Base salary

What is base salary?

Base salary is the fixed monetary amount an employee receives for their work, excluding bonuses, commissions, benefits, stock options, or other variable pay. It is usually stated as an annual or monthly gross salary before taxes and deductions.

This central element of compensation appears in the employment contract and forms the basis for calculating raises, severance, retirement contributions, and other financial benchmarks.

How does base salary work?

Base salary is set before employment begins and generally remains in place unless renegotiated or adjusted during performance reviews, promotions, or market-based salary changes. The following explains how it operates:

• Payment frequency (for example, monthly or biweekly) is governed by local legislation and company policy.
  
  
• Payroll calculations begin with the base salary, then apply deductions or add additional earnings.
  
  
• Employee classification (for example, exempt versus non-exempt in the U.S.) affects how base salary is handled and whether overtime pay applies.
  
  

Factors that typically affect base salary include job title, industry norms, geographic location, cost of living, and the employee’s experience.

Why do companies use base salary?

Base salary offers structure, predictability, and fairness in pay. Employers use it to:

• Clearly establish the minimum guaranteed earnings for a role.
  
  
• Serve as an anchor for other compensation elements, including bonuses or equity.
  
  
• Provide a benchmark against internal salary bands and external market rates.
  
  
• Encourage transparency and consistency in pay across teams and regions.
  
  

Examples of base salary in practice

• A marketing manager receives a base salary of $80,000 per year, along with a 10% performance bonus and stock options.
  
  
• An engineer in Berlin and a counterpart in São Paulo may hold the same role but be paid different base salaries in EUR, adjusted for local market conditions and cost-of-living differences.
  
  
• A company updates its salary bands annually to keep base pay competitive in global markets.
  
  

Base salary vs. gross salary vs. total compensation

The terms base salary, gross salary, and total compensation are frequently mixed up, but they are not interchangeable:

• Base salary is the fixed pay, excluding any additional amounts.
  
  
• Gross salary comprises base salary plus bonuses, commissions, and other earnings before tax.
  
  
• Total compensation covers gross salary together with benefits, stock options, allowances, and other perks.
  
  

Grasping these distinctions is key when setting compensation expectations and negotiating job offers.

Things to consider with base salary

When setting or reviewing base salary, take the following into account:

• Local market rates and industry benchmarks.
  
  
• Legal minimums (for example, minimum wage and salary thresholds for visas or tax status).
  
  
• Currency fluctuations when hiring across borders.
  
  
• Internal equity to avoid pay disparities and support fair compensation practices.
  
  

How Remote can help

Determining and administering base salaries across multiple countries can be complex, particularly with currency conversions, salary bands, and compliance risks. Remote streamlines this by:

• Providing localized salary benchmarks to help you make competitive, fair offers.
  
  
• Managing payroll, benefits, and total compensation through our unified platform.
  
  
• Staying compliant with local labour laws, including minimum salary requirements and pay-transparency regulations.
  
  

Remote helps you manage global compensation effectively, covering everything from base salary to total rewards. Check out Remote’s salary explorer to save time and money on compensation planning.