Remuneration
Summary definition: The full value of all compensation an employee receives in exchange for their work.
What is remuneration?
Remuneration refers to the total compensation an employee receives in exchange for their work or services.
Financial remuneration goes beyond base pay to include all forms of compensation, such as supplemental earnings (e.g., bonuses) and other performance- or responsibility-based rewards (e.g., sales commissions).
Key takeaways
- Financial remuneration is the complete value of compensation an employee receives in exchange for their work, including salary or wages, benefits, bonuses, and other financial or non-financial rewards.
- While the most common form of remuneration is wages or salary (i.e., direct remuneration), employers can use other forms to craft a total compensation package.
- Understanding the difference between remuneration and benefits or salary can allow employees to have more nuanced conversations or negotiations regarding their compensation.
What is the difference between remuneration vs. salary?
Simply put, an employee’s salary is a component of their remuneration package, but not the only one. Employee remuneration also includes other forms of financial compensation, such as commissions, bonuses, or stock options.
Furthermore, employee remuneration can include non-financial forms of compensation, such as recognition programs, fringe benefits, or flexible work arrangements.
Remuneration package types
While salary and wages are the most common forms of compensation, employers can remunerate their employees in several ways, depending on the nature of their work and role.
| Type of remuneration | Description | Examples |
|---|---|---|
| Direct financial remuneration | Monetary compensation paid directly to employees; often the most visible form of compensation. |
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| Indirect remuneration (benefits) | Non-cash compensation with financial value, commonly referred to as benefits. |
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| Variable remuneration | Performance-based rewards that vary depending on individual, team, or company results. |
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| Non-financial remuneration | Non-monetary rewards that enhance the overall compensation package and employee experience. |
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Remuneration package examples
Employee A earns a base salary of $70,000 per year. But, in addition to their salary, they’re also remunerated $10,000 in annual commissions, a $5,000 performance bonus, and $8,000 in employer-paid benefits. Thus, while their salary alone is $70,000, their remuneration is $93,000.
Conversely, Employee B earns hourly wages and tips, often totaling around $45,000 annually. Their employer, however, also provides up to $5,000 annually in performance bonuses and a $100 monthly stipend. Therefore, Employee B’s total remuneration is approximately $51,200 a year.
What are the benefits of using remuneration vs. salary?
Remuneration finance offers a more complete and transparent view of employee compensation. For employers, this supports fairer compensation practices, helping attract and retain talent and providing flexibility in designing competitive wage and benefits packages.
For employees, understanding remuneration expectations clarifies the true value of their earnings, making it easier to compare offers, understand compensation expectations, and recognize the full range of financial and non-financial benefits they can earn.
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