24/02/2022
Job hunting tips (what to know about Salaries)
Ever seen Gross pay or net pay on job ads that go 1.4Million per Annum or N45,000 to N70,000?
Don't be deceived by the large numbers let's know what these mean on today's post.
Let's start with Gross pay, what is it?
Gross pay is the total amount of money an employee receives before taxes and deductions are taken out. It is often referred to as basic salary, also called base salary which is the amount of money a salaried employee regularly earns before any additions or deductions are applied to their earnings. For instance, when an employer pays you an annual salary of N3Million per year, this means you have earned N3Million in gross pay.
The Gross Salary mentioned in the company’s offer letter in the salary section mentions all the required components on a yearly and monthly bases like bonuses, overtime pay, holiday pay, and other differentials
Know that basic salary may go up or, in some cases, be reduced.
Many jobs have a salary range—a minimum and maximum amount that a company is willing to pay to fill a position. For instance when you see on a job ad
Salary: N50, 000 - 90, 000 per month. Or N1. 4 million to 1.9 Million per annum (yearly).
The salary range is based on market rates for that work as well as the experience and skills of the employee. A new hire with little experience might be paid the minimum amount in that salary range as their basic salary. As the worker gains more experience and improves their skills over time, they may receive raises/promotions in their basic salary and eventually reach the maximum pay for their position.
Fringe Benefits, what are fringe benefits?
Fringe benefits are perks that employers give to their employees above and beyond any financial compensation. Especially when the compensation or salary alone is not high.
A wide range of fringe benefits and employee perks exist from one employer to another.The most common benefits include life, disability, and health insurance, tuition reimbursement, and education assistance, as well as retirement benefits
Additions and deductions to basic salary can significantly affect the size of an employee’s paycheck. These adjustments may include such things as added bonuses or deductions for the employee’s company health insurance premium.
What makes up Gross pay?
Gross earnings include the basic salary plus all additional money earned, such as sales commissions and bonuses.
Some components of Gross Pay
Basic Salary – A major component of the gross salary which you get.
HRA(House Rent Allowance) – Consider the house rent of any employee & reduce the tax of an individual.
Leave Travel Allowance – This component covers the travel cost of an employee & help in tax exemption.
Conveyance Allowance – This component is used to facilitate an employee to travel from home to work & back.
Retirals – Also known as superannuation, which covers an employee pension plan for post-retirement.
Bonus – Gifts or performance allowance which covers under gross salary.
Finally, what the. Is Net pay?
Net pay is the final amount of money that you will receive after all taxes and deductions have been subtracted.
Net pay is the amount that’s actually deposited into your bank account or the value of your paycheck, your exact Salary.
In most cases, your net pay appears in a larger font on your paycheck or pay statement and is often bolded to appear darker so that you can easily distinguish it from your gross pay.
Net Salary is the amount of the employee’s salary after deducting tax provident fund and other such deductions from the gross salary, which is generally known as Take home salary.
Net wages means take-home pay—the amount on the paycheck after the employee’s gross earnings have been totaled and all taxes and other deductions have been subtracted from that figure.
(sources: https://www.indeed.com/career-advice/pay-salary/what-is-gross-pay and https://www.google.com/amp/s/www.sage.com/en-us/blog/glossary/what-is-gross-pay/amp/ and https://www.bamboohr.com/hr-glossary/gross-wages/)
Gross pay is the total amount of money an employee receives before taxes and deductions. Learn about the difference between gross pay and net pay, and how to calculate gross pay for both hourly and salaried employees.