Base salary

What does base salary mean?

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

This principal element of remuneration is specified in the employment contract and forms the basis for calculating pay rises, severance payments, pension contributions, and other financial benchmarks.

How does base salary operate?

The base salary is agreed before employment begins and normally remains unchanged unless renegotiated or adjusted at performance reviews, on promotion, or due to market-driven salary changes. The following explains how it functions:

• The payment frequency (for example, monthly or biweekly) is governed by applicable local laws and company policy.
  
  
• Payroll calculations take the base salary as the starting figure, before statutory deductions are applied and any additional earnings are added.
  
  
• An employee’s classification (for example, exempt versus non-exempt in the U.S.) affects how the base salary is administered and whether overtime pay is payable.
  
  

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

Why do organisations adopt a base salary?

A base salary provides structure, predictability and fairness to remuneration. Employers use it to:

• Set out the minimum guaranteed earnings for a given role.
  
  
• Act as the anchor for other elements of compensation, such as bonuses or equity.
  
  
• Provide a reference point for internal salary bands and external market rates.
  
  
• Support pay transparency and consistency across teams and locations.
  
  

Practical examples of base salary

• A marketing manager receives a base salary of $80,000 per year, together with a 10% performance bonus and stock options.
  
  
• Two engineers—one in Berlin and one in São Paulo—may hold equivalent roles yet be paid different base salaries in EUR, adjusted to local market conditions and cost-of-living differences.
  
  
• A company may review its salary bands annually to ensure base pay remains competitive in the global market.
  
  

Base salary vs gross salary vs total compensation

Although the terms base salary, gross salary and total compensation are frequently conflated, they have distinct meanings:

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

Recognising these distinctions is crucial when setting compensation expectations and negotiating job offers.

Considerations when evaluating base salary

When determining or assessing base salary, take into account the following:

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

How Remote can help

Establishing and administering base salaries across multiple countries can be complex, particularly with currency conversion, salary banding and compliance risks. Remote streamlines the process by:

• Providing localised salary benchmarks to assist you in making competitive and 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 regulations.
  
  

Remote supports accurate global compensation, from base salary through to total rewards. Please consult Remote’s salary explorer to save time and money on compensation planning.