Base salary

What does base salary mean?

Base salary refers to the fixed sum an employee is paid for their work, excluding bonuses, commissions, benefits, stock options and other variable pay. It is usually quoted as an annual or monthly gross figure before tax and deductions.

This principal element of pay is recorded in the employment contract and provides the basis for calculating pay rises, redundancy payments, pension contributions and other financial benchmarks.

How base salary works

Base salary is normally agreed before employment begins and remains in place unless it is renegotiated or adjusted during performance reviews, promotions or market-driven pay changes. The following outlines how it operates:

• The frequency of pay (for example monthly or fortnightly) is set by local legislation and the employer's policy.
  
  
• Payroll calculations start from the base salary, before any deductions are applied or additional earnings are added.
  
  
• How an employee is classified (for example exempt versus non-exempt in the U.S.) can affect how base salary is handled and whether overtime pay is applicable.
  
  

Factors that commonly influence base salary include job title, sector benchmarks, location, cost of living and the individual's experience.

Why employers use base salary

A base salary brings structure, predictability and fairness to pay. Employers rely on it to:

• Set out the minimum guaranteed pay for a role.
  
  
• Provide the foundation for other pay elements, such as bonuses or equity.
  
  
• Compare against internal salary bands and external market rates.
  
  
• Support pay transparency and consistency across teams and regions.
  
  

How base salary looks in practice

• For example, a marketing manager might be offered a base salary of $80,000 per year, together with a 10% performance-related bonus and stock options.
  
  
• An engineer based in Berlin and an equivalent role in São Paulo may receive different base salaries in EUR, adjusted to reflect local market conditions and cost-of-living differences.
  
  
• A firm may review its salary bands annually to ensure base pay remains competitive in the global market.
  
  

Base salary, gross salary and total compensation compared

Although the terms base salary, gross salary and total compensation are sometimes used interchangeably, they have distinct meanings:

• Base salary denotes the fixed element of pay and excludes any additional payments.
  
  
• Gross salary comprises base salary plus bonuses, commissions and other earnings, before tax.
  
  
• Total compensation covers gross salary along with benefits, stock options, allowances and other perks.
  
  

Recognising these differences is important when setting pay expectations and negotiating job offers.

Factors to consider when assessing base salary

When setting or reviewing base salary, take into account:

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

How Remote can assist

Setting and managing base salaries across multiple countries can be complex, particularly when handling currency conversion, salary bands and compliance risks. Remote simplifies this by:

• Providing localised salary benchmarks to help you make competitive, fair offers.
  
  
• Managing payroll, benefits and total compensation via a single platform.
  
  
• Ensuring compliance with local labour laws, including minimum pay requirements and pay-transparency regulations.
  
  

Remote helps you get global compensation right, from base salary through to total rewards. Visit Remote’s salary explorer to save time and money when planning compensation.