What is a base salary?

A base salary is the minimum compensation that an employee or contractor will receive for expected work over the year. On top of the base salary, an employee can negotiate bonuses for performance or extra work completed beyond the minimum expectations.

All employees have a base salary, but not all receive bonuses on top of that. It is up to the hiring party and employee to negotiate potential bonuses, although managers are also able to award bonuses on a discretionary basis even if it is not in the original contract. Base salaries plus bonuses are more popular in performance-based industries like finance than others.