What Is Remuneration?
Remuneration is the total compensation received by an employee. It includes not only base salary but any bonuses, commission payments, overtime pay, or other financial benefits that an employee receives from an employer.
A job perk may or may not be a component of employee remuneration. An on-site gym or a generous vacation plan are perks but they aren't money in an employee's pocket. Remuneration may include direct payment of money or taxable fringe benefits such as personal use of a company car.
- Remuneration is the total amount an employee receives for performing a job.
- Remuneration includes not only base salary but all other forms of financial compensation an employee receives.
- A company contribution to a retirement plan is deferred compensation, and as such is a component of remuneration.
- At the executive level, remuneration may include a combination of salary, stock shares, bonuses, and other financial compensation.
- For employees in service jobs, tips are considered part of remuneration.
The term remuneration implies total compensation.
At the executive level, remuneration can include options, bonuses, expense accounts, and other forms of compensation. These are generally detailed in an employment contract.
The amount of remuneration and its components depend on many factors, including:
- The employee's value to the company. Employees with in-demand skills are likely to get more perks.
- The job type. Some are straight hourly or salaried positions while others offer base pay plus commissions, bonuses, or tips.
- The company's business model. Some companies pride themselves on their generous employee remuneration and may offer bonuses, employee stock options, and 401(k) plan matching contributions. Others find such perks to be an unsupportable drag on the finances of the business.
- The general state of the economy. When jobs are plentiful and talent is scarce, companies pull out all the stops to attract the best candidates. That means better remuneration.
The Golden Hello
A company that is anxious to attract a person with a unique skillset or an outstanding reputation may offer yet another type of remuneration: the golden hello. This is a signing bonus, due when the employee starts the job (and, sometimes, forfeited if the employee leaves within a short period of time).
The better-known golden parachute, which guarantees an executive a generous payout in case of termination, is another form of remuneration that is written into a contract before the job even begins.
Other Types of Remuneration
Remuneration refers to the monetary rewards that an employee receives, but these rewards can take different forms. Many sales positions offer a commission on the sales made by an employee or a percentage of the amount sold. Some of these commissioned positions offer a base salary, while others are solely dependent on commissions.
Many positions in the foodservice and hospitality industries rely on tips, as their base pay does not meet the minimum wage.
Another type of remuneration is deferred compensation, which sets aside an employee's earnings to be redeemed at a later date. One common example of this is a retirement plan that includes an employer matching a certain amount contributed by an employee.
Remuneration may also refer to the benefits an employee receives from their company. These can come in the form of health insurance coverage, gym memberships, the use of a company mobile device or car, depending on the job and the company.
Most forms of remuneration are taxable as part of an employee's gross income. It gets complicated, of course, and the Internal Revenue Service (IRS) publishes a complete guide to what it calls fringe benefits.
The minimum wage is the lowest remuneration an employer can legally pay most employees, assuming there are no other benefits of the job.
The minimum wage varies by state, although the state minimum must be at least equal to the federal minimum wage. The federal minimum wage has been $7.25 since 2009.
Many workers are exempt from the federal minimum wage. These include not only restaurant wait staff but independent contractors, laborers on small farms, seasonal workers, apprentices, and students.
For many workers, salary and remuneration are the same. For others, salary is only one part of remuneration and it may be a minor part.
Here are the answers to some commonly asked questions about remuneration.
What Does Remuneration Mean?
Remuneration is the total amount paid to an employee. It may include a salary or hourly rate, bonuses, commissions, or any other payment.
In the view of the IRS, remuneration is the sum total of earnings and other taxable benefits and allowances. Remuneration, to the IRS, is synonymous with wages, whether it is labeled a salary, a bonus, or a commission.
What Is the Difference Between Salary and Remuneration?
For many people, salary and remuneration are the same. They are paid a flat salary or hourly rate for their work.
For others, salary is only one part of remuneration, and may even be a minor part.
Salespeople, for example, may receive a small salary and get their income largely from commissions based on their sales.
Wall Street professionals are paid a token salary and get the bulk of their income in a single bonus payment that is determined at the end of the year based on their performance and that of the company.
Restaurant wait staff can be paid as little as $2.13 an hour under federal law. The law assumes that this hourly rate plus tips will add up at least $5.15 an hour in remuneration.
What Are the Types of Remuneration?
Remuneration generally includes a salary or hourly wage or (in the case of a contractor) a job rate.
Some workers also receive a bonus, commission payments, a retirement savings contribution, or other fringe benefits of financial value.
At the executive level, those fringe benefits can get crazy. CEO perks may include personal use of a company jet, plus a "tax gross-up," meaning a company reimbursement of the amount they had to pay in income taxes for their personal use of the company jet.
What Is Another Word for Remuneration?
Compensation is a fair synonym for remuneration. It implies total payments.
Salary or wages may be only one part of remuneration.