Remuneration: Everything you need to know

Remuneration: Everything you need to know
Last Updated: September 20, 2023

What is Remuneration?

Remuneration is the overall compensation given to employees in exchange for their services. It also includes benefits like commissions, bonuses, overtime pay, and other monetary incentives.

Benefits are indirect forms of remuneration; they include welfare and social security payments, life and accident insurance, and other retirement benefits, including gratuities and pensions.

Related: Developing Transparent Remuneration Systems

Types of remuneration



An employee's salary is a set sum of money given to them regularly (monthly, bimonthly, or annually) in exchange for their services.

Related: 5 Great Platforms for Remuneration Data


Wages are payments made per the number of hours or products an employee produces. The hourly, daily, or per-unit rate of pay is frequently established. Wages are common in construction, manufacturing, or hourly retail occupations where work hours often change. When employees work past their regular working hours, overtime pay may be due.

Related: Does a CEOs remuneration package positively impact a companys performance?


Commission is a type of payment that is based on a portion of the sales or profits that an employee produces. Employees frequently receive a share of the revenue/sales they generate.


Employees may receive bonuses on a one-time or recurring basis as a reward for exceeding expectations or demonstrating great performance. They might be discretionary (provided at the employer's discretion) or performance-based (individual or team targets). Bonuses may come in cash or non-cash items like gift cards, certificates, or vacation vouchers.

Options on stock or equity

Employees can purchase the company's stock at a predetermined price within a predetermined time frame. Employees that get equity compensation are given ownership stakes in the business. Startups and established businesses frequently use these types of compensation to entice and keep bright people.

Perks (Perquisites)

Perks are extra privileges or rewards that employers give their staff members in addition to normal pay. Company automobiles, housing stipends, gym memberships and expense accounts are perks.

Related: Frequently Asked Questions on Employee Remuneration

Factors affecting remuneration

Factors affecting remuneration

Role and duties of the position

The nature and difficulty of the work have a big impact on compensation. There is higher remuneration for roles requiring specific abilities, knowledge, and responsibilities. Positions having more power to make decisions, leadership responsibilities, or those crucial to the organization come with higher pay.

Related: A brief guide to some of the most common remuneration theories

Knowledge and Certifications

Employees with extraordinary abilities, advanced degrees, or specialized training will probably receive greater pay. Pay rates can also be impacted by the supply and demand of particular skills.


In many cases, more seasoned workers are paid more than entry-level candidates. Experienced workers are more valuable to businesses because they bring useful insights, problem-solving skills, and a track record of performance.

Market demand and industry

Industries in high demand and expanding quickly typically pay better salaries to entice and keep top people. Due to their significance and market demand, some industries, including technology, finance, healthcare, and engineering, frequently offer competitive pay.


Compensation might range dramatically based on the cost of living and the state of the labor market in various geographic areas.Tooffset the greater costs  of living, urban areas or cities may provide higher salaries.

Size of the business and financial health

Larger, more established businesses may have the means to provide competitive remuneration packages. Despite paying lower starting salaries, startups and smaller businesses may provide additional advantages like stock options or equity to entice employees.


Employees that do well in their jobs are rewarded with performance-based compensation, such as bonuses or incentives linked to certain targets or key performance indicators (KPIs). Employees who perform well may get promotions, incentives, or increased pay.

Influence of unions

Collective bargaining agreements can significantly affect pay structures in sectors with robust labor unions. On behalf of their members, unions bargain wages, benefits, and working conditions; frequently, this leads to standardized pay scales and benefits.

Labor laws and governmental regulations

Government-imposed labor rules such as minimum wage legislation, restrictions on overtime, and other labor laws can establish minimum pay standards. Employers must abide by these laws to guarantee just compensation and stay out of trouble with the law.

Policy and internal equity

The company's philosophy, culture, and overall budget may impact compensation policies and procedures.

Financial Situation

Remuneration trends may be impacted by the general economic environment, including inflation rates and economic growth. Employers may create competitive and fair compensation packages by considering these aspects, and employees can learn more about what goes into just compensation for their abilities and contributions.

Related: Remuneration Challenges and Recommendations - A Country Perspective

Remuneration vs Salary

Recompense and salary are words that are occasionally used interchangeably. But there are some distinctions between the two.


Remuneration plays a crucial role in motivating employees and ensuring their satisfaction in the workplace. It encompasses various forms of compensation, including salaries, bonuses, benefits, and non-monetary rewards. A well-designed remuneration package can attract and retain top talent, foster employee engagement, and drive performance. Organizations must establish fair and competitive remuneration practices that align with industry standards and reflect the value employees bring. By prioritizing remuneration as a strategic tool, businesses can create a positive work environment, enhance productivity, and ultimately achieve long-term success.

Charlene Dzonga
A dedicated Business analytics consultant focused on uncovering leading remuneration practices and trends, workforce planning that drives higher business impact

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