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Base salary: definition, gross or net

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That salary is an important issue for every employee as financial security is a basic need. Bills have to be paid and livelihoods financed and of course nobody wants to turn over every euro three times have to in order to make ends meet at the end of the month or maybe even to be able to put a little money aside to save on a vacation or another destination. When it comes to pay on the job, however, there are some differences that already appear in the employment contract. The concept of Base salary keep asking questions. We explain what this is all about, where the advantages are and why you should always be careful with the basic salary …

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Base Salary Definition: What Does It Mean?

If the term is used in a job advertisement or during an interview Base salary appears, a few question marks appear in many minds. You have heard of it before and some information is stored somewhere in the back of your mind, but in such a case you are reluctant to rely on such vague memories.

So what exactly does basic salary actually mean? Basically this is the Part of the salary that an employee receives in each case. The basic salary is therefore the minimum amount of payment that must be paid by the employer at the end of each month. This always leads to confusion, as various supplements, special payments or bonuses can be added to the basic salary. This type of remuneration can often be found in the field, where employees receive commissions for their work.

To clarify, a simple one example: An insurance broker in the field has negotiated a basic salary of 2,000 euros with his employer. In any case, these are due for the employee’s work. However, if the broker has a particularly successful month, signs many new contracts and recruits new customers, the payment can be significantly higher and at the end of the month there is a salary of 3000 euros or even more. It would also be conceivable that the employee would be given a company car in addition to their basic salary so that they could work in the field. Although this is not directly financial, it is an additional benefit to the basic salary.

In order not to experience any nasty surprises, you should definitely pay attention to the following: that the basic salary – unless otherwise agreed and stated separately – is given gross. Depending on the tax bracket, the amount that actually arrives on the account can be significantly lower than the basic salary agreed in the employment contract.

The advantages of a basic salary scheme

In some industries and professions, the basic salary is the usual procedure and anyone who sees their professional future in these areas will probably not be able to avoid it. In fact, such a regulation can also have some advantages. So it can be for employees huge motivational boost give to be able to improve one’s own salary through good performance. Having to wait for the next raise in spite of sustained top performance can be frustrating. With the basic salary, on the other hand, you have a direct influence on the monthly salary and you can immediately see on the statement that good performance and results pay off.

Of course, the companies are also happy about such a development, which in turn can benefit from motivated and committed employees. In some cases it can too Tax benefits if, as in the example above, a lower basic salary is paired with additional benefits – for example a company car that is not always fully taxable.

Base Salary: Why You Should Be Careful With It

Despite some advantages, employees should always be a little cautious about basic salaries. The basic salary gives a certain amount of financial security, but it does Due to fluctuations between the different months, there can be large differences in the individual salary payments. In the peak phases, you might earn more than 3000 euros gross for several months in a row, but then suddenly fall back to perhaps only 2200 euros gross in a lull. These fluctuations can make long-term planning very difficult; in most cases the monthly costs of rent, car, insurance and even the cost of living are not very flexible and remain at a similar level. No problem in good earning months, but if the statement suddenly only shows 1000 euros less, this can lead to financial bottlenecks.

Base salary is therefore often with great pressure to succeed connected to maintain a certain standard. If a month starts off badly, stress develops more and more, the days get longer and harder in order to somehow earn an additional salary.

In addition, there are often large ones Competition among employees. You basically do the same job, but you may get paid very differently for it because the other is simply more successful. This encourages envy and the working atmosphere suffers.

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Source: https://karrierebibel.de/grundgehalt/

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