Basic Salary

HR Glossary for HR Professionals

Glossary of the most common HR terms and acronyms to assist professionals navigating the ever-growing and ever-changing world of HR terminology.

Basic Salary

What is Basic Salary?

A basic salary defines the amount of money an employee makes before any additions or reductions are applied, such as taxes, monthly parking allotments, and more. 

This method of defining salary is the same as gross pay but different from base pay, which represents the minimum salary an employee is paid. In essence, it is the total cost of an employee to a company or organization. 

It almost goes without saying, but the pay for any given position has a major impact on employee recruitment and retention.

What’s the Difference Between Basic Salary and Net Salary?

To determine this kind of salary, employers must take the amount of money an employee is paid before taxes and deductions are taken out, as well as before additional benefits are added. It can include: 

  • Salary
  • Hourly wages
  • Overtime pay
  • Tips 
  • Bonuses
  • Commissions
  • PTO

Meanwhile, net pay is the amount paid to an employee after those deductions have been made. For example, if an employee’s salary is $50,000 per year, and their total deductions equal $12,000, then their annual net pay is $38,000.

Related Terms: Net Pay, Gross Pay

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