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Understanding Salary Terminology

Understanding Salary Terminology

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Published by: PrawnStarz Zo on Mar 02, 2012
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Understanding Salary Terminology - What is the difference between your Basic, Nett and Gross Salary?

by PAG Recruitment§ on Monday, February 21, 2011 at 2:53am Better knowledge of these terms might be able to assist you when it comes to speaking about salary: Basic Salary Your Basic Salary is the amount of salary you get before any additional benefits such as medical aid, pension, and allowances are added to your salary. It is also more commonly called your basic pay. Your basic salary is the section of your salary that is fixed every month. Excluded from this would also be overtime pay and any bonus or 13th cheque. Nett Salary: Your Nett Salary is what is left of your salary after deductions have been made for PAYE (tax), UIF etc. This is also the amount that is typically paid into your bank account on a monthly basis. Other deductions such as loan or bond re-payments are typically deducted after the Nett salary is calculated. In this instance your salary paid into your bank account would be you nett salary less these repayments. Nett salary is also referred to as "take home pay", i.e. That amount of money that you take home every month. Gross Salary: When employers refers to you Gross Salary this is the amount of salary you get after adding all your benefits and allowances to your salary and before deducting any tax. This is typically made up of the following components: Basic salary; Candidate contribution to Medical Aid, Pension/Provident fund, Group life etc, Allowances such as Travel, Entertainment, Computer, Cell phone, etc and Overtime and bonus for the specific period. Cost to Company: Companies use the term Cost to Company to calculate the total cost to them to employ you as an employee. I.e. what are all the costs associated with your employment contract. Cost to Company typically include the following: Gross salary; Company contributions to Medical, Pension/Provident, UIF, SDL , Group Insurance etc, 13th Cheque and Bonuses; Use of company property such as Car, petrol card, Computer/Notebook, software etc, Cost of any loans, bursaries and interest free or low interest loans; Costs of any expenses paid on your behalf such as insurance & telephone at home etc and Costs of share options & incentive schemes etc.

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