Base compensation includes monetary benefits to employees in form of wages or salaries. The term ’wage’ is used to denote remuneration to workers doing manual or physical work. Thus wages are given to compensate the unskilled workers for their services rendered to organisation. Wages may be based on hourly, daily, weekly or even monthly basis.

The term ‘salary’ means compensation to office employees, foremen, managers & professional & technical staff. It is based on weekly, monthly &yearly basis. Thus time period for which salaries are paid is generally higher than in case of wage payments.

Wages may be based on number of units produced (i.e. piece wage system) or time spent on job. But salary is always based on time spent on job.