Salaries and Wages

 

Difference between salaries and wages: Salaries are a fixed, monthly remuneration typically for permanent employees whereas wages are paid on a weekly basis and are usually paid to temporary employees. 

Terminology 

  • Gross salary= basic salary + overtime, before deductions 

  • Net salary = basic salary-deductions  

  • Deductions  - money taken out of an employee's salary that goes towards their medical aid, pension etc. 

  • Contributions - some businesses can decide to contribute a sum of money towards employees’ medical aids, pensions or UIF

  • UIF - Unemployment Insurance Fund- money set aside in case of unemployment 

  • Pension Fund - money paid to a fund for retirement

  • Medical Aid - a fund for medical emergencies which may cost large amounts of money 

  • PAYE  - Pay-as-you-earn (taxed income) - tax on monthly earnings for each employee, paid over to SARS. NB!! The business cannot contribute towards PAYE, it comes solely out of the employees’ salaries. 

  • SITE - Standard Income Tax on Employees - annual tax on income 

  • SDL - Skills Development Levy - fund to improve employees’ skills 

  • Cost to Company (CTC) = gross salary + contributions 

  • Employees have the option to join a trade union to speak out agaisnt their rights and fairness in the workplace or to fight battles with employers. Eg NUMSA, COPE etc. 

Salaries Journal 

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Wages Journal

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In the salaries journal, overtime would have to be calculated and added to the gross salary for each employee. Bonuses will also be added to the gross salary. 

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Things to take note of: 

  • 13th Cheques are bonuses which is equal to ONE months salary 

  • No deductions on 13th cheques 

  • Be aware of when the give the ANNUAL expense for salaries - divide it by 12 to get the monthly amount, for wages it would be weekly 

References

  • Anon., 2007. The Answer series: Grade 11 Accounting. 2007 ed. Cape Town: The Answer.

  • Anon., 2019. Investopedia. [Online]. Available at: https://www.investopedia.com/ [Accessed 3 October 2019].

  • Doctor, K., 2015. FLIPHTML5. [Online]. Available at: http://fliphtml5.com/fkul/mgtf/basic [Accessed 1 October 2019].

  • T Hall, D. W. P. S. A. A. P. G. P. F., 2017. Accounting Study Guide. 2016 ed. Musgrave: New Generation Publishers .

Neha Pillay (2019)

Grade 10Keroshan PillayComment