What is the salary calculator's purpose, and how to use it?

Salary

Salary is defined as the regular payments made to the employee by the employer for the accomplished work. Salary is an employee's annual figure in an employment contract I signed upon hiring. Salary can be accompanied by additional compensation such as goods or services.

Wages

Wages are paid depending on the amount of time worked, mostly in hours. Wage-earners tend to be non-exempt as they are subject to overtime wage regulations by the government to protect workers. Wage-earners earn less than salaried employees.

Salary vs. Wages!

Skills required

Salary – high skill set, licensed professionals such as lawyers and doctors termed as white-collared employees.
Wages – unskilled or semi-skilled workers. They are known as blue-collared employees.

Cost structure

Salary – Paid at a fixed rate.
Wages – Rate is variable

Frequency of Payment

Salary – monthly at a predetermined annual amount which is distributed over 12 months throughout the year.
Wages – Daily/weekly payment depends upon the employment

Basis of payment

Salary – a fixed amount is paid as decided, and the variable factor depends on the performance.
Wages – the hourly rate is decided as per the industry trends

Recipients

Salary – salaried workers, generally referred to as employees
Wages – Wages workers are referred to as labor

Nature of jobs

Salary – office and administrative jobs
Wages – Manufacturing or process-related jobs

Performance review

Salary – Most salaried guys have their performance at periodic intervals and decide on their increment of salary
Wages – No performance review system here.

Resignation

Salary – a salaried class has a notice period that allows the employer to find a replacement with the same skill set.
Wages – there is no such notice period for wages

Leaves

Salary – a salaried worker has a predefined schedule of the paid leaves
Wages – a wage worker has no schedule.

Examples

Salary – Doctors, lawyers, bankers, etc
Wages – Construction workers, bus drivers, carpenters, welders, electricians, etc

Salary Calculator

The salary calculator converts salary amounts to values based on payment frequency. An employee must fill in CTC. Bonus included in CTC, monthly professional tax, monthly employer PF, monthly employee PF and additional deductions in the designated box to get the net result.

A salary calculator is designed to help you access your finances. Some of the salary calculators which is helpful for the plan are listed below:

• The Take-Home calculator

• The Hourly Wage calculator

• The Maternity / Sick Pay calculator

• The Required salary calculator

• Two jobs salary calculator

• Pro-rata salary calculator

• Two salary comparison calculator

• The Mortgage repayment calculator

• The Debt consolidation calculator

Components of salary structure!

Basic Salary

The basic salary is 40% to 50% of the total salary. An employee earns based on experience, knowledge, skills, and qualifications.

House Rent Allowance (HRA)

HRA is a component of the salary offered by the employer to the employees who live in rented housing. It is taxable if the employee does not live in a rented house.

Leave Travel Allowance (LTA)

An employee can also receive LTA, and an employer gives an allowance to the employer for travel costs and expenses.

Professional tax

Professional tax is the tax on employment that is levied by the state. The state can charge a maximum of Rs 2500 as a professional tax.

Special Allowance

In the salary structure, an employee may receive a special taxable allowance.

Bonus

An employee may earn a performance incentive from an employer that is referred to as Bonus.

Employee Contribution to the Provident Fund (EPF)

Based on EPF, the employer and the employee contribute 12% of the employee’s basic salary each month.

Benefits of the salary calculator

Quick results – It is a hand salary calculator; you can calculate the take-home salary within seconds.

Identifies changes – this calculator helps you to find the changes in salary structure when an employee receives a bonus or deduction.

Clear Bifurcation – the salary calculator bifurcates and defines the amounts and deductions precisely.

Availing estimation helps to estimate and get a clear idea about the monthly and annual deductions and employee and employer's contribution towards EPF.

Pay frequencies!

Monthly

A monthly payment frequency results in 12 paychecks per year. Dividing the yearly salary by 12 will give you the gross pay for each month. A monthly payment frequency is for salary employees but for hourly employees can be paid monthly.

Semi-Monthly

A Semi-Monthly payment frequency results in 24 total paychecks per year. Divide the yearly salary by 24 to get the payments. Employers chose to pay their employees on the 1st and 15th of each month on a semi-monthly payment.

Bi-Weekly

A Bi-weekly payment frequency generates 26 paychecks per year in a normal year and 27 in a leap year. Employers will pay their employees every two weeks on a specific day. Paychecks differ from two to three each month, depending on the pay date falls.

Weekly

A weekly pay frequency results in 52 paychecks in a year. Paychecks are issued once a week. It is like bi-weekly pay frequency; weekly pay is commonly used to pay hourly employees.

How unadjusted and adjusted salaries are calculated?

Unadjusted salary accounts for all earnings before subtracting deductions like unpaid time off and federal withholdings. The remaining amount is known as an adjusted salary.

Example:

If a contracted IT support specialist for a year makes $20 per hour and works 40 hours a week, the annual unadjusted salary can be calculated as follows:

$20 per hour x 2080 hours worked per year = $41,600 per year

Account for one week of unpaid time off, or 40 hours of unpaid time, adjusted salary can be calculated as follows:

$20 per hour x 2040 hours worked per year = $40,800 per year

U.S. salary information!

According to the fair Labor Standards Act, salaried employees in the U.S. are often known as exempt employees. They make at least $684 per week, receive a salary, and perform job responsibilities. The federal wage rate is $7.25 an hour. The District of Columbia has the highest rate of $16.50. Georgia has a minimum wage rate set at $5.15.

Factors that influence salary and wages in the U.S.!

Age

A person who is 40-55 can have high salaries.

• Men aged 45 to 54 had the highest annual earnings at $72,696,
• women aged 35 and 44 have earned $56,472.

• Workers 25 or over without education or school degree had earnings of $35,984

• $45,032 for high school graduates.

• Workers with a bachelor's degree can earn $81,432 annually

Experience

A person with more experience or valuable career skills can have a higher salary.

Race and Ethnicity

• Black men earned a median salary of $47,944

• White men earned $61,984

• Black women earned $43,160

• White women earned $51,480

• Both genders, Hispanic and Asian people, earned $44,772 and $74,984

Different Locations have different supply and demand positions, and average salaries in each area will reflect this. The Cost of living is noted when comparing salaries.

Federal holidays in the U.S.!

• January – New Year's Day, the Birthday of Martin Luther King Jr.
• February – Washington’s Birthday
• May – Memorial Day
• June – Juneteenth National Independence Day
• July – Independence Day
• September - Labor Day
• October – Columbus Day
• November – Veterans Day, Thanksgiving Day
• December – Christmas Day

All the above 11 days are considered federal holidays in the U.S. companies allow time off for 6 to 11 holidays.

The formula for salary calculation!

Take Home salary = Gross salary – Income Tax – Employee’s PF contribution – Prof.Tax.

Gross Salary = Cost to Company – Employer’s PF contribution – Gratuity

Gratuity = (Basic salary + Dearness allowance) x 15/26 x No. Of years of service.

Taxable Income = Gross Salary – Employee's PF contribution/PPF investment – Tax-Free allowance – HRA – LTA- Medical Insurance – Tax. Saving Investments – Other deductions.

Conclusion!

A salary or wage is the payment from an employer to a worker for time and contributions. Most countries enforce minimum wages. You can get pay frequency inputs using the salary calculator, which assumes 52 weeks or 260 weekdays per year. This calculator is very useful for calculating the accurate salary.

FQA’s!

Components of salary structure!