Fixed Pay

What is a Fixed Pay?

Fixed pay refers to the guaranteed monthly amount paid to an employee for their services to the organization as per payroll management, which is earned through the work delivered in the current month. It includes base salary and other fixed  allowances like Dearness Allowances, Travel Allowance, House Rent Allowances (HRA), and Conveyance Allowances. The fixed pay does not include variable allowances, benefits in the form of reimbursement, overtime pay, bonuses, commissions, or wage supplements like gross salary. Contributions to a pension fund or provident fund payable by the employer are also not considered in the fixed pay.

Fixed salary Vs variable salary together make up the annual salary as per the payroll  defined for you. While fix salary is paid on a monthly basis, variable pay is paid quarterly, half-yearly, or yearly. In different words, Fixed comp & variable comp meaning – Fixed and variable compensation, are two salary components of an employee’s compensation packages.

Fixed compensation is the fixed pay that an employee receives, whereas variable compensation is the pay that varies based on the employee’s performance in their field( Appraisal is not counted in variables). A variable allowance in salary is a variable component of the salary structure, actual cost of work such as incentives, bonuses, or commissions.

Here are some important salary breakup  terms to know for understanding more about fixed pay.

Coming on, base salary, Basic pay means– the minimum amount of pay that an employee is entitled to receive for their work, whereas base pay is the amount of pay before any additional bonuses, incentives, or overtime pay.

Here is the difference between fixed, gross and variable pay. Check-  fixed pay vs variable pay

• Gross salary is the total salary before any deductions. In this case, fixed comp & variable comp is required.
• Net salary is the salary after deductions. You can call it- a take-home salary. Checkout our pay slip.

Annual CTC meaning refers to the total cost of an employee to the company over the course of a year. Cost to company includes fixed pay, variable pay, and CTC includes PF. 

For salaried employees, the current fixed compensation is the amount they are currently receiving as fixed pay. A variable salary structure is a compensation structure in which a portion of the salary is based on performance, such as bonuses or commissions. 

Also, See: Basic Salary | Gross Salary | Net Salary | Appraisal