Difference Between Wages and Salaries – A Detailed Analysis

Wages and salaries are both income that employees receive during their work at the enterprise. However, not everyone can really distinguish the difference between wages and salaries . Understanding these differences helps employees grasp their rights and choose the appropriate form of employment. 1C Vietnam will guide you on how to clearly distinguish between these two concepts in labor practice.

1. Overview of wages and salaries

Wages and salaries are two concepts commonly used in the field of labor and employment in Vietnam. Although there are many similarities, these two concepts have fundamental differences in terms of law, calculation method and subject of application.

In the Vietnamese legal context, wages and salaries are clearly defined in the Labor Code and related legal documents. Distinguishing between these two concepts is not only academic but also has important practical significance for employees and employers.

1.1. What is wages?

Wages are the amount of money paid to an employee after completing a specific job.

According to the Vietnamese Labor Code, wages are understood as the amount of money that an employer pays to an employee to perform a certain job according to an agreement between the two parties. Wages are often applied to short-term, irregular or unstable jobs.

Common forms of wage payment include:

• Hourly wages: Workers are paid based on actual hours worked.
• Piece rate wages: Workers are paid based on the number of products completed.
• Wages under a contract: Workers are paid a fixed amount of money when they complete a specific job.

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1.2. What is salary?

Salary is the amount of money paid regularly to employees under an employment contract.

According to Vietnamese law, salary is the amount of money that the employer pays to the employee according to the labor contract, corresponding to the working time, productivity and quality of the work performed. Salary is usually paid periodically (monthly, quarterly or annually) and is stable.

Common types of salary payment in Vietnam include:

• Time-based wages: Calculated based on actual working time (month, day, hour)
• Piece rate wages: Calculated based on the quantity or quality of completed products.
• Salary based on revenue or profit: Calculated based on the business results of the enterprise

For example: An accountant works at a company with a salary of 12 million VND/month according to the labor contract. This is a salary because it is paid periodically every month and is stable.

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2. Difference between Wages and Salaries – Detailed Comparison and Illustrative Examples

Although wages and salaries are both forms of payment to employees, they have fundamental differences in terms of calculation, stability, benefits, and applicable subjects. Understanding these differences helps employees choose the form of employment that best suits their needs and circumstances.

2.1. Differences in calculation methods

Wages are calculated based on the number of hours worked, the number of products completed or the value of the work. This form is flexible and depends on the productivity of each individual. Workers receiving wages can be paid more or less depending on the amount of work completed.

Wages are usually calculated at a fixed rate for a certain period (usually monthly). This form ensures a stable income for employees, regardless of the actual amount of work completed during the month.

Example:

• Wages: A construction worker receives a wage of 400,000 VND/day. If he works 25 days in a month, he will receive 10,000,000 VND. If he only works 20 days, he will receive only 8,000,000 VND.
• Salary: An office worker signs a labor contract with a fixed salary of 10,000,000 VND/month. Whether he works 20 days or 22 days in a month (within the prescribed limit), this employee still receives the full 10,000,000 VND.

2.2. Differences in applicable subjects

These two forms of payment are often applied to different types of workers.

Wages typically apply to:

• General labor, seasonal labor or jobs that do not require high expertise
• Industries such as construction, agriculture, beauty services, repair
• Freelance, shift or piecework
• Workers without long-term contracts

Salary usually applies to:

• Long-term, highly specialized or managerial labor
• Industries such as office, engineering, education, healthcare
• Full-time job, with official labor contract
• Workers working in government agencies and large enterprises

2.3. Detailed comparison table between wages and salaries

2.4. Practical illustration

Here are some specific examples to illustrate the difference between wages and salaries in practice:

Example of hourly wages:

A cafe waiter who works 6 hours a day at a rate of 35,000 VND/hour will receive 210,000 VND/day. If the waiter works 5 days this week, the total income will be 1,050,000 VND. If the waiter only works 3 days next week, the income will drop to 630,000 VND.

Example of piece rate wages:

A tailor receives 50,000 VND for each finished product. If he sews 5 products in a day, his income will be 250,000 VND. If he sews 8 products in a day, his income will increase to 400,000 VND.

Example of fixed monthly salary:

A software engineer signs a labor contract with a fixed salary of 25 million VND/month. Whether there are 20 or 22 working days in a month, the engineer still receives the full 25 million VND. In addition, the engineer also enjoys welfare regimes such as social insurance, health insurance, paid leave, etc.

Example of piece rate wages:

A garment worker has a basic salary of 4.5 million VND/month and is paid an additional 20,000 VND for each product exceeding the norm. The production norm is 200 products/month. If the worker completes 250 products, the total income will be: 4.5 million + (50 × 20,000) = 5.5 million VND.

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3. Advice for employees when choosing a form of payment

The choice between receiving wages or salaries depends on many factors, including personal needs, financial situation, and career goals. Before making a decision, employees should carefully consider the following factors:

• Prioritize financial stability or income flexibility? If the employee needs a steady source of income to cover fixed expenses such as housing, tuition, etc., then a salary may be the more suitable choice. On the other hand, if the employee prioritizes time flexibility and is willing to accept an unstable income, a wage may be the better choice.
• Need for benefits and social security: Salary often comes with benefits such as social insurance, health insurance, paid leave, etc. If these factors are important to the employee, especially those with families, salary will be a more suitable choice.
• Skills and experience: Highly skilled workers can earn more money in the form of wages if they can complete more work in a shorter period of time. However, this requires experience and high productivity.
• Long-term career goals: If an employee wants to build a long-term career within an organization, advance and develop professionally, a salary form is often more suitable.
• Nature of work: Some professions such as art, design, writing, etc. are often suitable for the wage form, while professions such as finance, medicine, education, etc. are often suitable for the salary form.

4. Frequently asked questions about wages and salaries

Can an employee receive both wages and salary at the same time?

Legally, employees can receive wages from their main job under the employment contract and wages from side jobs at the same time. However, this must comply with the law on working hours and the terms of the main employment contract.

How are nominal and real wages different?

Nominal wages are the initial agreed wages, without taking into account inflation and purchasing power. Real wages are the real value of wages after taking into account inflation, accurately reflecting the purchasing and spending ability of workers.

Which industries commonly use wage payment?

Industries that commonly use wage payments include: construction, seasonal agriculture, domestic services (maids, repair work), freelance work, arts and entertainment, delivery services, and irregular shift work.

What are the advantages of piece rate wages over fixed wages?

Piece rate wages encourage workers to increase productivity, creating opportunities for increased income based on individual performance. This form is fairer because it is paid according to work results, and at the same time helps businesses control costs more effectively than fixed wages.

The difference between wages and salaries is reflected in many important aspects, from calculation method, stability to applicable subjects and accompanying benefits. Understanding these differences helps employees make choices that are appropriate to their personal circumstances and goals. Each form has its own advantages and limitations, suitable for different industries and laborers. 1C Vietnam recommends that employees carefully consider the factors before deciding on the appropriate form to ensure their rights and sustainable career development.

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