✨  Don't miss out! Register for our Employee Appreciation Webinar scheduled for 29th February.🎖️
✨  Don't miss out! Register for our Employee Appreciation Webinar scheduled for 29th February.🎖️

Register now

Live Webinar: Secrets to Building a Successful B2B2C Growth Flywheel
Save your spot now

The Empuls Glossary

Glossary of Human Resources Management and Employee Benefit Terms

Visit Hr Glossaries

Gross Up

Gross up is a financial and accounting term that describes increasing a net amount to arrive at a final amount. The concept of gross up is usually encountered in different financial scenarios, like employee compensation, dividends, and various types of payments and reimbursements.

What is the meaning of gross up?

Gross up is a process of raising a net amount to reach its gross equivalent. It includes adding the amount of taxes or other deductions to a net figure to calculate the total amount before those deductions were made. The primary purpose of grossing up is to ensure that a recipient receives a particular amount after taxes or deductions have been taken.

Listen, recognize, award, and retain your employees with our Employee engagement software  

What is the gross-up rate?

The gross-up rate, also referred to as the gross-up factor, is a numerical multiplier used to calculate the gross amount from a given net amount after deductions. It is basically used in tax and financial calculations to identify the total amount before taxes or miscellaneous deductions.

When an employer offers gross-up to employees?

Employers may offer a gross-up in various situations, such as:

  1. Relocation expenses
  2. Bonus and incentives
  3. Equity awards
  4. Severance package
  1. Relocation expenses: When an employee is asked to relocate for work, they may provide financial assistance to cover the cost of moving, maybe traveling, housing and shipping goods expenses. Employees get reimbursed for the tax incurred; the employers may gross up the amount of relocation.
  2. Bonus and incentives: Employers may also provide incentives or bonuses on their performances; rather than giving a gross bonus, they may gross up the bonus as a desired amount.
  3. Equity awards: In some scenarios, employers grant equity-based compensation, like stock units or stock options, to employees. When equity awards vest or become exercisable, employees may face tax implications to help employees cover the taxes owed on the equity awards.
  4. Severance package: When the employee is being terminated, they might be offered a severance package to assist the employee during this termination and cover taxes; the employer may gross up the amount.

How to calculate gross up?

To calculate the gross-up amount, cater these steps:

  1. Identify the net amount
  2. Determine the gross-up rate
  3. Calculate the gross amount
  4. Check the gross amount

1. Identify the net amount: By identifying the net amount that the receipt needs to receive after taxes or deductions. This is the amount you want to end up after grossing up.

2. Determine the gross-up rate: The gross-up rate is the tax or dedication that was taken to arrive at the net amount.

(Total gross amount - Net amount) / net amount = Gross up rate

3. Calculate the gross amount: To determine the gross amount, divide the net amount by the complement of the gross-up rate.

Net amount / (1 - Gross up rate) = Gross amount

4. Check the gross amount: Ensure that the calculated gross amount, after-tax or deductions, will result in the desired net amount.

What is an example of gross up?

Suppose an employee is eligible for performance bonuses of $6500, and employers ensure that employees receive the full amount of $6500 after tax deduction and consider the employee tax rate as 20%.

Calculating the gross-up rate

Gross up rate = (Total gross amount / Net Amount) - 1
Total gross amount = Net amount / (1- Gross up rate)
Gross up rate = Net amount / (1- Gross up rate)

                      = ($6500 / $6500) - 1

Gross up rate = 0

Since the gross-up rate is 0, there are no tax deductions applied to the bonus amount, and the employee will receive the full $6500 without grossing up.

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.


eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

  • Promoters
    Employees who have responded positively or agreed.
  • Detractors
    Employees who have reacted negatively or disagreed.
  • Passives
    Employees who have stayed neutral with their responses.

Quick Links

Employee Engagement solutions

Recognised by market experts