid for the time you work without any exceptions.
• You are entitled to receive overtime pay when you work for more than 40-hour/week. Employers may increase the amount of overtime pay than the normal in case you are working on a holiday.
• You may ask to increase your hourly rate in case the employer requests you to work overtime.
• Hourly employees have a better work-life balance.
• Unlike salaried employees, hourly employees are not held responsible if anything goes wrong with the company. You do not bear the responsibility of the company’s growth.

Cons

• No guaranteed salary. According to the availability of work and demand, you may sometimes get to work a lot of overtime while sometimes you may fail to work even 40 hours a week, therefore income is never fixed.
• Some companies do not allow hourly employees to work more than 40 hours per week, so they do not have to pay overtime. In this case, you will not be able to earn extra through extra hours of work.
• Very few or no benefit packages as compared to salaried employees.
• No sick days or vacations are allowed. If you fail to show up at work, you will not be paid.
• If a company is going through a tough time, hourly employees’ hours may get shortened or they may lose the job.