Gross and net salary

The net salary or liquid is the amount received by an employee in your account taxes and security contributions deducted, while the gross salary is the total amount before all deductions apply.

Many times there are bad misunderstandings in the workers with respect to these two terms because in job interviews they usually talk about the gross salary . Then, when the worker receives the remuneration, that is, the net salary , it is much less than what they had initially talked about. That is why from our blog we clarify the differences.

 Gross salary
 Net income
 Payment It is agreed with the company Amount credited to the account after taxes and social charges were subtracted
 Quantity Higher than gross salary Less than net salary
 Amount  Amount that is stipulated that does not reflect what will be charged Actual amount charged

What is gross salary:

It is the amount agreed with the worker before the deductions and discounts that will appear in a payroll at the time of payment of the salary. In other words, it is what the company is going to pay, although later it will not be what the worker receives, but the worker will receive the net salary. It is normal that negotiations between a company and a worker are always based on a gross salary.

What is the net salary:

The net salary is the pay that a worker receives. An amount in which the worker’s contributions to social security and withholdings are discounted.

What discounts does the net salary have?

Each country has its own labor legislation where discounts for each worker are contemplated. As we said, the net salary is charged with the relevant discounts that correspond to:

  • Common contingencies (payment of sick leave and benefits if the worker has an accident or becomes ill)
  • Professional contingencies (Possible coverage for accidents at work or an occupational disease).
  • Unemployment.
  • Training.
  • Union dues (if the worker belongs to a union)
  • Alimony (if decreed by a judge’s ruling)

Net salary calculation

To know the amount of the net salary, first of all you must know the exact gross salary amount. It is important to know the figure that is really going to be charged in your pocket and for this on the internet there are many tools that can be consulted for this calculation.

It must be taken into account that, for example, to request a loan in a bank, the amount of the net salary must be known so that the institution can evaluate if one can pay the amount requested.

Are there limits on discounts from gross pay?

Yes, there are limits, in no case can the worker be discounted an amount that exceeds 45% of the amount on the gross salary.

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