What Is Base Pay

This is usually a fixed amount of salary that is paid to an employee, and does not include benefits, incentives, bonuses etc. Any employee who is paid a base salary is anticipated to finish his entire duties and responsibilities. This may wary in the case of employees who are paid on hourly basis. Such kinds of employees are authorized to get overtime for their piece work.

The employees who are paid base pay will not keep account of hours worked because there are not entitled for overtime. Base salary is always fixed only after market rate pay analysis is done, so that a fair pay rate in maintained along with the other companies. It is always better for the employees to get in written if they are paid other commission, benefits. If nothing is given in black and white regarding these extra benefits then the employees cannot demand the same.

The most important task for an organization is to design a base pay structure. This requires forecasting and analysis of market rates, company policy and procedures and legal laws that bind the compensation. While designing this base pay the company must keep in mind the following:

  • Launch a base pay policy
  • Planning a pay band keeping in mind the minimum and maximum range for different sets of employees.
  • Regulate overlay in pay bands
  • Decide if the organization needs more than one pay structure.
  • The link between pay ranks
  • Whether the pay band should top or holdup in the market.

After assessing these then comes the biggest question of issues relating to the above. The company should think to hire employees with even lowest pay band if in case the costs are getting too high. This situation is very critical for any company and has to be handled very intelligently. The company should also sort out which would be a better rate of pay to retain human force. Another issue is to decide whether benefits and incentives to be included in the base pay.

Most organizations today go for multiple pay structure, because of the flexibility it gives to the companies. The advantages of this policy are:

  • The base pay for specialized jobs is very high, so there is need for multiple pay structure.
  • The base pay for top and managerial positions should always be different.
  • In case the company hires laborers class of employees it is easy for the organization to go for hourly rates.

Base pay structures whether single or multiple provides an edge in making pay decisions. Having said that it takes care to maintain equity of pay through out the organization.