Gross salary, also referred to as gross pay, is the total earnings an employee receives before any deductions such as taxes, social security, or benefit contributions. It includes not just base pay or hourly wages, but also bonuses, overtime, commissions, allowances, and any other type of financial compensation. When someone refers to a job offer stating “€5,000 per month,” they’re typically referring to gross salary, the total amount agreed upon before anything is taken out.
Gross salary is the figure most commonly quoted in job advertisements and employment contracts. It represents the employee’s full earning potential, and is crucial for both employee expectations and employer budgeting.
Components of Gross Salary
Gross salary includes:
Base salary or hourly wages
Overtime pay
Performance-based bonuses or commissions
Stipends or allowances (e.g., for transport, housing, meals)
Holiday or vacation pay
Other financial incentives or earnings
In short: if it’s earned during a pay period, it contributes to gross salary.
Gross Annual Salary
Gross annual salary is the total pre-tax earnings an employee receives over a year. This number is commonly used for:
Comparing job offers
Budgeting and personal finance planning
Payroll projections by employers
Tax reporting and compliance
For salaried employees, this is often a fixed figure stated in the employment contract. For employees with variable compensation (e.g. bonuses, commissions), it includes all actual earnings over the year. For example, someone earning €60,000 per year on paper, with €5,000 in bonuses, would have a gross annual salary of €65,000.
Gross Monthly Salary
Gross monthly salary is simply the amount of gross pay an employee earns in one month — again, before deductions. For salaried workers, it’s usually calculated by dividing the annual salary by 12.
Example:
Annual salary of €48,000 → Gross monthly salary = €4,000
Weekly pay of €900 → Gross monthly salary ≈ €3,900 (since there are ~4.33 weeks/month)
In many countries, employment contracts state gross monthly salary as the standard reference point.
Is Gross Salary Before Taxes?
Yes, gross salary is always before taxes and other deductions. It is considered “pre-tax income” and forms the basis for calculating payroll withholdings. From this amount, employers subtract:
Income taxes
Social security or national insurance contributions
Pension or retirement contributions
Healthcare premiums
Other legal or voluntary deductions
After all deductions are applied, what remains is called net salary, the take-home pay employees receive in their bank account.
How to Calculate Gross Annual Salary
Understanding the difference between gross and net salary is critical for both employers and employees.
| Gross Salary | Net Salary |
|---|---|
| Total earnings before deductions | Take-home pay after deductions |
| Includes base salary, bonuses, overtime | Excludes taxes, contributions, insurance |
| Quoted in job offers and contracts | What employees receive in their bank accounts |
| Used for budgeting and forecasting | Used for personal budgeting and living expenses |
Example:
If someone earns a gross salary of €60,000 per year and €15,000 is deducted for taxes and benefits, their net salary is €45,000.
Gross = the whole amount
Net = what’s left after payroll deductions
Why Gross Salary Clarity Matters for Payroll and HR
Clear understanding of gross salary is essential for:
Accurate payroll setup
Tax calculations
Ensuring employees are paid fairly and on time
Transparent job offers
Payroll integrations across global HR systems
In global companies using integrated HCM and payroll platforms, consistent definitions of gross salary are key to compliance and data accuracy. Misunderstandings between gross and net salary can lead to payroll errors, incorrect tax filings, and even employee dissatisfaction.
By clearly defining gross salary and using it consistently across your organization, you ensure smoother HR operations, better financial forecasting, and improved employee trust.
Final Thoughts
Gross salary is the total amount earned before taxes or deductions.
It includes base pay, bonuses, overtime, and allowances.
Used in contracts, offers, and payroll budgeting.
Critical for calculating taxes, net pay, and legal compliance.
Distinct from net salary, which is the actual take-home pay.
Whether you’re structuring compensation, managing payroll, or comparing job offers, understanding gross salary gives you a clear picture of what’s being earned and what portion of it is subject to deductions.