Earnings | Meaning and Definition

What are earnings?

Earnings stand for the total amount of compensation paid by the employer and earned by the employee in exchange for the services provided to the employer by the employee calculated on the basis of the payroll observed during the period of accounting. Its mode consists of salaries, wages, as well as pay for overtime. Earnings, in a general sense, are basically the total amount of compensation provided to the employee by the employer.

Earnings and deductions go hand in hand to structure the overall salary earned by an employee. Both of them function in calculating the take-home salary or the net salary paid to the employee. In simple terms, earnings consist of the amount paid by the employer that is earned by the employee, whereas deductions are the amount that consists of the deduction made by the employer in the form of insurance premium, taxes, as well as in other forms of deductions.

All the earnings of the employee are present on the left-hand side of the salary slip, whereas the deductions are generally positioned on the right-hand side of the salary slip.