Gross wage is the total amount of an employee’s salary, including any additions to their base pay, such as overtime. Net pay is the actual amount received after deductions such as taxes and union dues. The frequency of gross wage calculation varies and deductions are limited by law and contract terms.
Gross wage is a term that is used to describe the calculation of the sum total of wages an employee receives as wages. This figure includes any type of addition to the usual or basic salary foreseen in the worker’s employment contract. Gross salary is usually a starting point for calculating net pay, which is the actual salary the employee will receive when deductions have been applied to the employee’s gross salary.
An example of an addition to an employee’s base pay that will be included in the calculation of gross pay is overtime pay. For example, assuming an employee at a fast food restaurant makes base pay of $400 United States Dollars (USD) a week and worked over time to receive $200 USD, the gross pay would be calculated by adding base pay and overtime pay to other applicable elements such as any allowances and bonuses. The sum total of these figures will constitute the gross salary for an employee, even if you do not get the full gross salary.
To arrive at the net pay, which is the actual amount the employee will receive, adjustments must be made to the gross pay in the form of applicable deductions. For example, if the employee is a member of a union, these dues may automatically be subtracted from total pay and remitted to the union concerned. This deduction is in addition to other items such as income tax, insurance and social security. The final figure after applying all these deductions is the actual salary the employee can expect to receive from the employer, rather than the gross salary.
The gross wage calculation can be done on a periodic basis that is selected by the employee as he tries to arrive at a figure that represents that wage. For example, it can be calculated monthly, biweekly, quarterly, or even annually, depending on what the person calculating the sum is trying to achieve. Another noteworthy aspect is that the deductions that the employer can take from an employee’s salary are limited and are generally determined by the law in force in the region and by the terms of the contract between the employee and the employer.
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