A fixed sum of capital expended by an employer to its employees in a swap for assistance in the form of a fixed salary is known as fixed pay. The accrual salary listed on the salary slip with essential and additional allowances is known as fixed pay. Employees receive the exact amount of capital every month.
A fixed salary involves tax deductions based on one’s salary slot, as well as an EPF strategy. It is a monthly allowance permitted to employees for their assistance to the company.
When computing monthly earnings, keep in the sense that it eliminates unstable compensations, the revenue of annual overtime, bonuses, commissions, or earnings complements, and extras in any form of compensation, including employee costs. Similarly, employer-paid contributions to a pension or provident fund, including payments made on the employee’s behalf, are not included in the fixed pay.
There is no hard and fast rule that a specific component is a fixed pay. Basic salary and DA are the fixed components in most cases, while other components are added to the fixed compensation depending on the company’s policies.
The annual salary is calculated by adding all of the payments together. Fixed pay, on the other hand, is paid monthly, and variable pay is paid quarterly, half-yearly, or annually.
You will be paid a set salary regardless of how well you do at work. It is the amount you will be paid, regardless of whether you perform well or poorly. Variable compensation refers to a payment that is determined by your performance in your field.