The real value of your salary

June 29, 2011Posted by carolyn

Figuring out how much your annual salary or a job offer is worth in your back pocket can be a confusing task. We’ve broken down the basic elements to help you understand the structure of a typical remuneration package for mining professionals.

Mining truckRemuneration is comprised of two key elements, fixed remuneration and variable remuneration. Fixed remuneration includes all aspects of guaranteed income like base salary, whereas variable remuneration includes those elements that by definition vary, such as bonuses.

Typically, fixed remuneration includes base salary, superannuation, site or hardship allowances, housing or housing supplements, private medical insurance, vehicle or vehicle allowance and non-financial benefits such as gym memberships.

Variable remuneration normally is comprised of performance bonus, company share scheme or options. Putting a dollar value on these aspects can be difficult, especially when performance bonuses can be tied to overall company performance rather than just your individual performance.

Options and share schemes which are becoming increasingly commonplace across all levels for professionals are extremely difficult to value, largely due to their variability based on market fluctuations, exercise prices and dates, tax complications and so forth. If you’re in doubt regarding the value and tax implications for any aspects of your remuneration, it’s best to always speak to an accountant.

Ultimately, when you’re considering your take home pay or comparing offers of employment, be careful not to confuse aspects of fixed remuneration and variable remuneration. Some employers and recruitment agents may talk up the real value of variable remuneration which by definition isn’t guaranteed income. However, variable income provides a valuable means of realising substantial financial benefits from your work particularly if you’re individual performance is recognised in a company who is performing well.

A final word of caution on international roles… be careful of tax implications, particularly if working abroad yet residing in Australia. If in doubt, speak to your accountant!