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“Gross Pay”

Glossary / Gross Pay

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What is Gross Pay?

Gross Pay refers to the total amount earned by an employee before any deductions like taxes or retirement contributions are made. It’s a key figure in payroll and finance.

Calculating Gross Pay

Gross Pay is calculated based on an employee’s hourly wage multiplied by the number of hours worked, or it can be a fixed salary amount.

The Importance of Gross Pay

  • Foundation for budgeting and financial planning.
  • Crucial for determining tax liabilities and contributions.
  • Essential for understanding employee compensation packages.

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FAQ

How does Gross Pay differ from Net Pay?

Gross Pay is an employee’s earnings before deductions, while Net Pay is the amount after deductions.

Are bonuses included in Gross Pay?

Yes, bonuses, commissions, and other earnings are included in the Gross Pay calculation.

How often is Gross Pay calculated?

Gross Pay is typically calculated each pay period, which can be weekly, biweekly, or monthly.

Does Gross Pay include overtime?

Yes, overtime pay is part of Gross Pay if employees work more than their standard hours.

Also See – Overtime calculations

Related glossary

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Retrenchment

Partial Payments

Employer Identification Number

Flexi Benefit Pay

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