Annual Vs. Hourly Salary

Annual Vs. Hourly Salary

Learn about Hourly salary with Taarzan
Taarzan, The Wonder Car 2004

Movie Case Study

The scene you just saw shows Raj (played by Vatsal Seth) questioning his employer (Kartar Singh, played by Amrish Puri) about the pay cut. Raj is a car mechanic and works at a garage. Kartar Singh has deducted Raj’s pay as he didn’t show up at work for three days. Learning Perspectives blog will explore the meaning of annual and hourly salaries.

Annual Vs. Hourly Salary

The annual salary is the income earned over a year. People drawing annual salaries are usually not paid for the hours they work. They receive a regular salary that is fixed in nature. These jobs can be related to managerial or any other professional job. Salaried employees tend to get additional benefits as well.

In the case of the hourly salary, individuals are paid according to the number of hours contributed. Common hourly jobs are mostly teachers, visiting faculties, tutors, etc. These jobs can be in the areas related to consultancy as well.

Annual Vs. Hourly Salary
Difference between Annual & Hourly Salary

For full-time workers paid and unpaid leaves are granted based on the company’s policies. If it is a government entity, the rules for leaves might differ. While someone who works on a part-time basis, taking a leave may be a loss of salary. Today, many jobs are contractual, and almost 1 in 4 individuals is doing a freelancing gig.

Many salaried employees also take up freelancing or contractual jobs. This provides them with security and an opportunity to earn extra money.

When calculating tax, full-time worker shows their income on the tax return as ‘Income from salary’ while part-time workers generally show their income as ‘income from other sources.


ITR 1 or Income tax return form is applicable for salaried employees. They show their salary from their full-time work in the first row that mentions gross salary. This comes from form 16 that the company provides. If the same employee is also doing some contractual or freelancing work then his income is shown in the B3 section ‘ income from other sources

Advantages of Annual Vs. Hourly

  1. Hourly or part-time work provides time flexibility.
  2. The annual salary is consistent and hence in turn provides surety and security.
  3. Full-time workers have the liberty to take leaves without worrying about pay-cut. This does not hold true for part-time workers.
  4. Part-time workers can earn more by putting in the extra hours and working overtime.

Understand annual vs. hourly salary with a Video

Understand annual vs. hourly salary with a Video

Some individuals cannot work under an authority figure and may choose to work part-time. Some individuals want more control over their time. For some, security and safety are of utmost importance, and would want to work full-time. It depends on the individual’s circumstances, life phases, and choices. Both choices are viable and different people would opt according to their preferences.

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