Gross Salary: Meaning, Calculator, & Salary List in Malaysia

When discussing salary with potential hires, many employers face the common question: “How much will I actually receive?”

This is where the difference between gross salary and net salary becomes important.

While gross salary is what employers offer in contracts, net salary is what employees take home after deductions.

In this article, you will learn more about gross salary, how to calculate, and the general gross salary estimation across Malaysia. Read the article below.

What is Gross Salary?

Gross salary is the total amount an employee earns before any deductions.

It includes basic salary, allowances, bonuses, overtime, and employer contributions such as EPF and SOCSO.

Simply, it is the salary that appears on a job offer or employment contract before statutory and voluntary deductions are applied.

The amount that employees actually receive in their bank accounts is net salary, which is calculated after subtracting taxes, EPF, SOCSO, and other deductions from gross salary.

Gross Salary vs. Basic Salary

Some employers and employees confuse gross salary with basic salary. However, they are different.

Basic salary is the fixed amount an employer agrees to pay an employee before adding bonuses or allowances.
Gross salary includes basic salary plus additional earnings such as allowances, overtime, and bonuses.

For example, if an employee’s basic salary is RM3,500 and they receive a travel allowance of RM500 and a monthly bonus of RM200, their gross salary will be RM4,200.

Gross Salary vs. Net Salary

The key difference between gross salary and net salary is that gross salary includes all earnings before deductions, while net salary is the final amount employees receive after all deductions are applied.

Category	Gross Salary	Net Salary
Definition	Total salary before deductions	Final salary after deductions
Includes	Basic salary, allowances, bonuses, overtime, EPF, SOCSO	The amount left after deducting taxes, EPF, SOCSO, EIS
Formula	Gross salary = Basic salary + Allowances + Bonuses	Net salary = Gross salary - Taxes - EPF - SOCSO - Other deductions

What Are the Benefits of Gross Salary for Employers?

Gross salary plays a major role in salary structuring, payroll planning, and compliance.

Employers benefit from properly structured gross salary packages in several ways:

1. Helps in Structuring Competitive Salary Packages

A well-planned gross salary structure helps businesses stay competitive in the job market.

When companies offer a well-balanced salary package, including allowances and bonuses, they attract top talent and reduce employee turnover.

2. Provides Transparency in Salary Negotiations

Many employees may not fully understand how their salary is structured.

A clear breakdown of gross salary, allowances, and deductions helps in reducing misunderstandings during salary negotiations.

3. Assists in Budget Planning and Payroll Management

Employers need to plan their payroll expenses carefully. Gross salary affects EPF, SOCSO, and EIS contributions, which are mandatory for employers.

Understanding gross salary helps companies forecast salary budgets accurately.

4. Impacts Statutory Contributions (EPF, SOCSO, EIS)

In Malaysia, employers contribute 12-13% to EPF and pay SOCSO and EIS contributions based on an employee’s gross salary.

The higher the gross salary, the higher these contributions. Understanding these obligations helps businesses stay compliant with labor laws.

Components of Gross Salary

Gross salary consists of several key components. While the structure may vary depending on company policies, the following are the most common components:

Component	Description
Basic Salary	The fixed salary amount before any benefits, incentives, or deductions.
Allowances	Extra payments such as housing, transport, meal, shift, and utility allowances.
Bonuses and Incentives	Performance-based or company-wide bonuses.
Overtime Pay	Extra earnings for employees working beyond their normal hours.
Employer Contributions	Contributions to EPF, SOCSO, and EIS, which are based on the employee’s gross salary.

Each of these components affects the final gross salary and impacts both the employer's payroll budget and the employee's net salary.

What Kind of Businesses Use Gross Salary?

All businesses in Malaysia, regardless of industry, use gross salary as a basis for payroll calculations.

However, the salary structure may differ based on the nature of the business.

1. Corporate and MNCs

Large corporations and multinational companies typically have structured salary packages, with clear breakdowns of gross salary, allowances, and deductions.

2. SMEs and Startups

Small and medium enterprises (SMEs) and startups may offer lower basic salaries but compensate with performance bonuses, stock options, or flexible benefits.

3. Manufacturing and Construction Companies

Industries with daily wage workers or contract employees use gross salary calculations to determine overtime pay and statutory contributions.

4. Service-Based Industries

Retail, F&B, healthcare, and hospitality industries often include shift allowances, tips, and commissions as part of gross salary.

What is the Benchmark of Gross Salary in Malaysia?

Gross salary benchmarks in Malaysia vary across industries, experience levels, and job roles.

These benchmarks help employers structure competitive salary packages, attract skilled talent, and manage payroll budgets effectively.

Industry-Wise Gross Salary Benchmarks in Malaysia

Different industries offer different salary ranges based on demand, skill requirements, and economic factors.

Below is a general comparison of gross salary benchmarks across key industries in Malaysia:

Industry	Job Role/Position	Average Monthly Salary (RM)
Information Technology (IT)	IT & Technology Development Manager	RM12,449
Banking & Finance	Mergers & Acquisitions (M&A) Partner	RM41,666
Marketing	Head of Marketing	RM35,000
Engineering	Engineering Director	RM34,166
Healthcare	Country Manager (Healthcare)	RM33,000

Note: These figures are estimates and may change based on company policies, market conditions, and job demands. The sources are from Join Horizons and Michael Page.

Average Gross Salary by Job Positions

Salaries also differ based on job responsibilities and hierarchy within an organization.

Here's a look at common job positions and their estimated gross salary ranges based on Glassdoor:

Job Position	Experience Level	Range Gross Salary (RM)
Software Engineer	Entry-Level	48,000 - 60,000
IT Manager	Mid-Level	60,000 - 144,000
Chief Technology Officer	Senior-Level	120,000 - 336,000
Business Analyst	Entry-Level	48,000 - 72,000
Finance Manager	Mid-Level	84,000 - 144,000
Chief Financial Officer (CFO)	Senior-Level	120,000 - 684,000
Marketing Executive	Entry-Level	36,000 - 48,000
Marketing Manager	Mid-Level	60,000 - 144,000
Head of Marketing	Senior-Level	120,000 - 420,000
Chief Marketing Officer	Senior-Level	180,000 - 456,000
Mechanical Engineer	Entry-Level	36,000 - 60,000
Project Engineer	Mid-Level	48,000 - 72,000
Engineering Director	Senior-Level	252,000 - 420,000
Registered Nurse	Entry-Level	24,000 - 48,000
Medical Officer	Mid-Level	48,000 - 276,000
Medical Director	Senior-Level	240,000 - 384,000

Impacts of Candidate Experience and Qualifications on Gross Salary

One of the biggest factors affecting gross salary is experience and educational background.

The more experience and higher qualifications an employee has, the higher their earning potential.

Experience Level and Salary Growth

Employees with more years of experience generally earn higher salaries because they bring stronger problem-solving abilities, industry insights, and leadership skills.

A new hire may start with an entry-level salary, but over the years, as they develop expertise and take on greater responsibilities, their earning potential increases.

Senior professionals or managers with extensive experience are often rewarded with higher gross salaries, additional benefits, and performance-based incentives.

Educational Qualifications and Gross Salary

Academic qualifications also play a role in salary determination.

Employees with higher degrees (Bachelor’s, Master's, Ph D) tend to secure better-paying roles, especially in industries where technical knowledge or specialized expertise is required.

For example, an individual with an advanced degree in engineering, finance, or technology may qualify for a higher salary bracket than someone with only a diploma or certificate in the same field.

Industry-Specific Skills Matter

Not all industries compensate employees the same way. Some fields demand highly specialized knowledge, which leads to higher gross salaries.

Professionals with expertise in artificial intelligence, cybersecurity, or fintech are in high demand and often command higher salaries than general IT or administrative roles.

Similarly, medical specialists, legal experts, and engineers with niche expertise receive better salary offers compared to their generalist counterparts.

Professional Certifications Boost Salaries

Certifications are highly valued, particularly in fields like finance, IT, and project management.

Employees who invest in obtaining professional credentials often have stronger negotiation power when discussing their salaries.

Certifications such as ACCA or CPA in accounting, AWS or Cisco in IT, or PMP in project management signal that an employee has specialized skills.

This makes them more competitive in the job market.

How to Calculate Gross Salary in Malaysia?

The basic formula for gross salary calculation is:

Gross Salary = Basic Salary + Allowances + Bonuses + Overtime Pay

However, to determine how much an employee will actually receive after deductions, employers must consider:

Net Salary = Gross Salary - EPF - SOCSO - EIS - Income Tax (PCB)

Let’s go through a detailed example.

Example of Gross Salary Calculator with Payroll Deductions

Imagine an employee has the following earnings:

Basic salary: RM5,000
Housing allowance: RM500
Transport allowance: RM300
Performance bonus: RM700

Step 1: Calculate Gross Salary

Gross Salary = Basic Salary + Allowances + Bonus
Gross Salary = RM5,000 + RM500 + RM300 + RM700
Gross Salary = RM6,500

Step 2: Calculate Payroll Deductions

Now, let’s calculate EPF, SOCSO, EIS, and PCB deductions based on the gross salary.

Category	Deduction Rate	Calculation	Amount (RM)
EPF (Employee’s Contribution)	11%	RM6,500 × 11%	715
SOCSO	Based on salary range	RM6,500 falls under RM4,000+ category	19.75
EIS	0.2%	RM6,500 × 0.2%	13
Income Tax (PCB)	Based on tax bracket	Approximate deduction	250

Step 3: Calculate Net Salary

Net Salary = Gross Salary - (EPF + SOCSO + EIS + PCB)
Net Salary = RM6,500 - (RM715 + RM19.75 + RM13 + RM250)
Net Salary = RM5,502.25

So, although the employee's gross salary is RM6,500, the take-home salary (net salary) is RM5,502.25 after statutory deductions.

Online Tools for Gross Salary Calculation

Since payroll calculations involve multiple deductions, employers can use online salary calculators to simplify the process. Here are some recommended tools:

LHDN PCB Calculator: https://www.hasil.gov.my
PayrollPanda: https://www.payrollpanda.com
BrioHR: https://www.briohr.com
Talent.com: https://www.talent.com
Fincrew: https://www.fincrew.my

FAQ

How do employers determine gross salary?

Employers set gross salary based on industry benchmarks, job responsibilities, employee experience, and business budgets.

Is gross salary the same as take-home salary?

No, gross salary is before deductions, while take-home salary (net salary) is after deductions.

Do bonuses count as part of gross salary?

Yes, bonuses, commissions, and overtime pay are included in gross salary.

How do statutory contributions affect gross salary?

Employers must contribute EPF (12-13%), SOCSO, and EIS based on gross salary, which increases payroll costs.

Where can employers find salary benchmarks in Malaysia?

Employers can refer to government salary reports, job market surveys, and recruitment platforms for industry-specific salary data.

Managing gross salary correctly is crucial for businesses to remain compliant with labor laws and transparent in salary negotiations.

Employees value clarity in how their salaries are calculated, and businesses that communicate salary structures effectively can foster trust, reduce misunderstandings, and improve employee retention.

Need to hire employees in Malaysia?

Post your job ads on Maukerja, Ricebowl, LinkedIn, and Google with AJobThing to find the best talent today!