What is Gross 1?
Gross 1 salary is the amount a worker most often negotiates with their employer. It is the amount specified in your employment contract and serves as the foundation for all further calculations.
What does Gross 1 consist of?
This amount belongs directly to the worker, but it does not land in full on the account; instead, mandatory contributions and taxes are settled from it. It includes:
- Contributions "from salary" (Pension insurance)These contributions are paid into pension funds (PIO) so that you have an insured pension in the future. Since they are deducted from the Gross 1 amount, we call them contributions "from salary".
- Income tax and local taxesThe state charges income tax (after the personal non-taxable deduction is subtracted), while the local government may charge an additional tax depending on the laws and residence.
- Net salaryAfter all the above-mentioned contributions and taxes are deducted from the Gross 1 amount, the remainder is your Net salary. This is the amount you receive in your bank account.
Why is Gross 1 negotiated?
Negotiating salary in gross amount is the standard due to different tax deductions that workers may have (e.g., dependent family members, disability). Two workers with the same Gross 1 salary can have completely different Net salaries. Therefore, negotiating a gross amount is the only fair way to define the value of a job position.