What does "salaried" vs. "hourly" mean in a European (?) context?

Question

I am confused about the meaning of "salaried" vs. "hourly" payment, when it comes to matching it up with work life as I know it.

I think I know the abstract definition; to paraphrase what is e.g. outlined in the tag description:

• A salaried employee receives a fixed amount of money (e.g. each month), and it doesn't matter how many hours they actually work.
• An employee who is paid by the hour receives a certain amount of money for each hour worked, and they are paid the exact amount of money matching the hours worked.

This is explained time and again in many posts on this site, e.g. in that answer (to name just a single example):

(...) someone accused you of "stealing" by working a half-hour less. (...) for a paid employee I don't think this accusation would make sense. If you were paid by the hour, your time-tracking would reflect your 9-to-16:30 workday, so you wouldn't be paid for the missing half-hour anyway. If you were salaried, you'd be expected to use your professional judgment about how you provide value to the company and when you do your most productive work.

So, what am I?

The following statements apply to me (as per my work contract and/or as a direct consequence thereof):

• I get a fixed annual salary of X €, distributed evenly across 12 months.
• The regular weekly working time is 40 hours.
• When necessary for the company, I can be required to work overtime within legal limits, for which (as per the contract) I receive no extra money.
• In practice, I can compensate for said overtime by working less on other days, though it is not guaranteed, should there ever be so much existentially crucial work to be done.
• If possible while meeting the job requirements, I can use flextime to compensate for that overtime.
• If I work less than those regular 40 hours, I will not get proportionally less money, but (at the very least) a reprimand (the rationale being that I am supposed to work for 40 hours for my money, as stated in my contract, and not less).

As far as I can tell, something like this is pretty much the norm at least in software development (probably covering many more types of jobs) at least in Germany (possibly in most or all of the EU), for all levels, i.e. starting at entry-level positions up to project management.

So, would I describe this arrangement as:

• "salaried" - because a fixed salary is agreed upon in advance and there is no way the salary gets adapted based on my working hours

or as

• "hourly" - because it very much plays a role how many hours I work and working less than agreed upon would imply I get some of my payment undeservedly

?

Answer 1

The distinction doesn't make much sense because labour law in germany means that an employee can pretty directly convert between hourly wage and monthly gross salary, and we switch back and forth between both points of view.

• This is because the employment contract must specify both the working time (weekly or monthly hours) and either the monthly gross salary (which can basically be divided by the fixed number hours) or the hourly wage (from which the monthly gross can be calculated).
  (There are 13/3 weeks in a salary month)

• A time sheet must be kept for almost all (salaried) employees

• Employees have the right to temporarily or permanently "downsize" their contract to part-time, and to go back to full-time, with their monthly gross being proportionally adjusted (i.e., a hourly wage is applied to the working hours).

• German labour law makes free time the preferred compensation for overtime, and even prescribes that the free time must be given within a specified time frame. Payment for overtime will then happen only when the employment contract ends before the overtime can be compensated by free time (same for holidays).

(There are special rules for e.g. shifts and on-call time, and more extensive possibilities in certain sectors like healthcare)

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Because the working contract has to specify weekly/monthly working hours, hourly payment without a pre-agreed number of hours is legal only outside employment contracts. I.e., with self-employed/freelancers/business-owners and of course a business may bill their customers by the hour (but has to pay their employee for the pre-agreed number of hours per week/month).

Answer 2

This is salaried.

My working contract (UK) works in exactly this way.

My contract states a particular number of hours I should work each week, but this is flexible. I keep a time sheet so if I work more hours one week, I can choose to work fewer the next week or vice versa within pre-agreed limits.

If a particular project requires overtime, this can be paid extra with pre-agreement with my manager.

Answer 3

I mean, from what you've described (especially the part about working the occasional OT for no OT Pay) is quintessential Salaried.

Answer 4

The way you defined salaried and hourly the vast majority of workers in Germany are not covered by either definition.

I would understand salaried to mean you have a work contract that specifies not only your salary but also the numbers of hours (usually per week) as well as a whole list of other conditions and rules of your work. This covers the vast majority of workers.

An hourly paid worker is essentially someone who is self-employed and rents out their services by the hour. This is only suitable for some specific tasks, for most tasks self-employed people are paid per task done and the amount of hours they spend on it is not part of the contract.

Answer 5

The concept of hourly vs. salaried doesn't really apply in Germany.

Answer 6

There isn't always a clear distinction between salaried and hourly employees.

Traditionally, hourly employees were those who had to clock in and out (in some way or another), and who had their wages reckoned according to their start and finish times. If they didn't turn up they didn't get paid during their absence, if they chose to leave early then their pay stopped, and if they were laid off and told to go then their pay stopped on departure. Any kind of "overtime" (however defined) is also paid for. The employment was often "at will".

Salaried employees were often "staff" in the traditional sense - permanent employees who performed various supporting functions, who were typically responsible for setting their own pace of work and attending as necessary, and whose pay was not reckoned according to hours of attendance or measurable output. The traditional implication of being salaried was that pay would continue during holidays, sickness, or any other kind of absence (such as adverse weather, or bereavement).

Nowadays, hourly employees are often entitled to holidays by law, may be covered for sickness, and salaried employees might not be considered particularly responsible workers, may have their hours and working pace monitored closely, and may be entitled to no sick pay and no more leave than those on hourly pay.

Partly what has eroded the distinction is that the law has over time reduced the legal scope for distinction, and partly more jobs have come to resemble the traditional staff jobs in content more closely than they resemble "workforce" jobs.

Answer 7

As far as I'm aware, you'd not be 'hourly'. But I don't know of any contract in Europe that works the way you say.

Contracts for a fixed-time, or unrestricted duration are always 'x€ / month for 40 hours of work' with any work above those 40 hours being compensated either in money or granted as time-off later.

In those cases you'd be expected to work at least 40 hours for obvious reasons, but you wouldn't lose any money if you did happen to work less (your manager would probably be pissed off though).