From monthly salary to annual salary

Job adverts usually quote an annual salary while your payslip is monthly, and the number of payments changes the comparison entirely. This turns one figure into the other without slips.

The annual salary is the monthly figure times the number of payments. To compare with offers expressed over twelve months, that equivalent is calculated too.

Twelve, fourteen or sixteen payments

In Spain, Portugal and much of Latin America it is standard to split annual salary into fourteen payments, with extras in summer and at Christmas. In other countries it is twelve. Comparing a monthly wage between offers without knowing how many payments each has is comparing different things: only the gross annual figure is comparable.

Spread or not

Many companies offer to spread the extra payments across the twelve months. The annual total is the same, but cash flow changes and sometimes the monthly withholding does too. Neither option is objectively better: it depends how you prefer to receive the money.

The cost to the employer is not your gross

On top of gross salary, the employer pays social contributions that exceed thirty per cent in some countries. That total cost is what they consider when negotiating, and knowing it helps explain why a ten per cent rise costs them more than ten per cent.

Variable and fixed

A salary with a large variable component is not equivalent to an all-fixed one at the same total. You carry the risk, and the conditions for earning the variable part deserve careful reading before signing.