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I was recently promoted at my workplace and went from hourly to salary with what seems like a nice pay bump. However, I am regretting not asking these questions that I'm now thinking about post signing the offer letter. My offer letter stated my base salary, several allowances taxed and untaxed (health care, car, phone, etc) and 80 hours of PTO listed in a monetary amount. The allowances are set amounts paid out on every pay check which contributes to my final number for my annual salary. I'm coming up on using PTO however, and based on my assumption when signing the offer letter, I would receive my base salary + allowances + a pay out for the PTO hours used. But now, I'm second guessing and thinking I will only receive my base + allowances, with simply less hours worked. I plan on approaching the owner about this, but wanted to know what to expect from other's experiences. This is how the offer letter I signed was stated in terms of compensation as an example

Base: 50,0000
PTO: 1,200 (80 hours)
Health: 1,200
Car: 1,200
Phone: 300
Total Compensation: 53,900.

These numbers are examples, but still shouldn't my gross payout be 53,900? Otherwise in this example it would be 52,700 with 80 hours less worked. Mind you this is salary and I am required to work 40, but am often worked 50 or more a week. I'd love to hear some thoughts and what the norm is for this.

Thanks!

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    What region of the world. Edit your question instead of commenting. However, in general you are either paid at an hourly rate or have a yearly compensation (salary). Now you might be expected to work certain hours, and if not working during those hours, to be on your provided unlimited or limited yearly leave. The company typically will make their expectations clear in that regard
    – Donald
    Commented Oct 2, 2023 at 23:58
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    Haha... It's really funny that your company counts PTO as part of the total monetary compensation. Maybe, that probably depends on the industry and the location/country (?) But, in the IT industry in the US, usually companies don't really count PTO as part of the total monetary compensation in the job offer letter. Commented Oct 3, 2023 at 0:14
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    To be clear, $53,900 isn't your "final salary figure". $53,900 is the value (to you) of your total compensation package, $50,000 of which is salary. The company is paying for those benefits and for the PTO. You're not paying for them directly out of your pocket, therefore the total value to you is $53,900.
    – joeqwerty
    Commented Oct 3, 2023 at 1:40

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From management's point of view, benefits are part of the total cost of hiring you. Depending on what the benefit is and what tax laws you're under, some benefits may also be taxable as income.

I'd say the intent is clear: 50,000 plus those benefits, with total cost to them of 53,900. Whether the value to you is 53,900 is something you need to decide. You can attempt to negotiate to trade off one of these against another, or to increase any one of them -- but remember that they are under no obligation to agree; you have to explain why it is in THEIR interests to spend more money on you or spend it differently.

The offer is what the offer is, not what you're creatively interpreting it as. Take it, negotiate it, or leave it.

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    Nice answer. This addresses this issue in a way that many answers don't. The total cost to the employer of employing the OP is $53,900... $50,000 of which is salary. The total compensation package, which includes the PTO and other benefits, is $53,900. I'd personally see $53,900 as the total "value" of my compensation package. Think of it this way; The company is paying me to take vacation and they're paying for these other benefits. The cost of those benefits isn't coming directly out of my pocket, so to speak.
    – joeqwerty
    Commented Oct 3, 2023 at 0:40
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    In the US, employer-subsidized health insurance is often a huge part of our total compensation. And, with great difficulty, I'm going to leave it at that.
    – keshlam
    Commented Oct 3, 2023 at 0:47
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    @keshlam, ... and also 401K, employee stock options, etc... (BTW, some companies may even count work-from-home as a perk :-) Commented Oct 3, 2023 at 0:58
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    If the staff doesn't take the days off, the PTO does turn into cash. This is why "unlimited PTO" is actually a scam because you cannot get paid out for "unlimited" PTO, and people end up taking less PTO to begin with.
    – Nelson
    Commented Oct 3, 2023 at 6:40
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    That is why, in some parts of the world (example: India), instead of using the term "Compensation" / "Remuneration", they use "CTC - Cost to Company" in the employment agreement. A part of that is monetary, another part is perks / benefits, but overall, they are "cost" to the employer. Commented Oct 3, 2023 at 9:40
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Maybe, the correct answer depends on how your country defines what the total income is for income tax purpose.


In the US, when people file their income tax, they don't include their PTO as part of their income.

Specifically, using your example, people will only report $52,700 as their income to the government or tax agency (the IRS).

Thus, their total compensation would be $52,700.

For reference, please check out this article US Law: PTO is not considered part of an employee's salary:

Paid time off (PTO) is not considered part of an employee's salary, so it can be docked without jeopardizing the employee's exempt status, the 3rd U.S. Circuit Court of Appeals recently ruled.


In other words, in the US, when a company hires you, they send you a job offer letter that will not count PTO as part of the monetary compensation.


You wrote that you plan ask the owner for clarifications on this question. I believe this is the best way to go.

In addition, you can also talk to an accountant or someone who is familiar with the income tax law in your country.

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  • If I'm paid by the company then it shows up on my W-2. So, yes, my vacation is paid, and I pay tax on that. Now, they can dock vacation days (perhaps) and not let me take them, sure.
    – Jon Custer
    Commented Oct 3, 2023 at 12:38
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    Your salary and the taxable amount are different things.
    – gnasher729
    Commented Apr 11 at 21:14
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I suspect the real reason is that they are giving you your pay like this is for comparing total compensation against other companies or your old job. A lot of times it can be difficult to calculate what the actual value of your benefits is, so some companies will give you that number to make sure that you are considering all of the aspects of their offer. I would still double check their math on everything to make sure that they aren't overvaluing anything, though.

Not suggesting the company is somehow altruistic, but usually in my experience it's a solid green flag that a company is willing you give you those values because they know that their benefits and compensation are good and will hold up to industry standards.

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  • I see it as a deep red flag. Because nobody else adds paid holidays that way. If everyone says salary + paid holiday, and ONE company adds money to the salary amount, they art trying to trick you.
    – gnasher729
    Commented Apr 11 at 21:17
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Call them and ask them what this means.

I honestly can't tell from this whether you will end up being paid 50,000 or 51,200. I'm pretty sure the others are just statements of the value of benefits, not money that will actually come to you.

It's an extremely weird way of presenting salary. I suspect that they are doing this to make their offer seem better than it really is. They want to make their offer look better than another theoretical offer you might get which is 52,000 salary with 80 hours PTO, health, car and phone. In reality the 52,000 offer is better, but they want to make theirs seem larger.

The simple question you need to ask is "how much actual money will I be paid in my first year assuming I take my 80 hours PTO?". Don't let them off until they have actually answered the question. (My bet is that it's 50,000). If they refuse to answer the question assume its 50,000 (and I would reject them unless you have no other offers - you don't want to be working for a company that tries to play mind games with you.

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In NZ here (where PTO is a legal requirement) it would be the latter.

That is - your Total Compensation would be expressed as:

Base Salary + Perks/allowances + Holiday (which may be over and above the legal minimum).

When I get paid - on my Payslip it will be something like this:

Salary 80 hrs x not enough per hour = not enough
Perk 1 = Amount
Perk 2 = Another amount
Tax = Far too much
Net amount deposited = Really not enough.

Then, elsewhere on my Payslip it will show this:

Leave accrued (in NZ PTO or Annual Leave is Accrued - which is you 'earn' N number of days/hours for Y number of days/hours worked - there's a formula online)

Annual Leave YTD = N Hours
Sick Leave = Y Hours etc.

Edit:

Then, when I take time off my Payslip looks something like this:

Salary 40 hrs x not enough per hour = not enough
Annual Leave 40 hrs x not enough per hour = not enough
Perk 1 = Amount
Perk 2 = Another amount
Tax = Far too much
Net amount deposited = Really not enough.

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This is very strange and looks like it is designed to bamboozle you.

Any decent company will tell you your gross salary, your paid or unpaid holiday allowance (some people would be quite happy with 14 days additional unpaid holiday), perks like a company car. It’s up to you to figure out how much taxable income you have from that offer. So your offer should be “50,000 per annum, x days paid holiday, company car”.

When you get your payslip, the company should know what you have to pay tax for. That will say “50,000 salary, 1,200 for company car”. Your salary is 50,000. Paid holidays means the 50,000 pays for the days you work and the days you don’t work, unless they actually pay you additional money.

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