Gross wage

What is gross wage?

Gross wage (or gross pay) is the total amount an employee earns before any deductions are applied. It includes base salary or hourly pay, along with bonuses, commissions, overtime pay, and other earnings such as allowances or holiday pay.

Gross wage represents the full compensation agreed upon between the employer and employee, and serves as the starting point for calculating taxes, statutory contributions, and net pay.

For salaried employees, the gross wage is typically quoted on an annual, monthly, or weekly basis. For hourly workers, it’s calculated by multiplying the hourly rate by the number of hours worked (plus any applicable additions like overtime or shift differentials). Gross wage may also reflect entitlements under collective agreements, country-specific wage laws, or employer policies.

It’s important to note that gross wage is distinct from net pay, which is the actual amount an employee takes home after all deductions (e.g., income tax, pension contributions, and health insurance premiums) have been subtracted.

See also: What is the difference between gross and net pay?

Why does this matter for employers?

Gross wage forms the basis for payroll calculations, tax withholdings, and statutory reporting. Employers must ensure that all components of gross pay — regular and variable — are accurately tracked and reported to local tax authorities, social security bodies, and benefit providers.

In international employment, understanding how gross wage is defined and regulated in each country is critical for legal compliance and for setting fair, competitive compensation packages. It also affects how salary offers are perceived by candidates, especially in countries where taxes and deductions significantly reduce net income.

How can Remote help?

When hiring through Remote, gross wages are transparently outlined in employment contracts. Our platform ensures correct processing of gross-to-net calculations and withholds the appropriate contributions according to local law, reducing the risk of errors and ensuring payroll compliance across borders. Learn more.