Glossary
Gross-to-net pay
Gross-to-net pay is the process of calculating an employee's take-home pay by subtracting income tax, social contributions, and other deductions from their gross (before-tax) salary.
Reviewed by Teamed's in-house employment-law team·Last updated 24 June 2026
What is Gross-to-net pay?
Gross-to-net pay describes the calculation that turns an employee's agreed salary into the amount that actually lands in their bank account each pay period. You start with gross pay, the full amount before anything is taken out, and then subtract a series of mandatory and voluntary deductions to arrive at net pay.
Mandatory deductions typically include income tax withheld by the employer on the employee's behalf, employee-side social security or national insurance contributions, and any statutory pension deductions. Voluntary deductions, such as private health insurance premiums or salary-sacrifice arrangements, come off after that.
The precise deductions, rates, and order of calculation differ by country. An employee in Germany faces different brackets and contribution rates than one in the Philippines or Canada. That variation is exactly why running payroll across multiple countries requires local knowledge. Teamed's in-house employment-law team handles these calculations for each jurisdiction where your people are employed.
What is gross pay?
Gross pay is an employee's total earnings before any deductions. It includes base salary and, where applicable, overtime, bonuses, and allowances. It is the number in the employment contract, but it is not what the employee takes home.
What gets deducted to reach net pay?
The main deductions are income tax withheld at source, employee social security or national insurance contributions, and statutory pension amounts. Voluntary deductions such as health insurance or cycle-to-work schemes sit on top. The total, and the order, varies by country.
Why does the gross-to-net calculation vary by country?
Each country sets its own tax brackets, contribution ceilings, and statutory rates. A gross salary of 50,000 in the UK produces a different net figure than the same amount in France, Germany, or Mexico. Local payroll rules also determine which deductions the employer must apply before others.
Who is responsible for running the gross-to-net calculation?
The employer, or the employment platform acting as the legal employer, is responsible for withholding the correct amounts and paying them to the relevant tax and social-security authorities. Errors result in penalties for the employer, so accurate local payroll knowledge is essential.
Frequently asked questions
Is gross pay the same as cost of employment?
No. Cost of employment also includes employer-side social contributions, pension contributions, and any other on-costs the employer pays on top of the employee's gross salary. The employee never sees those amounts; they sit above the gross-to-net calculation entirely.Can an employee ask to see the gross-to-net breakdown?
Yes. Most countries require employers to provide a payslip showing gross pay, each deduction itemised, and the resulting net amount. This is a legal obligation in most jurisdictions, not simply good practice.Does remote work across borders change the gross-to-net calculation?
Yes. When an employee is based in a different country from the employer, the deductions follow the rules of the country where the employee works and is tax-resident. Running the wrong country's rates is a common payroll compliance error.What is a payslip?
A payslip is the document, paper or digital, that shows an employee their gross pay, every deduction applied, and their net take-home amount for that pay period. Employers are legally required to issue one each time they run payroll in most countries.
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See what employment actually costs in your target countryLast verified 2026-06-24