Pay and

Benefits
Arranged by:

Syarifah Maiza Dwi

Putri

Maisarah

Raisyah Tri
Anggrayani

Ira Kristanti

Hidayatul Istiqamah

What is Wedges?
Wages is a fixed regular payment earned for work
or services, typically paid on a daily or weekly basis.
Wages are often associated with production
employees (sometimes referred to as "blue-collar"
workers), non-managers, and other employees whose
pay is dependent on hours worked. The pay for these
employees is generally stated as a gross, hourly rate,
such as "$13 per hour." Again, the "gross" amount
refers to the pay an employee would receive before
withholdings are made for such things as taxes,
contributions, and savings plans.

Employees receiving wages are often paid weekly or biweekly. To

determine the gross wages earned during a work period, the
employer multiplies each employee's hourly rate times the number
of work hours recorded for the employee during the work period.
Due to the extra time needed to make calculations for each
employee, hourly-paid employees typically receive their paychecks
approximately five days after the work period has ended.
When the hourly-paid employees have work periods that are weekly
or biweekly, but the company's financial statements cover calendar
months, the company will likely have to prepare an accrual-type
adjusting entry at the end of the month. If hourly wages are a
significant portion of a company's expenses, it is critical that the
company report the correct amount of wages expense that pertains
to the 30 or 31 days in the month, not the 28 days in a four-week
work period.

What is Salary?
Salary is a fixed regular payment, typically paid on a monthly
basis but often expressed as an annual sum, made by an
employer to an employee, especially a professional or whitecollar worker. Salaries are usually associated with "white-collar"
workers such as office employees, managers, professionals, and
executives. Salaried employees are often paid semi-monthly
(e.g., on the 15th and last day of the month) or bi-weekly (e.g.,
every other Friday) and their salaries are often stated as a gross
annual amount, such as "$48,000 per year." The "gross" amount
refers to the pay an employee would receive before
withholdings are made for such things as taxes, contributions to
United Way, and savings plans.

Since salaried employees earn a specified annual

amount, it is likely that their gross pay for each pay
period is the same recurring amount.
Throughout our explanation, bonuses paid to
employees and sales commissions paid to employees
will be considered to be part of salaries.

1. Overtime Pay
Overtime refers to time worked in excess of 40 hours per
week. Whether or not employees are paid for overtime
depends on each employee's job responsibilities and rate of
paysome employees are exempt from overtime pay and
some are not. For example, executives are considered to be
"exempt"; their employers are not required to pay them for
their overtime hours because (1) their compensation is high,
and (2) they can control their work hours. Executives do not
need state or federal wage and hour laws to protect them
from company abuse.

2. Overtime Premium Pay

An overtime premium refers to the "half" portion of
"time-and-a-half" or "time-and-one-half" overtime pay. For
example, assume an employee in the production
department is expected to work 40 hours per week at $10
per hour. If the employer requires the employee to work 42
hours in a given week, the extra two hours are paid at timeand-a-half and the employee earns a total of $430 for the
week (40 hours x $10 per hour, plus 2 overtime hours x
$15 per hour). It can also be computed as 42 hours at the
straight-time rate of $10 per hour plus 2 hours times the
overtime premium of $5 per hour.

What is Benefit?
Benefits is something that an employee receives from
the company they work for, other than their usual pay, for
example private us of a company car, mobile phone or
health insurance in addition to their salary. Benefits are
usually subject to tax.
Where the employee receiving such benefits is a
director of the company concerned, the benefits are taxable
regardless of the level of remuneration. The liability to tax
also applies in respect of benefits provided by an employer
for a member or members of an employee's family or
household.

In addition, employees and directors are

chargeable to tax in respect of 'perquisites' from
their employment, that is, remuneration in nonmoney form which is convertible into money or
money's worth, for example vouchers in various
forms, the payment of club subscriptions and
medical insurance premiums on an employee's
behalf.

Example of Wages
Wages is best associated with employee compensation based
on the number of hours worked multiplied by an hourly rate
of pay. For example, an employee working in an assembly
plant might work 40 hours during the work week. If the
person's hourly rate of pay is $15, the employee will receive a
paycheck showing gross wages of $600 (40 x $15). If the
employee had worked only 30 hours during that week, her or
his paycheck will show gross wages of $450 (30 x $15).
Because the paycheck needs to be computed based on the
actual hours worked, the employee earning wages will likely
receive her or his paycheck five days after the work period.

Example of Salary
Salary is best associated with employee compensation
quoted on an annual basis. For example, the manager of the
assembly plan might earn a salary of $120,000 per year. If
the salaried manager is paid semi-monthly (perhaps on the
15th and last day of each month), her or his paycheck will
show gross salary of $5,000 for the half-month. Since the
salary is the same amount for each pay period, the salaried
employee's paycheck will likely cover the work period
through the date of the paycheck.

Example of Benefits
Benefits in kind are sometimes called perks or fringe
benefits. They include things like company cars, private
medical insurance paid for by the employer and cheap or free
loans. Some benefits in kind will not be taxed. Benefits in
kind will not be taxed for people who earn less than their
personal allowance. Some benefits in kind will be taxed for
everyone, whatever their income. For example, Mr Smith's
salary, pension, and benefits in kind, including a company
car and medical insurance, amounted to 289,627 for the
year 2010.

Main Differences Between

Wages and Salary
Basis for Comparison

Wages

Salary

Payment period

Daily or Weekly

Monthly

Skills

Skilled Personel

Type of Cost

Semi-skilled or
Unskilled
Variable

Basis of Payment

Hourly Basis

Performance Basis

Paid to Whom

Labor

Employees

Extra Pay for Extra

Hour Worked

Yes

No

Fixed