What is Gross 2?
Gross 2 salary, often known as "Total employer cost", represents the actual financial amount your company must set aside to employ you and pay your salary.
What does Gross 2 consist of?
Gross 2 is a wider and larger amount than Gross 1. Mathematically, it is composed of:
- 1Gross 1 salaryThe previously explained amount that includes your net salary, pension insurance, and taxes.
- 2Contributions "on top of salary" (Health Insurance)These are additional levies that the state requires from the employer on top of the Gross 1 salary amount. In most countries in the region, this primarily includes the health insurance contribution. Since the employer pays it on your Gross 1, these contributions are called contributions "on salary".
Why is Gross 2 so important?
When you ask for a net raise of 100 EUR, the cost of that raise for the employer is not 100 EUR. Due to required payments for pension, health, and taxes to the state, that raise costs the employer significantly more (often up to 180 EUR).
Therefore, when you negotiate a new salary, the employer calculates Gross 2 in their mind to assess if you are a profitable investment.