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Tips for Keeping on Top of Wages

As an employer, you have a duty to pay your employees wages or salaries. For many new business owners, getting used to scheduling a payroll and keeping on top of employees’ pay is a crucial learning curve. It can be hard to adjust and there are a number of legalities that you must comply with. We’ve put together some tips on keeping on top of wages as an employer.

Wages vs Salaries

First of all, you need to understand the difference between wages and a salary. The two phrases are often used interchangeably, but they do in fact relate to two different things.

Wages are generally paid hourly. For example, a person might earn $10 per hour. Employees who get paid wages are typically contracted a set number of hours per month, giving them a rough estimate of how much they can expect to earn as a minimum. If a person’s wages are $10 an hour and they are contracted 40 hours a week, they should expect to earn $400 a week. Depending on if overtime is available, they could earn more.

Those who earn a wage usually work on a rota basis and may expect to work over the course of weekends or at night. They could be paid weekly or monthly. It is important that employers who pay their employees an hourly wage adhere to the minimum wage guidelines set out by their local government.

Job roles that are generally paid hourly might include: cleaners, construction workers, warehouse workers, freelancers, retail workers, caterers and carers.

Salaries generally refer to the set amount a person is paid every year. The yearly amount is typically divided per month, and employees can expect to earn the same amount every year. Overtime is not a standard option for those who earn a salary. Salaries must encompass minimum wages set out in law.

Job roles that are generally paid on a salaried basis might include: accountants, technicians, doctors/nurses, teachers and office workers.

Set Pay Caps

The first step to keeping on top of wages is to set a threshold. You can do this by undertaking a job evaluation process to determine how much you should be paying your employees to remain competitive. Once you have a competitive base salary or hourly wage, you should consider setting a cap. As an employee progresses through their role and banks more time at your company, they will naturally expect a pay rise every now and then. A lot of companies set caps so that there is room for their employees to earn more, but only to a viable degree.

An increasing number of employees cite job progression as a major deciding factor on whether or not they take a position at a company. For example, a junior graphic designer will more than likely want the opportunity to progress to studio manager, undertaking various senior roles along the way. This is a good way to encourage employees who have reached their pay cap to stay. It might not be viable or reasonable to pay a junior graphic designer $60,000 a year, so you’d cap their pay at $30,000 a year and then – once they have enough experience – promote them to senior graphic designer where they can move up the pay grades.

This not only helps with staff retention, but with managing wages, too.

Be Honest and Open with Employees

The final tip we have for keeping on top of wages is to be open and honest with your employees. Don’t make promises you can’t keep, prepare employees for if they do hit their pay cap, and be honest if you run into financial difficulty and need to consider pay cuts.


Pair the above three tips with experienced pay roll staff/software, and you’ll find keeping on top of wages is much simpler than you had previously anticipated.

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