Base salary is the fixed, regular pay someone earns for their work. Unlike other types of compensation, like bonuses or overtime pay, base salary is predictable and constant, regardless of fluctuations in work hours or performance. It can be expressed as a weekly, monthly, or annual salary.

Does base salary include taxes?

Base salary is the gross amount someone earns before deductions and withholdings like federal and state taxes, Social Security in the United States or National Insurance in the United Kingdom, and Medicare.

What’s the difference between base salary, gross pay, and net pay?

Understanding the differences between base salary, gross pay, and net pay can help HR teams communicate pay expectations and provide a holistic view of compensation.

How do you determine base salary?

To determine base salary, HR teams consider factors such as job responsibilities, market rates, experience and qualifications, and the company’s budget and pay structure, to stay competitive and in line with organizational capabilities.

How is base salary different from total compensation?

While base salary is the fixed annual amount someone earns, total compensation encompasses all aspects of someone’s earnings. This includes base salary plus bonuses, overtime, benefits (such as health insurance and retirement contributions), stock options, and other incentives.

Can base salary change over time?

Yes, base salary can change over time. In fact, periodic salary adjustments are common and often align with performance, tenure, or shifts in job responsibilities. Base salary increases may also occur due to cost-of-living adjustments or promotions to keep compensation fair and competitive.

How do you determine adjusted base pay?

Adjusted base pay refers to a base salary you’ve modified by adding variable elements like bonuses, benefits, or overtime. To find someone’s adjusted base pay, take the base salary as the consistent, guaranteed amount, and add bonuses and benefits.

Is base salary negotiable during the hiring process?

Absolutely. Base salary is often negotiable during the hiring process. Candidates and employers usually discuss salary expectations to reach an agreement that reflects the role’s responsibilities and the candidate’s experience. Transparent negotiations also set the stage for a positive working relationship built on mutual respect and fair compensation.

What’s the difference between gross income and net income?

Gross income is the total amount people earn before deductions. You can determine net income by subtracting taxes, retirement contributions, health insurance, and other withholdings. Net income is the most accurate representation of someone’s spending power.

Glossary

What is a merit increase and how does it work?

A merit increase is a salary raise companies offer professionals for outstanding work achievements or…

What is base salary?

What is a merit increase and how does it work?

What is biweekly pay?

What is imputed income?

What is retro pay?

What are the objectives of compensation management?

What is compensation management?

What is HCM payroll?

What is payroll automation?

What are salary bands?

What is job pricing?

What is on-demand pay?

What is a salary freeze?

What is a performance-based bonus?

What is a compensation plan?

What are supplemental wages?