Gross pay definition
Gross pay is an individual’s total earnings throughout a given period before any deductions are made.
How to calculate gross pay
Gross pay is simple to determine. Just plug your numbers into the gross pay calculator:
Gross pay = net pay + taxes and deductions
How to calculate gross pay for salary employees
For an hourly rate, your monthly gross pay is calculated similarly because taxes and deductions are normally paid after pay has been received:
Gross pay = agreed hourly rate x number of hours worked in the given period
Gross pay versus net pay
The gross pay definition differs from that of net pay since it does not indicate the take-home salary of an individual.
Gross pay deductions
Deductions such as mandated taxes and National Insurance contributions, as well as deductions made for company health insurance or pension funds, are not accounted for when gross pay is calculated.
Frequently asked questions about gross pay
What is gross pay?
Gross pay is the amount of money you receive from a job, usually calculated as a yearly or monthly salary.
This is before any deductions such as tax, pension plans, or benefit payments are taken out.
What is an example of gross pay?
An example of gross pay is:
You work as a PAYE employee for a company. Every month you get sent a payslip detailing that month’s wages and any deductions. Your salary is £1,500 a month. This is the largest amount on your payslip, before taxes, etc, are deducted.
What is the meaning of gross pay?
Gross pay means the full amount you are paid for the period, before any deductions such as taxes or National Insurance payments are taken out.
