Base Pay - Meaning & Definition

Published in Human Resources Terms by MBA Skool Team

What is Base Pay?

The base pay is the minimum compensation received by an employee excluding benefits, allowances, incentives and bonuses. Base pay is purely financial and can be expressed as an hourly rate, monthly or annual salary. The base salary is determined through benchmarking practices to match the market rate for similar work in similar regions.

Other ways to calculate base pay include market surveys and also the use of online base salary calculators. Some organizations define base pay in relation grades or their position in the hierarchy.

Base pay can be affected by the number of available talent to perform the job and also regulatory policies such as minimum wages. Changes in basic pay can be caused by annual increments, promotions, demotions or job transfers. Some organizations define base pay in relation grades or the position in the hierarchy.

For example all employees who have achieved a grade 5 will have the same base pay whereas all employees at grade 6 will have a slightly higher base pay.


This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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