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Wages vs Salary: Which are you better to be on?

Written by

Shaun McGowan

Before we start, there’s one thing we need to get straight. What’s the difference between wages and a salary?

  • Wages are calculated and paid based on how many hours a week you work.
  • A salary is a fixed amount (such as $50,00 a year) that you’ll be paid in instalments (usually monthly or fortnightly). No matter how much overtime you do, you’ll still receive the same amount.

So, which is best for you, salary or wages?

Let’s look at the pros and cons of both

Wages: pros and cons


  • First, your employer is required to pay you for how many hours you work, including overtime.
  • The chances are, you’re more likely to have a better balance between your work and home life, since once you’re off the clock, you’re (hopefully) done with work.
  • And if your company allows you to work overtime you’re at an advantage, because if you have to put in extra time to get the job done, you’ll also bring home extra pay.
  • Overtime hours may also attract higher rates, especially if you work on a weekend or public holiday – if so, they’ll be even more valuable.


  • If your company starts to fall on hard times, your hours and pay may be at risk.
  • If you can’t get in all the hours you want (because your shift isn’t available, or because you’re sick / have to take care of your family / need a holiday) you could quickly end up short on cash, because you’ll only get paid for the hours you work.
  • As an hourly employee you may also miss out on benefits and bonuses that are exclusive to salaried employees.

Salary: pros and cons


  • The most obvious thing to think about is that your pay will be a set amount, whether you work 30 or 50 hours.
  • That means that you won’t lose out on pay (although your employer may have some questions to ask!) if you don’t put in your full 38 hours a week (or however many hours you’re contracted to work).
  • Salaried employees also tend to get better benefit packages and bonuses that aren’t offered to hourly employees.
  • This is because salaried employees often have higher tier jobs (e.g. management roles) than hourly employees.
  • As a salary-earner, you’ll probably also get paid annual leave and personal leave, which means you can take time off when you need to without having to worry.


  • Even if you’re working 50+ hours a week, you’ll still be bringing home the same amount of money. You don’t get the benefit of being paid for overtime, which is not fun when you have to work over the weekend and after hours.
  • Salaried jobs are also often considered to be more stressful than typical hourly wage jobs. You may even find that a salaried job offers a lower hourly rate than a casual, wage-based job.
  • Hang on, that can’t be right, can it? Actually, yes – because your total salary package will include all the benefits you receive – like sick leave and holiday pay, and extra perks like health cover that some employers may offer.
  • Your overall package may be more, but the actual amount of cash in your account each fortnight may be lower. (Remember, though, that it will be in your account every fortnight, even if you’re on vacation).


So what’s the takeaway here?
As a salaried employee, you’ll probably have access to better employee incentives, like paid holidays and sick leave, plus the reassurance of regular income regardless of how many hours you work.

But there may be a lot more work and stress involved, and you won’t get any extra pay for working more than your standard hours.

Before you decide if a salaried job is right for you, you’ll need to find out what sort of benefits are on offer.

If you decide that an hourly wage is what you’d prefer, you’ll get the reap the benefits if you work extra hours (if you employer allows it). And if overtime qualifies for a higher rate, getting time and a half or double time pay can really add up.

Depending on your employer, you may also have the flexibility to swap shifts, and work more or fewer hours as you need to.

But flexibility comes at a price – lack of security.

  • If your employer cuts your hours, or if you can’t work for some reason, you’ll only be paid for the hours you put in.
  • If you choose to stick to hourly wages, you should also find out what benefits you can access, and how likely it is that you’ll be asked to work more, or less, than 38 hours a week.
  • If your employer can guarantee a steady stream of work, you may prefer to steer clear of the extra stress that often comes with a salary package.

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About the Author

Shaun McGowan from



Shaun McGowan

Shaun is the founder of and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded and Lend.


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