A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis. Salary can also be considered as the cost of hiring and keeping human resources for corporate operations, and is hence referred to as personnel expense or salary expense. In accounting, salaries are recorded in payroll accounts.
A salary is a fixed amount of money or compensation paid to an employee by an employer in return for work performed. It is typically paid at fixed intervals, such as monthly payments equal to one-twelfth of the annual salary.
Salaries are typically determined by comparing market pay-rates for people performing similar work in similar industries in the same region. Salary is also determined by leveling the pay rates and salary ranges established by an individual employer. Salary is also affected by the number of people available to perform the specific job in the employer's employment locale (supply and demand).
The total remuneration for work includes employee benefits and gross salary. Payroll taxes and income tax reduce the net or disposable income.
History
First paid salary The first salaried work would have required a society advanced enough to have a barter system which allowed for periodic exchange of goods or services. Some infer that the first salary would have been paid in a village or city during the Neolithic Revolution, sometime between 10,000 BCE and 6,000 BCE.
A cuneiform inscribed clay tablet dated about 3100 BCE provides a record of the daily beer rations for workers in Mesopotamia. The beer is represented by an upright jar with a pointed base. The symbol for rations is a human head eating from a bowl. Round and semicircular impressions represent the measurements.
By the time of the Hebrew Book of Ezra (550 to 450 BCE), receiving salt from a person was synonymous with drawing sustenance, taking pay, or being in that person's service. At that time, salt production was strictly controlled by the monarchy or ruling elite. Depending on the translation of Ezra 4:14, the servants of King Artaxerxes I of Persia explain their loyalty variously as "because we are salted with the salt of the palace" or "because we have maintenance from the king" or "because we are responsible to the king".
Salarium The word "salary" comes from Latin salarium 'pertaining to salt' (sal 'salt'), but the exact connection is not known; a persistent modern claim that the Roman Legions were sometimes paid in salt is baseless. It may have been a salt allowance, but even that is not supported by ancient sources.
Roman empire and medieval and pre-industrial Europe Regardless of the exact connection, the salarium paid to Roman soldiers has defined a form of work-for-hire ever since in the Western world, and gave rise to such expressions as "being worth one's salt".
Within the Roman Empire or (later) medieval and pre-industrial Europe and its mercantile colonies, salaried employment appears to have been relatively rare and mostly limited to servants and higher status roles, especially in government service. Such roles were largely remunerated by the provision of lodging, food, and livery clothes (i.e., "food, clothing, and shelter" in modern idiom). Many courtiers, such as valets de chambre, in late medieval courts were paid annual amounts, sometimes supplemented by large if unpredictable extra payments. At the other end of the social scale, those in many forms of employment either received no pay, as with slavery (although many slaves were paid some money at least), serfdom, and indentured servitude, or received only a fraction of what was produced, as with sharecropping. Other common alternative models of work included self- or co-operative employment, as with masters in artisan guilds, who often had salaried assistants, or corporate work and ownership, as with medieval universities and monasteries.
Commercial Revolution Even many of the jobs initially created by the Commercial Revolution in the years from 1520 to 1650 and later during Industrialisation in the 18th and 19th centuries would not have been salaried, but, to the extent they were paid as employees, probably paid an hourly or daily wage or paid per unit produced (also called piece work).
Share in earnings In corporations of this time, such as the several East India Companies, many managers would have been remunerated as owner-shareholders. Such a remuneration scheme is still common today in accounting, investment, and law firm partnerships where the leading professionals are equity partners, and do not technically receive a salary, but rather make a periodic "draw" against their share of annual earnings.
Second Industrial Revolution From 1870 to 1930, the Second Industrial Revolution gave rise to the modern business corporation powered by railroads, electricity and the telegraph and telephone. This era saw the widespread emergence of a class of salaried executives and administrators who served the new, large-scale enterprises being created.
New managerial jobs lent themselves to salaried employment, in part because the effort and output of "office work" were hard to measure hourly or piecewise, and in part because they did not necessarily draw remuneration from share ownership.
As Japan rapidly industrialized in the 20th century, the idea of office work was novel enough that a new Japanese word (salaryman) was coined to describe those who performed it, as well as referencing their remuneration.
20th century In the 20th century, the rise of the service economy made salaried employment even more common in developed countries, where the relative share of industrial production jobs declined, and the share of executive, administrative, computer, marketing, and creative jobs—all of which tended to be salaried—increased.
Salary and other forms of payment today Today, the concept of a salary continues to evolve as part of a system of the total compensation that employers offer to employees. Salary (also now known as fixed pay) is coming to be seen as part of a "total rewards" system which includes bonuses, incentive pay, commissions, benefits and perquisites (or perks), and various other tools which help employers link rewards to an employee's measured performance.
Compensation has evolved considerably. Consider the change from the days of and before the industrial evolution, when a job was held for a lifetime, to the fact that, from 1978 to 2008, individuals who aged from 18 to 44, held an average number of 11 jobs. Compensation has evolved gradually moving away from fixed short-term immediate compensation towards fixed + variable outcomes-based compensation. An increase in knowledge-based work has also led to pursuit of partner (as opposed to employee) like engagement.
Salary surveys provide data on salaries for specific jobs throughout the market. Organizations may use salary survey data to develop and update their compensation packages. Individuals may use salary survey data in salary negotiations.
By country
Botswana In Botswana, salaries are almost entirely paid on a monthly basis with pay dates falling on different dates of the second half of the month. Pay day usually ranges from the 15th of the month to the last day. The date of disbursement of the salary is usually determined by the company and in some cases in conjunction with the recognized Workers Union.
The Botswana Employment Act Cap 47:01 Chapter VII regulates the aspect of protection of wages in the contracts of employment. The minimum and maximum wage payment period with the exception of casual employees should not be less than one week or more than a month, and where not expressly stipulated a month is the default wage period per section 75 of the Act payable before the third working day after the wage period. The wages are to be paid during working hours at the place of employment, or in any other way, such as through a bank account with the consent of the employee. Salaries should be made in legal tender, however, part payment in kind is not prohibited provided it is appropriate for the personal use and benefit of employee and his family, and the value attributable to such payment in kind is fair and reasonable. The payment in kind should not exceed forty per cent of the total amount paid out to the employee.
The minimum wage is set, adjusted, and may even be abolished by the Minister on the advice of the Minimum Wages Advisory Board for specified trade categories. These categories include building and construction, hotels, catering, wholesale, watchmen, domestic services, and the agricultural sector, among others. The current minimum wages for these sectors are set out in the subsidiary legislation under the Act.
Women on maternity leave are entitled to 25% of their salaries as stipulated by the Employment Act but the majority of the companies pay out at about 50% for the period.
Denmark Trilateral negotiations (Danish: "trepartsforhandlinger") between employers', employees' & state organizations determine a collective remuneration agreement for most Danish privately employed blue-collar employees for a period of typically 3 or 4 years. Such an agreement is known as an "overenskomst" or just OK and covers an agreement between a specific employee union ("fagforening"/"fagforbund") and a specific employer organization ("arbejdsgiverforening"/"arbejdsgiverorganisation").
Political agreements made in 1997, known as "Ny Løn" (English: "new remuneration"), instigated a formal remuneration system that almost all employees in the Danish Government are employed under. An individual's remuneration consists of five components: grundløn (): base salary derived from education level & seniority kvalifikationsløn (): additional salary based on qualifications (additional formal or non-formal education, language or social skills etc.) funktionstillæg (functional supplement): additional salary paid for responsibilities of the specific role not covered by the above resultatillæg (achievement supplement): additional salary paid for specific predetermined achievements, typically used for long-term motivation of leadership engangstillæg (one-time supplement): additional salary paid to honor an outstanding effort, typically paid yearly
There is no minimum salary determined by law. A salary is often discussed or given as a gross monthly salary ("månedlig bruttoløn") which is pre-tax but including any pension benefits required by collective agreements ("overenskomst") to be deposited by the employer. This typically amounts to 8-12% of the monthly net salary ("månedlig nettoløn"), of which the employee is also obligated to deposit a part, typically another 4-6%.
European Union According to European law, the movement of capital, services and (human) resources is unlimited between member states. Salary determination, such as minimum wage, is still the prerogative of each member state. Other social benefits, associated with salaries are also determined on member-state level.
India In India, salaries are generally paid on the last working day of the month (Government, Public sector departments, Multi-national organisations as well as majority of other private sector companies). According to the Payment of Wages Act, if a company has less than 1,000 Employees, salary is paid by the 7th of every month. If a company has more than 1,000 Employees, salary is paid by the 10th of every month.
Minimum wages in India are governed by the Minimum Wages Act, 1948.Details on the same can be seen at http://labourbureau.nic.in/wagetab.htm . Employees in India are notified of their salary being increased through a hard copy letter given to them.
Italy In Italy, the Constitution guarantees a minimum wage, as stated in Article 36, Paragraph 1