Wages and salaries are the remuneration paid or payable to employees for work performed on

behalf of an employer or services provided. Normally, an employer is not permitted to withhold the
wages or any part thereof, except as permitted or required by law. Employers are required by law to
deduct from wages, commonly termed "withhold", income taxes, social contributions and for other
purposes, which are then paid directly to tax authorities, social security authority, etc., on behalf of
the employee. Garnishment is a court ordered withholding from wages to pay a debt.
Wages and salaries are typically paid directly to an employee in the form of cash or in a cash
equivalent, such as by cheque or by direct deposit into the employee's bank account or an account
directed by the employee. Alternatively, all or a part may be paid in various other ways, such as
payment in kind in the form of goods or services provided to the employee,[1] such as food and
board.
For tax purposes, wages and salaries normally do not include other non-cash benefits received by
an employee, such as flights, payment of school fees etc. These are usually referred to as fringe
benefits.
In the national accounts, in accordance with the System of National Accounts, wages and salaries
are the sum of remuneration paid to employees, including the values of any social
contributions, income taxes, etc., payable to employees. For administrative convenience, or due to a
legal requirement or some other reason all or a part of such payments may actually be withheld by
the employer and paid directly to tax authorities, etc., on behalf of the employee. However, labour-
related expenses of a business, such as payroll taxes, pension fund contributions, social
insurance schemes, workers compensation insurance, etc., are not counted as wages and salaries
for national accounts purposes. Similar concepts apply to general accounting treatment of labour
expenses.
Wages and salaries in cash consist of such amounts payable at regular intervals, such as weekly,
monthly or other intervals, including payments by results and piecework payments; plus allowances,
such as those for working overtime; plus amounts paid to employees away from work for short
periods (e.g., on holiday, sick leave, etc.); plus ad hoc bonuses and similar payments; plus
commissions, gratuities and tips received by employees.
Wages and salaries in kind consist of remuneration in the form of goods or services that are not
necessary for work and can be used by employees in their own time, and at their own discretion, for
the satisfaction of their own needs or wants or those of other members of their households.

What is the difference between wages and

salary?
You should be aware that some people use the terms wages and salary interchangeably. I and
many others make the following distinction.

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 wageswill likely receive her or his paycheck five days after the work period.

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.

Generally, the hourly-paid employees will earn wages at the rate of time and one-half for the
hours in excess of 40 per week. The salaried employees in high pay positions are not likely to
receive additional pay for the hours in excess of 40 per week. However, employees with low
salaries are entitled to overtime pay. (In the U.S. see your state's laws and the federal wage and
hour laws.)