Global HR Glossary

What are the Differences Between Hourly and Salary Employees?

Hourly employees are paid based on the actual hours worked and may receive overtime pay for hours worked beyond the standard workweek, typically calculated using timecards or timesheets.

Salaried employees, on the other hand, earn a fixed annual amount, paid in consistent installments regardless of the number of hours worked, often exempt from overtime.

Implications for workforce management

This distinction is crucial for payroll management and labor compliance. Understanding whether employees are hourly or salaried helps employers structure compensation packages appropriately and manage workforce expectations regarding overtime, benefits, and job stability.