Salary Breakup

Salary break up gives information detailing how an employee's total compensation package is made up of items such as the different components, allowances and deductions. The compensation package generally comprises base salary, allowance (which include housing allowance, transportation and medical benefits), bonuses, incentives and deductions (which include taxes, insurance premium and retirement contributions). Giving employees the privilege to break down their salaries transparently will help them in understanding the components of their compensation; make prudent financial choices and negotiate terms favorably.

Example

An employee gets a statement from their employer indicating where each part of their total compensation package is deducted. Such a statement mentions the basic salary of $60,000 per year and the aggregate amount of $10,000 that will cover housing, transportation, and health insurance benefits. In addition to the base salary and allowances, the employee is entitled to performance-based bonuses and incentives depending on the achievement of individual and organizational performance targets that may amount to an additional $5,000 yearly. The salary breakdown also comprises deductions for taxes, retirement contributions, and other withholdings, consequently, the employee's net take-home pay. Through the salary breakup that gives employees a complete view of their income, companies foster transparency, earn trust, and empower employees to make wise decisions regarding their finances and career progression.