An Employer Guide To Remuneration

Post A Job For Free, Promote It For A Fee

The main reason that an individual will decide to work for a particular employer is remuneration. The better the compensation for their work, the more tempting the offer is and the more likely it is that they’ll stay with the company. That means that deciding what to offer your employees for remuneration is an extremely important consideration.

This isn’t just a matter of salary, either. The entire package that the employer gives to an employee that has monetary value is considered remuneration. That means that benefits, perks, and other forms of compensation are also extremely important, not just your staff’s salary or wage.

Key Takeaways:

Remuneration includes the entire package of pay that an employee receives from their employer. This means that the salary and other monetary payments are included with benefits such as health insurance and retirement benefits.
There’s both direct and indirect remuneration. Direct remunerations are payments, like a salary or bonuses. Indirect remunerations are payments that the employee doesn’t have direct access to, such as retirement benefits or discounted health insurance.
Almost all types of remuneration are taxable.

What Is Remuneration?

Remuneration is the entire compensation package that the employer gives an employee. In most cases, the biggest part of this is the base salary, but that isn’t true for every job. Remuneration also includes commissions from sales, overtime pay, bonuses, and other financial benefits.

That being said, Not everything included in a benefits package is remuneration, as they aren’t a form of direct payment. For instance, a vacation package can be considered a form of payment, but it doesn’t count as remuneration. It isn’t money that is paid directly to the employee – or something that is equivalent to that, such as allowing an employee to use a company car.

Get Started Hiring Now

Post A Job

Types of Remuneration

Remuneration can come in several different forms. The most obvious and best-known one is an employee’s salary, but that’s not the only way that employers compensate their employees. If you want to offer a complete remuneration package, then you should offer several other benefits to your staff. Almost every kind of remuneration is taxable, and the IRS has a guide on this.

Types of remuneration include:

Wages or salary. In most cases, this is the primary form of remuneration. A worker’s hourly wage or salary will make up the bulk of the compensation that an employer offers them.
Tips. In the case of a server, baristas, or other similar workers, tips are the primary part of their remuneration. It’s expected that tips will push their wage up to the minimum wage and therefore allow the employer to pay them less.
Bonuses. Bonuses are a type of payment. Some people’s salaries are more based on bonuses than their hourly wages. Some companies offer regular bonuses, usually related to performance, and that will make a big difference in the employee’s end salary. Bonuses are, of course, taxable, just like other forms of payment.
Commission payments. In sales, commission payments can make up the bulk of an employee’s take-home pay. Some sales positions get a token salary and expect that their sales will generate a bigger paycheck. Other positions get a smaller commission, and their salary is more important.
Overtime payments. Paying the additional wage for overtime is also a type of remuneration. Most businesses don’t encourage overtime as they don’t want to pay the extra money, but there are exceptions to this. Some employees will be able to boost their pay a lot by getting overtime pay.

This is also something that is expected in places that have to open over holidays. Hospitals, police, fire, airlines, and other essential services will have workers working on a holiday and pay them holiday pay – which usually works out to time and a half, just like overtime. However, some will offer double or triple pay.
Golden hello. This is also known as a signing bonus. The idea behind this payment is to encourage an employee to work for the company, and therefore they give them a lump sum upfront as an incentive.
Severance package. Severance packages are an agreed-upon payment that employees will receive upon leaving the company. Sometimes they’ll include a continuation of benefits or perks as well. This is another form of remuneration and a way to offer employees security in their position.

There is also indirect remuneration. Indirect remuneration is money that isn’t immediately available to employees but still has value. Types of indirect compensation include:

Deferred compensation. This is money paid to the employee that they can’t access right away. The most common form of indirect compensation is retirement benefits. If the employer adds a certain amount of money to the employee’s retirement fund each month, then it is money they pay out, but it’s not money the worker has direct access to.
Health insurance. The majority of jobs have health insurance benefits. While the discount on health insurance is a type of payment, it isn’t money directly into the employee’s pocket like a salary or bonus, which makes it indirect remuneration.
Paid for memberships. Some employers will grant employees membership to a gym or other service. Again, this is valuable, but it isn’t money that the employee can use at their discretion, nor is it paid directly to them.
Use of company property. Some businesses will allow employees to use a company phone, computer, or even car. Not having to pay for these can save employees a lot of money, which is why the use of a car is still taxed. However, once again, it’s not paid directly to them – they aren’t gifted the phone or car – so it’s indirect.
Meal plans. If the employer offers free or highly discounted meals on a regular basis, this can be considered remuneration. If they have a cafeteria with free lunch or offer to cover meals, then this is a type of payment.

What’s an Attractive Remuneration Package for an Employee?

There are several things to consider when deciding on a remuneration package to offer an employee. Every person is different, which means that they will prioritize different things, but there are some choices that are likely to appeal to almost everyone.

In order to put together a remuneration package that will catch valuable workers’ attention, you’ll want to include the following:

A competitive salary. The salary is the first thing that your potential employees will look at. Not that if you offer excellent benefits, you may get away with a lower salary, but it won’t have the same wow factor as a higher salary will.
Work-life balance. Nowadays, it’s difficult to get away from work, as you’re always connected via your phone or computer. Not letting employees disconnect is a sure way towards burnout, which helps no one. Make sure to encourage vacations and allow employees to not work during non-work hours.

Part of this can also be flexibility with the schedule. Most salaried positions aren’t something that requires the employee to be at their desk for eight hours per day. If they’re offered flex time or work-from-home options, then that will be attractive to a lot of younger workers.
Perks. This isn’t the strongest appeal for employees, but offering things like team lunches, celebrations for completing a project, honoring the employee of the month, or handing out gift cards can all make employees feel valued. This is an inexpensive way to make the people who work for you feel valued.
Strong benefits. The benefits package is the second most important thing for luring a candidate to choose to work for you. A comprehensive package is an excellent way to start, but there are two options to catch a potential employee’s attention.
- Individualized. If you offer benefits that are particular to your business or are specific to your particular employee, then that will stand out. Of course, you have to make sure that the benefits are desirable to the employee in question.
- Flexible. If you have a wide selection of possible benefits and allow your employees to tailor them, then that will also stand out. It’ll also mean that they’re getting the most value from them, as they’ll select the ones that are the most important to them.
Clear career progression. If you want your employees to stay with you long-term, then you want to offer an obvious path for their career to take. For most positions, this will involve a high possibility of promotions. But barring that, they have to be able to expect their salary to rise, and they will get more prestige the longer they stay.
Bonuses. Offering a way to obtain bonuses is another way to attract qualified candidates. Everyone likes being paid more, and a bonus can make people feel highly valued and appreciated. If there’s a clear way to obtain the bonuses, then that can also serve as a motivator.

Get Started Hiring Now

Post A Job