Fixed Pay Meaning | What is Fixed pay? | Fixed Pay Definition | UBS

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, 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. Contributions to a pension fund or provident fund payable by the employer are also not considered in the fixed pay.

Fixed pay and variable pay together make up the annual salary. While fixed pay is paid on a monthly basis, the variable pay is paid quarterly, half-yearly, or yearly. In different words, Fixed comp & variable comp meaningFixed and variable compensation, are two 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. A variable allowance in salary is a variable component of the salary structure, such as incentives, bonuses, or commissions.

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

Coming on, base salary, Basic pay meaning– 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. 

  • Gross salary is the total salary before any deductions. 
  • Net salary is the salary after deductions. 

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

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