Remuneration is the total compensation an employee receives. It includes employee salary, hourly wages, bonuses, overtime pay, and other employee benefits, such as group health insurance or a company car. Employers who effectively communicate total remuneration and all it affords their employees may be better able to compete for talent.
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Determining remuneration
Remuneration received is determined by a mix of factors, including:
- Role and responsibilities: in-demand or special skills, certifications
,or education needed to fulfil the role - Market rate: what others are paying and the scarcity of talent
- Experience and qualifications: highly qualified people being offered higher pay
- Company budget and pay policies: policies regarding junior versus senior roles
What are the types of remuneration?
There are several types of remuneration, including but not limited to:
- Direct remuneration: salary, hourly wage, bonuses, commissions
- Indirect remuneration: health insurance, retirement contributions, paid vacation, sick leave, personal days, discounts, pensions, reimbursement for work-related travel, company phone or car
- Deferred remuneration: pensions, stock options
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Learn MoreHow remuneration affects taxes
Remuneration is taxable income in Canada. Direct remuneration is taxed as regular employment income. Non-cash benefits, such as a company car, also count as taxable benefits. The value of these benefits is added to your income and taxed. Deferred remuneration may be taxed later, when you get the money from this type of remuneration.
What are the advantages of total remuneration?
Total remuneration or total rewards statements show how much an employer invests in their people. A strong total remuneration package can be the deciding factor for prospective candidates or existing employees weighing offers from other employers, thus impacting talent acquisition and retention.
When employers provide competitive salaries and valuable benefits, like health insurance, retirement plans, bonuses and flexible work options, they show employees they are valued beyond their pay cheques. This impacts on employee satisfaction, loyalty, and motivation. Ultimately, investing in total remuneration strengthens the company's reputation as an employer of choice.
FAQs
What does remuneration mean?
Remuneration is compensation to employees, which includes salary or hourly wages, along with indirect remuneration, such as health insurance and paid vacation.
What is the key difference between salary and remuneration?
A salary is a form of remuneration but does not represent an employee’s total compensation. Remuneration includes salary and employer-sponsored benefits, such as health insurance and retirement savings plans.
What is executive remuneration?
Executive remuneration is the compensation package awarded to employees who serve on an executive board or are in senior management positions. Executive remuneration is usually designed to motivate leaders to grow the company’s success.
What factors affect remuneration policies?
Employers must consider many variables when creating a remuneration policy, such as the market value for certain positions, employee performance and experience, economic conditions, pay equity and labour laws.
What is the difference between total remuneration and total compensation?
Remuneration and total compensation are the same. When employers show employees their remuneration, it’s usually done via a total compensation statement.
Are perks the same as remuneration?
Employer-sponsored perks and fringe benefits are forms of remuneration that make up an employee’s total compensation.
What does total remuneration package mean?
A total remuneration package is the combined value of an employee’s wage or salary and any benefits they receive from their employer in return for their contributions to the organization.
Do all employees get remuneration?
Yes, all employees receive remuneration, though some are compensated more than others based on experience, performance, credentials, skills, and other factors. Employers must also be mindful of pay equity regulations.
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This article is intended to be used as a starting point in analyzing the remuneration definition and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.
