Allowances for internet and telephone for home working
Non-monetary extras such as mobile phone, company car, gym membership
Examples of deductions from basic salary
Deductions from basic salary can include:
Salary sacrifice schemes – for childcare vouchers, share options, and so on
Contributions to a company car or mobile phone
Repayments against a company loan or a student loan
Deductions for cash shortfalls or stock deficiencies (in retail situations)
Court order deductions and child maintenance payments
Pay deductions due to industrial action, such as striking
Tax and national insurance
Basic salary vs. on-target earnings
An example of a basic salary might be £25,000. This is what you would advertise as the rate of annual pay if you are hiring for a new role. That will exclude any bonuses you might offer, as well as allowances and expense payments.
When it comes to sales roles, you may offer a basic salary only or, if you pay commission, it’s common to express the offered salary as on-target earnings – known as OTE. On-target earnings are the basic salary equivalent that an employee can expect to be paid if they meet all their sales obligations. This can include a basic salary with an element of commission, but some organisations choose to pay commission only.
When it comes to the actual monthly or weekly payment, as summarised on a payslip, the basic salary is detailed. Any extras are added, and any deductions – as well as tax and national insurance – will be subtracted.
A typical pay slip separates and sub-totals the additions and the deductions, which makes the payslip easy to read.