What is a salary?

The periodic income that a worker receives for the performance of his work

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It is the payment that a person periodically receives for the performance of their work.

For this, the employee and the employer commit themselves by formalizing a contract, by which the employer pays a salary in exchange for the employee’s work.

Said work may be translated into the creation of a good or the provision of a service, for others.

Salary characteristics

The salary in essence must be principally and compulsorily money, in addition, as an additional and optional part, it may include remuneration in kind, depending on the terms of the contract.

If the periodicity of the salary is daily, it is called “wage”. In addition to the salary itself, we can add the payment of bonuses, overtime pay, overtime and other compensation for dangerousness, night work, etc.

Salary objectives

The objectives that the salary remuneration intends to achieve are the following:

  • The salary seeks to value monetarily the work performance by the employee.
  • In addition, it is a method used to motivate workers, since it is an essential part for the development of their lives.
  • Salary is a very powerful method of negotiation between workers and employers and widely used when it comes to retaining certain employees within the company.

Salary Function

Salary also has its own function. In this function, the boss or boss cannot adjust the nominal likes. But it must be with the value of every employee who works in his company. The following functions:

  • The salary function is to attract a worker who has certain skill skills into an organization.
  • In addition, salaries also serve to encourage employees to be more active and increasingly show high achievement.
  • Salary function to build employee performance during a long period of time.

Basically this salary is to motivate someone to do something that he does in a nominal form that has been determined in accordance with what is done.

Role of Salary

Besides having an important function for the company, salary also has a role that is no less important. So, the role of salary can be viewed from two parties, namely:

Employer Aspects

Salary is a basic element in calculating the cost of production and components in determining the cost of goods that can determine the survival of the company.

If a company gives too high a salary, it will result in a high base price as well and if the salary given is too low it will cause the company to have trouble finding workers.

Aspects of work recipients

Salary is income received by someone and is used to meet their needs. Salary is not the only motivation of employees in achievement, but salary is one of the important motivations that encourage employees to excel.

So the high and low salary given will affect the performance and loyalty of employees.

Salary Forms

Now, we turn to forms. So the salary has forms in accordance with the criteria, here are the forms of salary:


The amount of salary given to employees is in accordance with the position and services provided to the company. And the minimum base salary has been set at the time the employee first worked.


This form of payroll has two types, namely food and transportation fees, and another there is overtime pay, the following explanation:

Food and Transport Money

This is an addition that an employee will receive other than his base salary and is calculated based on his level and position according to his expertise. By way of calculation per day but is given at every salary.

Overtime pay

The nominal in overtime pay will vary from company to company. Because the company has its own nominal every hour. But the determination of overtime has also been regulated in the law.


Benefits are given to each employee based on their needs and are usually given at one month’s salary.

Yearly bonus

Is a bonus given to employees in a year if the company is in a profit or profit position, which is every December, and the amount of bonuses is given in accordance with the work performance of each employee.

Purpose of Payroll

After that, salary also has a purpose. Here are the objectives of payroll:

Collaborative ties

With the provision of salary there is a formal partnership between the employer and the employee. Employees must do their duties properly, while employers or employers must pay salaries in accordance with agreed agreements.

Job satisfaction

With service fees, employees will be able to fulfill their physical, social status and selfish needs so that they can get job satisfaction from their positions.

Effective procurement

If the salary program is set large enough, the procurement of qualified employees for the company will be easier.


If the services provided are large enough, the manager will easily motivate his subordinates.

Employee stability

With a compensation program on the principle of fair and reasonable as well as external consistency that is comparative, employee stability is guaranteed because turnover is relatively small.


With the provision of substantial rewards, employee discipline is getting better. Employees will realize and obey the rules that apply.

Trade union influence

With a good compensation program the influence of trade unions can be avoided and employees will concentrate on their work.

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