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The Empuls Glossary

Glossary of Human Resources Management and Employee Benefit Terms

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Remuneration is a multifaceted concept that plays a crucial role in the world of employment and compensation. It encompasses all the ways in which individuals are rewarded for their work or services within a company or organization. Beyond just basic salary or wages, remuneration includes a wide range of financial and nonfinancial benefits, each designed to recognize and motivate employees.

What is remuneration?

Remuneration refers to the total compensation or rewards that an individual receives in exchange for their services, work, or employment with a company or organization.

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What are types of remuneration?

Types of remuneration can be broadly categorized as follows:

  1. Base salary
  2. Wages
  3. Bonuses
  4. Commissions
  5. Tips
  6. Benefits
  7. Allowances
  8. Fringe benefits
  1. Base salary: This is the fixed amount of money paid regularly to an employee, typically on a monthly or bi-weekly basis. It forms the foundation of an employee's earnings.
  2. Wages: Similar to salary, wages are compensation for work, but they are often paid on an hourly or task-specific basis. Hourly workers receive wages based on the number of hours they work.
  3. Bonuses: Bonuses are additional payments made to employees based on specific criteria, such as individual performance, company profits, meeting targets, or special achievements. They can be one-time or recurring.
  4. Commissions: Employees, especially in sales or marketing roles, may receive commissions as a percentage of the sales or revenue they generate. Commissions serve as incentives to drive performance.
  5. Tips: In certain industries, employees receive tips as part of their remuneration. Tips are voluntary cash bonuses given by customers for good service or job performance, often found in the service sector.
  6. Benefits: Employee benefits include non-financial perks provided by the employer. These can include health insurance coverage, dental plans, retirement plans (e.g., 401(k)), stock options, and more.
  7. Allowances: Some employees receive allowances to cover specific expenses related to their job, such as car allowances, housing allowances, or meal allowances.
  8. Fringe benefits: Fringe benefits encompass non-cash perks offered to employees, like the personal use of a company car, gym memberships, company-sponsored events, wellness programs, or other non-monetary benefits.

What does remuneration mean according to the IRS?

According to the Internal Revenue Service (IRS) in the United States, remuneration is a term synonymous with wages when it comes to taxation. It refers to the total amount paid by an employer to an employee for their services or work. This includes all forms of compensation, whether they are labeled as salary, hourly wages, bonuses, commissions, or any other payment made to the employee in exchange for their work.

For tax purposes, the IRS considers remuneration as the sum total of an employee's earnings, including not only their regular pay but also any additional forms of compensation, fringe benefits, and taxable allowances or reimbursements they receive from their employer. These earnings are typically subject to federal income tax, Social Security tax, and Medicare tax withholding, as well as state and local income taxes, where applicable.

What is the difference between salary and remuneration?

The difference between salary and remuneration:

1. Definition

A salary refers specifically to the fixed, regular, and typically monthly or bi-weekly payment that an employee receives from their employer in exchange for their work or services. Whereas remuneration is a broader term that encompasses all forms of compensation and benefits that an individual receives for their work or services. It includes both financial and non-financial rewards.

2. Components

Salary represents the core or base component of an employee's compensation package. It is a predetermined and consistent amount of money that an employee can expect to receive for their work, regardless of performance or hours worked.

Whereas remuneration includes not only the base salary but also additional forms of financial compensation like bonuses, commissions, overtime pay, and other perks and benefits such as health insurance, retirement plans, allowances, and non-cash incentives.

3. Examples

  • For salary, If an employee is paid an annual salary of $50,000, it means they receive that amount evenly distributed over the course of a year, typically in regular intervals, such as monthly paychecks.
  • For remuneration, If an employee's remuneration package includes a base salary of $50,000, an annual bonus of $5,000, health insurance coverage, and a company car, their total remuneration is the sum of all these components.

What factors affect remuneration policies?

The factors affect remuneration policies:

  1. Labor market conditions
  2. Labor laws and regulations
  3. Union agreements
  4. Worker efficiency and performance
  5. Cost of living
  1. Labor market conditions: The supply and demand for specific skills and talents in the labor market can significantly impact remuneration policies. When there is a shortage of skilled workers in a particular field, employers may offer higher salaries and better benefits to attract and retain talent.
  2. Labor laws and regulations: Employment laws and regulations, both at the federal and state or regional levels, play a critical role in shaping remuneration policies. These laws may set minimum wage requirements, overtime rules, and anti-discrimination guidelines that employers must adhere to.
  3. Union agreements: In unionized workplaces, collective bargaining agreements negotiated between labor unions and employers can establish remuneration structures, including wage scales, benefit packages, and working conditions.
  4. Worker efficiency and performance: Employers often consider an employee's individual performance, skills, experience, and qualifications when determining compensation. High-performing employees may be eligible for salary increases, bonuses, or other incentives.
  5. Cost of living: The cost of living in a particular geographic area can impact remuneration policies. Employers in high-cost-of-living regions may offer higher salaries to help employees maintain a reasonable standard of living.

How does remuneration work?

Here's how remuneration typically works:

  1. Job analysis and evaluation
  2. Designing remuneration policies
  3. Setting base salaries
  4. Variable pay and bonuses
  5. Benefits and perks
  6. Salary review and adjustments
  7. Legal compliance
  8. Communication
  9. Payroll processing
  10. Performance management
  11. Legal and tax compliance
  12. Record keeping
  1. Job analysis and evaluation: Before establishing remuneration policies, organizations conduct job analysis and evaluation to determine the relative value of different positions within the company. This involves assessing factors such as job responsibilities, skills required, experience, and market demand for specific roles.
  2. Designing remuneration policies: Based on job analysis and market research, organizations create remuneration policies that outline how employees will be compensated. These policies include guidelines for base salaries, bonuses, benefits, and other forms of compensation.
  3. Setting base salaries: Base salaries are the fixed amounts paid to employees on a regular basis, often monthly or bi-weekly. The organization sets base salaries based on factors like job roles, seniority, and market rates. These salaries are typically the foundation of an employee's compensation.
  4. Variable pay and bonuses: Many organizations offer variable pay, such as performance bonuses or commissions, to incentivize and reward employees for achieving specific goals or targets. The criteria for earning variable pay are outlined in the remuneration policies.
  5. Benefits and perks: Remuneration packages often include a range of benefits and perks, such as health insurance, retirement plans, stock options, allowances, and non-cash incentives. The specific benefits offered can vary widely and are designed to attract and retain employees.
  6. Salary review and adjustments: Organizations regularly review employee salaries to ensure they remain competitive in the job market. Salary adjustments may be made based on factors like inflation, market trends, individual performance, and promotions.
  7. Legal compliance: Employers must ensure that their remuneration practices comply with federal, state, and local labor laws and regulations. This includes adhering to minimum wage laws, overtime pay requirements, and anti-discrimination laws.
  8. Communication: Effective communication is essential in the remuneration process. Employers should transparently communicate compensation structures, policies, and any changes to employees. Clear communication helps employees understand their total compensation and benefits.
  9. Payroll processing: The actual disbursement of remuneration is facilitated through payroll processing. Payroll departments or systems calculate and distribute employees' salaries, bonuses, and deductions, ensuring that taxes and other obligations are withheld and reported to the relevant authorities.
  10. Performance management: Employee performance is often linked to remuneration. Organizations use performance management systems to assess and evaluate employee contributions, which may influence variable pay, promotions, or salary adjustments.
  11. Legal and tax compliance: Employers must comply with tax regulations when handling remuneration. They are responsible for withholding and remitting income taxes, Social Security, and Medicare taxes, among others, on behalf of their employees.
  12. Record keeping: Employers maintain records of employees' remuneration, including salary history, benefits enrollment, tax forms, and performance evaluations, for compliance and reporting purposes.

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.


eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

  • Promoters
    Employees who have responded positively or agreed.
  • Detractors
    Employees who have reacted negatively or disagreed.
  • Passives
    Employees who have stayed neutral with their responses.

How remuneration affects taxes?

Remuneration affects taxes as:

  1. Income tax
  2. Social security and medicare taxes
  3. Additional taxes
  4. Tax deductions and credits
  1. Income tax: Most forms of remuneration, including salaries, bonuses, commissions, and tips, are considered taxable income for employees. Income tax is typically withheld from an employee's paycheck by the employer based on the employee's declared withholding allowances and tax brackets. The total remuneration, including both cash and non-cash benefits, contributes to the employee's taxable income.
  2. Social security and medicare taxes: Employees are subject to Social Security and Medicare taxes, often referred to as FICA (Federal Insurance Contributions Act) taxes. These taxes are withheld from the employee's paycheck at specified rates. Both the employer and the employee share the responsibility for paying these taxes.
  3. Additional taxes: Some forms of remuneration, such as stock options or bonuses, may be subject to additional taxes. For example, non-qualified stock options may trigger ordinary income tax when exercised, and high-income individuals may be subject to additional Medicare taxes on certain forms of compensation.
  4. Tax deductions and credits: Some expenses related to employment and remuneration may be tax-deductible for employees. For instance, contributions to retirement plans, health savings accounts (HSAs), or certain work-related expenses may reduce taxable income or qualify for tax credits.

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