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

Fixed Pay

What is a Fixed Pay?

A fixed salary is defined as the amount that the employee earns monthly through the work he delivers in the current month. Different Allowances like the HRA (House Rent Allowances) and transportation allowances etc. are not included in the fixed pay. A fixed salary comes with tax deductions applicable on your salary slot and an EPF system as well. Fixed Pay is described as a guaranteed monthly amount paid to the employee for his services to the organization. 

However, when you calculate the monthly salary, keep in mind that it does not include variable allowances, payment of annual overtime, bonuses, commissions or wage supplements, benefits in any form of reimbursement, including expenses incurred by an employee. Moreover, contributions to a pension fund or provident fund payable by the employer, including contributions paid on behalf of the employee are not considered in the fixed pay.

Fixed Pay includes basic salary with other allowances like:

  • Dearness Allowances
  • Travel Allowances
  • House Rent Allowances (HRA), and
  • Conveyance Allowances

There is no fixed rule that the particular component is a fixed pay. Generally, basic salary and DA are the fixed components, and depending on the company’s policy other components get added to the fixed pay.

Fixed Pay and variables Pay together gives the annual salary. However, fixed pay is paid on the monthly basis, whereas the variable pay is paid quarterly, half-yearly, or yearly.

Fixed pay will be paid to you irrespective of your performance in the company. No matter whether you perform well or badly, it is the amount you will be paid. Variable pay is the salary that you will be paid based on your performance in your field.

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

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