2024-02-14 09:04:06
It is quite common that during a job interview a human resources recruiter provides – on purpose or not – to the applicant the salary to be paid in its gross form, which causes confusion and can make it appear that the job pays more than what it really offers. . For this reason, it is essential to understand how to calculate gross salary and be able to distinguish it from “out-of-pocket” salary, as the discrepancy between the two can be significant.
What is the disparity between gross and net salary?
Gross salary is the amount that the company offers an employee for their services without any discount. In contrast, the net salary – commonly known as “pocket salary” – is the amount that the individual will receive after deducting mandatory deductions from the State and some voluntary ones, such as union dues. Generally, the difference between the two ranges around 20%.
Once the gross salary is known, which is the amount allocated by the employer to remunerate the employee, the following elements are deducted to calculate the net salary:
– Retirement: 11% of the gross salary is deducted as a retirement contribution for ANSES. This amount is retained by the Argentine Integrated Pension System (SIPA), which is the current retirement regime in Argentina.
– Social work: 3% is subtracted from the gross to cover health services. This deduction guarantees medical coverage in the event of illness or accident. Although this percentage is deducted from the worker’s salary, it is the employer who must send the money to the AFIP, which in turn allocates a portion to the National Health Insurance Administration, better known as ANSES.
– INSSJP: corresponds to PAMI, which provides health services to retirees. 3% is deducted from gross income, which is automatically allocated to this fund.
– Union dues: In the event that the employee is affiliated with a union, between 2% and 4% will be deducted from the gross salary for the body corresponding to the work activity. Therefore, this figure can vary significantly.
In summary, the difference between gross and net salary is usually 20%. For example, if a worker receives $200,000 gross, his net salary will be $160,000.
What is the total amount of a pay slip?
If the objective is to calculate the net salary and you want to know the total amount before deductions, you can see this information on the pay stub.
The receipt or salary slip is a document that must include all contributions and reductions applied to your earnings. The number visible at the end of the list, indicating the total, represents the out-of-pocket salary after deductions.
However, at the top of each bill, if it is correctly prepared, there is a section that says “salary” and that is where the gross salary is located, the total amount that the employer allocates for your payment. This is the basic or fixed salary agreed with the employer, without deductions, but it does not include commissions or bonuses.
How to determine gross and net salary in Argentina: an example
If your gross salary is $600,000, deductions should be calculated as follows:
Social Work + INSSJP Discount + Retirement = total amount deducted from income
- (600.000 x 0.03) + (600.000 x 0.03) + (25.000 x 0.11) =
- 18,000 + 18,000 + $66,000 = (discounted amount)
- 600,000 – 102,000 = $498,000 (this would be the net salary).
All workers are subject to legal deductions. Depending on various factors, such as salary, the employed person may or may not be required to pay income tax.
It is important to keep in mind that some unions may charge additional fees to workers under an agreement (for example, in union dues), which could represent up to 20% of the total salary.