10. 02. 2025.
Difference between gross and net salary
Understanding the difference between gross and net salary is important for both employers and employees. Clear knowledge of these terms enables proper cost planning as well as compliance with legal obligations in Montenegro.
NET SALARY
- Net salary is the amount an employee receives in their bank account.
- It represents the salary after taxes and employee contributions are deducted from the gross amount.
GROSS SALARY
- Gross salary includes:
- Net salary
- Taxes
- Employee contributions
- This amount is most often stated in the employment contract and represents the basis for calculation.
GROSS II – TOTAL EMPLOYER COST
- Gross II includes:
- Gross salary
- Employer contributions
- Surtax (if applicable)
This is the total amount the employer allocates for one employee and represents the actual cost of labor.
STRUCTURE OF GROSS SALARY
Gross salary consists of several elements:
- Basic salary – compensation for full-time work.
- Special salary component – compensation for meals during work and 1/12 of the annual leave allowance (part of the minimum wage).
- Salary increases, which may arise from:
- Years of service (seniority)
- Night work
- Work on state or religious holidays
- Overtime work
WHY IS THIS DIFFERENCE IMPORTANT?
- For employees – it clearly shows how much money they actually receive and what is deducted from their salary.
- For employers – it reveals the actual cost per employee and helps in planning company expenses and budgets.
