Net vs. Gross pay

Wages and salaries are always advertised gross and in negotiations between employers and employers it is the gross wage which us usually regerred to. From the employees viewpoint one of the first things he considers when he receive a pay rise or if he has a new job is “How much money will I bring home?”, or `what will be my take home pay`, this is his net pay.

Groos pay

Gross pay represents wages earned before taxes or other deductions are taken, it includes basic pay plus overtime pay, holiday pay and bonuses. Basic pay is the agreed rate discussed between employer and employee it does not include overtime or any other forms of extra compensation. If an employee has worked overtime or been the recipient of a bonus, the amounts will be added to his gross pay.

Net pay

Net pay is the residual amount of earnings after all deductions have been taken from gross pay, including PAYE, national insurance, attachment of earning, student loans and pension play contributions. Net pay is the take home paid received by the employee and paid to him either in cach or transferred to the employee’s bank account.

Gross Employed Net pay

Gross refers to the total amount before anything is deducted. 
Many important accounting statistics use this methid, such as gross earning and gross profit.
Net refers to the amount remaining after certain adjustments have been made for debts, deductions or expenses.


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