Gross pay

What it means

Gross pay is the agreed remuneration before deductions, including premiums, bonuses and rewards. It is the base for contributions, tax and average earnings.

It may not fall below the minimum wage or the minimum wage claim for the job’s difficulty level. That level is assigned per position, not once for the company.

Gross pay does not include travel allowances, payments from the social fund or reimbursed expenses, even though the employee receives them with the salary. Some are taxed and some are not, but none is wages under the Labour Code, and none counts when pay is compared with the minimum wage.

How it works in practice

The contract states the base component. Variable pay, bonuses and premiums belong in a pay policy or an annex so they can change without amending the contract.

For cost planning gross converts into total employer cost; in a conversation with the employee it converts into net pay. Keep all three numbers side by side.

When a client wants to offer an employee a specific take-home amount, we work it back to gross. The contract, however, always states the gross figure: agreeing a net salary would mean every change in contributions or tax falls on the employer and the pay rises without the employer deciding it.

What to watch out for

Assigning a position to a low difficulty level purely to justify lower pay is a problem in an inspection. The actual content of the work decides, not the job title in the contract.

An agreement that the salary already covers any overtime is valid only for the group of employees the law names, such as managers or staff doing conceptual or creative work, and only up to an annual cap on hours. For an ordinary employee such a clause does not hold, and overtime pay with its premiums is paid retrospectively.