Earnings Definition

Earnings are the financial gains or profits that an individual receives from their employment or investment activities. In the context of HR, earnings generally refer to the total compensation that an employee receives for their work. This includes base salary, bonuses, commissions, and any other forms of monetary compensation.

Earnings are an important aspect of an employee’s overall compensation package, as they directly impact an individual’s financial well-being and job satisfaction. In addition to providing employees with a source of income, earnings also serve as a key indicator of an individual’s performance and value within an organization.

How does it work?

Earnings are typically determined based on a variety of factors, including an individual’s job role, level of experience, performance, and market conditions. Employers may use salary surveys, performance evaluations, and other tools to determine appropriate levels of compensation for their employees.

Key features of earnings include:

1. Base Salary: This is the fixed amount of money that an employee receives on a regular basis, usually on a monthly or annual basis.

2. Bonuses: Bonuses are additional payments that are awarded to employees based on their performance, company profits, or other predetermined criteria.

3. Commissions: Commissions are payments that employees receive based on their sales performance or the revenue they generate for the company.


While wages generally refer to the hourly or daily rate of pay that an employee receives for their work, earnings encompass all forms of compensation, including base salary, bonuses, and commissions.

Yes, earnings are typically subject to federal and state income taxes, as well as Social Security and Medicare taxes. Employers are required to withhold these taxes from employees' earnings and remit them to the appropriate tax authorities.

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