HR Glossary


Updated on:
August 22, 2022


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Table of Content

What is Remuneration? 

Remuneration is the financial compensation or dues that a business provides to its employees or independent contractors.

The compensation includes salary, wages, tips, commissions, bonuses, and vacation. How much a company pays an individual is based on what the individual does for the company.

Total remuneration is taxable, so the employer must withhold income taxes and other payroll taxes and report them on the employee’s W-2 form.

A company’s remuneration for its employees and independent contractors depends on the type of business. For example, a marketing company may pay a higher wage than an engineering company. A marketing company may also offer additional perks, like health insurance and vacation, to compensate employees.

What are the packages of Remuneration? 

Remuneration packages are generally described as a reward for employment. This can be expressed in the following things:

  • pay/salary/wage
  • allowances
  • benefits
  • bonuses
  • cash incentives
  • non-cash incentives

This can not only be used in terms of employment pay, but also victim payment in a civil case in relation to unpaid wages.

What Are the Types of Remuneration?

There are two basic types of remuneration (compensation): direct and indirect. 

  1. Direct remuneration is simply a different term used to explain financial compensation and includes salary, incentives, bonuses, travel expenses, etc. 
  2. Indirect remuneration is a different term for non-financial compensation and includes educational opportunities, child care assistance, health insurance, etc.

Why Remuneration is Necessary?

Remuneration is necessary in order to ensure that employees are fairly compensated for their work. Without remuneration, employees would not have any incentive to work, and businesses would not be able to function. Remuneration is also important in order to attract and retain the best employees. If businesses did not offer competitive salaries and benefits, they would quickly lose their best workers to other companies. Finally, remuneration is a key element of employee motivation. If employees feel that they are not being paid fairly, they will quickly become demotivated and may even start looking for other jobs.