The fixed salary or hourly wage paid to an employee, excluding bonuses or other forms of compensation.
What Is Base Salary?
Base salary is the fixed amount of money an employee receives from their employer before taxes and deductions. It does not include bonuses, commissions, overtime, equity, or other variable compensation.
Base salary is often expressed as an annual figure, though it can also be paid monthly, biweekly, weekly, or daily depending on the pay schedule.
How Base Salary Works
- Consistent & Predictable: Paid on a regular schedule (monthly, semi-monthly, or biweekly).
- Unrelated to Performance: Unlike bonuses or incentives, it’s not tied to individual or company performance.
- Used for Benefits & Payroll Calculations: Impacts tax deductions, benefits eligibility, and retirement contributions.
- Part of Total Compensation: Base salary is one piece of the larger compensation package, which may also include perks, bonuses, stock options, and benefits.
Who Sets Base Salaries?
Base salaries are defined collaboratively by:
- HR/Compensation teams: Use market research and benchmarking data to create salary bands.
- Hiring Managers: Propose offers within those bands based on role requirements and candidate experience.
- Finance/Executives: Approve salaries based on budget and organizational goals.
What Influences Base Salary?
- Market Rate: Competitive rates for similar roles in your industry.
- Internal Equity: Fair pay compared to others with similar roles and experience.
- Location: Salaries may be adjusted for cost of living and local market demand.
- Experience & Skills: Affects where someone lands within a pay band.
- Job Level: Seniority and responsibilities influence the base salary range.
How Base Salary Is Paid
- Paid in equal installments (e.g., 12, 24, or 26 times/year)
- Delivered via direct deposit or paycheck
- Subject to taxes and deductions (Social Security, retirement, healthcare, etc.)
Example:
If your base salary is $60,000/year and you’re paid biweekly, you’d earn around $2,307.69 per paycheck before deductions.
Base Salary vs. Annual Pay
| Base Salary | Annual Pay (Gross) |
| Fixed yearly income | Total yearly earnings |
| Doesn’t include bonuses or extras | Includes bonuses, overtime, commissions, etc. |
| Easier to forecast | Can fluctuate year to year |
Base Salary vs. Hourly Pay
| Base Salary | Hourly Pay |
| Fixed amount | Varies with hours worked |
| Not eligible for overtime (typically) | Eligible for overtime pay |
| Predictable income | Flexible but less predictable |
| Common for exempt roles | Common for non-exempt roles |
Why Base Salary Matters
Understanding base salary helps both employers and employees:
- Employees know what to expect in regular pay and how benefits are calculated.
- Employers can budget hiring, assess internal equity, and structure competitive offers.
