Total Remuneration

What Is Total Remuneration?

Total remuneration refers to the total amount of an employee’s yearly compensation package. It often includes base wage or salary, commissions, bonuses, stock options, pension plans, and financial and non-financial compensation and benefits.

As total remuneration is taxable income, the employer deducts income taxes and other payroll taxes and reports them on the employee’s W-2 form.

FYI remuneration and compensation mean the same thing. People of the USA and Canada commonly use the term compensation, while remuneration is more frequently used outside of the US.

What Are the Types of Remuneration?

Direct and indirect compensation are the two basic types of remuneration (compensation).

1. Direct Remuneration

It is another term that describes financial compensation, such as salary, incentives, bonuses, and travel expenses. 

2. Indirect Remuneration

All the non-financial compensations such as health insurance, educational opportunities, child care assistance, and so on fall under the indirect remuneration category.

An employer can decide whether to offer the employees direct or indirect remuneration or a mix of both. 

What Is Included in Total Remuneration?

Total remuneration includes both financial and non-financial compensations. According to their company policies, employers decide which financial and non-financial compensation benefits to include in their total remuneration package.

What Does Total Remuneration Package Mean?

A total remuneration package indicates that the employer has implemented a policy outlining how they intend to compensate an employee. A total remuneration package is taxable.

A total remuneration package policy reflects an organization’s

• Sustainability goals
• Business strategy
• Budget
• Investment in and efficient use of recruitment and training costs
• Philosophy or values of fairness and equity
• Desire to improve employer-to-employee relationships

What Are the Advantages of Total Remuneration?

Both employers and employees are benefitted from total remuneration. Its advantages are-

• It’s a powerful recruitment tool that can demonstrate the value of the employer’s benefits package.
• A complete remuneration package can ensure employee satisfaction, leading to improved employee performance, engagement, productivity, and higher retention rates. 
• It helps to establish the values that employers place on the employees.
• It allows employees to compare their compensation to the market standard.
• Total remuneration easily reflects an organization’s values, strategies, and goals by supporting and rewarding employees’ actions and behaviors.
• It helps to display and communicate the employer's cost of investing in its employee.

Total Remuneration vs Remuneration: What’s the Difference?

Total remuneration is made up of both financial compensation and non-financial compensation. 

However, remuneration only refers to base wages or salary and other financial compensation such as commissions, bonuses, and pension plans. But it doesn't include non-financial benefits.

Are Salary and Remuneration the Same?

People often use the terms salary and remuneration interchangeably. However, technically they aren’t the same. 

A salary is the flat, base wage paid to employees for their work.

On the contrary, remuneration includes base wages and other financial compensations such as bonuses, commissions, and tips.