Gross pay

What Is Gross Pay?

Gross pay refers to the total amount of income an employee earns before any deductions are taken out. This includes not only their base salary or hourly wages, but also any overtime pay, bonuses, commissions, allowances, and other earnings.

In Australia, gross pay is the figure shown on an employee’s payslip before tax, superannuation, and other deductions such as salary sacrifice or union fees are applied. It forms the foundation for calculating net pay (the take-home amount), and is also used to determine key entitlements like superannuation and leave accruals.

Understanding Your Payslip

Key Inclusions in Gross Pay

Gross pay covers all earnings that an employee receives for work performed. Depending on the nature of the job and the employment agreement, this may include:

• Base wages or salary
• Overtime earnings
• Weekend and public holiday loadings
• Commissions and performance bonuses
• Allowances (e.g., travel, meal, uniform)
• Shift penalties
• Paid leave (e.g., annual leave, personal leave, long service leave)
• Back pay and adjustments
• Termination payments and redundancy payouts

Each of these elements must be reported accurately for payroll compliance and tax purposes.

Gross Pay vs Net Pay: What’s the Difference?

Understanding the difference between gross and net pay is essential for employees to interpret their payslips correctly, and for employers to remain compliant with reporting standards such as Single Touch Payroll (STP).

Why Gross Pay Matters for Employers

For Australian employers, correctly calculating and reporting gross pay is essential for:

• Payroll compliance with the Fair Work Act, awards, and agreements
• Accurate superannuation contributions, which are based on ordinary time earnings (a subset of gross pay)
• Tax reporting and PAYG withholding obligations to the ATO
• Leave entitlement calculations, which rely on gross income and working hours
• Providing legally compliant payslips, which must show gross pay clearly

Failing to report gross earnings correctly can lead to compliance issues, underpayment claims, or penalties from the Fair Work Ombudsman.

Fair Work – Payslip Requirements

How Microkeeper Simplifies Gross Pay Management

Microkeeper’s payroll platform automatically calculates and reports gross pay for each employee, reducing the risk of human error. Features include:

• Award interpretation tools that automatically add penalties, loadings, and overtime to gross pay
• Seamless timesheet integration, ensuring actual worked hours are translated accurately into gross earnings
• Custom allowances and deductions, automatically itemised on each payslip
• Superannuation and tax calculations directly linked to gross earnings
• STP-compliant payroll reporting, ensuring accurate gross income is reported to the ATO in real time

Gross Pay and Superannuation

Gross pay is used to determine superannuation contributions, which are currently set at 11.5% in FY24–25, increasing to 12% from 1 July 2025. However, not all gross income is considered ordinary time earnings (OTE) for super purposes.

Generally, super is calculated on:

• Base salary or wages
• Leave taken and paid
• Allowances (if linked to ordinary hours of work)

It usually excludes:

• Overtime earnings
• Bonuses that aren’t related to ordinary hours
• Lump-sum termination payments

ATO – Ordinary Time Earnings Explained

FAQs About Gross Pay

Does gross pay include superannuation?

‍No, gross pay is calculated before superannuation contributions are added. Super is a separate entitlement paid on top of gross income by the employer.

Can an employee negotiate their gross pay?

‍Yes, during employment negotiations. However, it must still comply with minimum wage requirements under the relevant award or agreement.

Why is gross pay higher than my bank deposit?

‍Gross pay does not account for tax, super, and other deductions. The difference between gross and net pay is made up of these withheld amounts.

Final Thoughts

Gross pay is more than just a line on a payslip—it’s a critical figure that influences tax, superannuation, and employee entitlements. By understanding what it includes and how it's used, both employers and employees can ensure fair pay, compliance, and transparency.

With an automated platform like Microkeeper, gross pay calculations are handled efficiently, helping Australian businesses stay compliant while reducing payroll admin.

_{Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. Please consult the ATO or a qualified advisor for specific guidance.}