27. 09. 2024.
Difference between gross and net salary?
Understanding the difference between Gross and Net salary is crucial for all employers in Montenegro. Here’s a clear explanation of what each of these terms means:
- Net salary:
- This is the amount an employee receives on their bank account.
- Net salary includes only what remains after taxes and employee contributions are deducted.
- Gross salary:
- Gross salary includes the net salary + taxes + employee contributions.
- This amount is specified in the employment contract and it is the basis for salary calculation.
- Gross II:
- Gross II includes the gross salary + employer contributions + surtax.
- This represents the total cost an employer has for the employee.
Gross salary structure: The gross salary for an employee for work performed and time spent at work consists of:
- Basic salary – the salary an employee earns for full-time work.
- Special part of the salary – includes compensation for meals during work and 1/12 of the holiday allowance, which is part of the minimum salary.
- Salary increases – the salary can be increased based on:
- Years of service (past work);
- Works at night;
- Work on a National or Religious holiday;
- Overtime work.
These elements together makes the total gross salary of an employee. A clear understanding of these terms helps employers properly calculate wages and ensure compliance with the law. For additional information, feel free to contact our support team.
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