Base salary

What is base salary?

Base salary is the fixed sum an employee receives in return for their work, excluding bonuses, commissions, benefits, stock options or other variable pay. It is normally stated as an annual or monthly gross figure before tax and deductions.

This principal component of compensation is recorded in the employment contract and provides the basis for calculating pay rises, severance or redundancy payments, retirement contributions and other financial benchmarks.

How does base salary work?

Base salary is agreed before employment starts and generally remains in place unless it is renegotiated, altered during a performance review, adjusted after a promotion, or modified to reflect market movements. The following explains how it operates:

• Payment frequency (for example monthly or biweekly) is governed by local legislation and the employer’s payroll policy.
  
  
• Payroll calculations start with the base salary before 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 managed and whether overtime pay applies.
  
  

Typical drivers of base salary include job title, prevailing industry standards, geographic location, cost of living and the employee’s experience.

Why do companies use base salary?

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

• Clearly set the minimum guaranteed earnings for a role.
  
  
• Provide an anchor for other forms of pay, such as bonuses or equity.
  
  
• Serve as a benchmark for internal salary bands and external market rates.
  
  
• Help promote transparency and consistency in pay across teams and regions.
  
  

Examples of base salary in practice

• A marketing manager may be offered a base salary of $80,000 a year, together with a 10% performance bonus and stock options.
  
  
• An engineer in Berlin and a counterpart in São Paulo might hold equivalent roles yet receive different base salaries in EUR, adjusted to reflect local market conditions and cost‑of‑living differences.
  
  
• A company may review its salary bands each year to ensure base pay remains competitive on the global market.
  
  

Base salary vs. gross salary vs. total compensation

The terms base salary, gross salary and total compensation are often used interchangeably, but they have distinct meanings:

• Base salary is the fixed element of pay, excluding additional earnings.
  
  
• 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.
  
  

Knowing these distinctions is essential when setting compensation expectations or negotiating a job offer.

Things to consider with base salary

When establishing or assessing base salary, take into account:

• Local market rates and industry benchmarks.
  
  
• Legal minima (for example minimum wage and salary thresholds relevant to visas or tax status).
  
  
• The effect of currency fluctuations when hiring across borders.
  
  
• Internal equity to avoid pay disparities and uphold fair compensation practices.
  
  

How Remote can help

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

• Providing localized salary benchmarks to help you make competitive, fair offers.
  
  
• Handling payroll, benefits and total compensation via our unified platform.
  
  
• Ensuring compliance with local labour laws, including minimum salary requirements and pay transparency rules.
  
  

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