Base salary

What does base salary mean?

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 usually expressed as an annual or monthly gross figure before taxes and deductions.

This principal element of compensation is set out in the employment contract and provides the foundation for calculating pay increases, severance, retirement contributions and other financial benchmarks.

How base salary works

The base salary is agreed before employment starts and remains in place unless it is renegotiated or adjusted during performance reviews, promotions or market-driven salary updates. It operates as follows:

• Payment frequency (for example monthly or biweekly) is determined by local legislation and company policy.
  
  
• Payroll calculations start from the base salary before deductions are applied or additional earnings are added.
  
  
• Employee classification (for example exempt versus non-exempt in the U.S.) can affect how the base salary is administered and whether overtime pay is payable.
  
  

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

Why companies use base salary

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

• Clearly specify the minimum guaranteed earnings for a role.
  
  
• Provide an anchor for other compensation elements, such as bonuses or equity.
  
  
• Serve as the reference point for internal salary bands and external market rates.
  
  
• Support transparency and consistency in pay across teams and regions.
  
  

Examples of base salary in practice

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

Base salary vs gross salary vs total compensation

People often confuse the terms base salary, gross salary and total compensation, but each refers to something different:

• Base salary is the fixed pay and excludes 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.
  
  

Understanding these differences is important when setting compensation expectations and negotiating job offers.

Considerations when assessing base salary

When setting or reviewing a base salary, take into account:

• Prevailing local market rates and industry benchmarks.
  
  
• Legal minimums (for example minimum wage and salary thresholds relevant to visas or tax statuses).
  
  
• Exchange rate fluctuations when hiring across borders.
  
  
• Internal equity to avoid pay gaps and to support fair compensation practices.
  
  

How Remote can help

Setting and administering 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 our unified platform.
  
  
• Remaining compliant with local labour laws, including minimum salary requirements and pay-transparency regulations.
  
  

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