Total remuneration

Total remuneration is a significant and ongoing employment cost, covering all types of employee compensation.

  • Definition

  • Types

  • Key factors

  • Importance

  • How to calculate

  • Differences

What is total remuneration?

Total remuneration is the sum of all an employee's compensation from their employer, including the benefits they receive in addition to their base pay. It usually covers wages, benefits, legal costs, food and transport allowances, and reimbursements.  

Total remuneration comprises all compensation, and can be financial or non-financial. It is a significant part of a worker’s total employment cost and is an ongoing expense.

Categories of total remuneration

There are two types of total remuneration: fixed (direct) and variable (indirect). 

Fixed remuneration refers to all monetary compensation an employee receives. It may include base salary, overtime payment, cash bonuses, and commissions. 

Variable remuneration refers to all non-cash payments an employee receives. Examples can include:

  • Equity (such as stock options and shares)

  • Healthcare insurance

  • Gifts and awards

  • All-expenses-paid trips

Factors that may affect total remuneration

The total recompense for a worker depends on certain factors. These factors include the size of the company and the significance of the role. Giant corporations often prepare a robust recompense package, especially for specialised or managerial positions. 

The economy also plays a significant role, as well as the employment contract type. Employees on a permanent employment contract typically receive a handsome total remuneration package. 

Skills and experience are also factors that determine the recompense an employee gets. The most skilled individuals would naturally command a more comprehensive compensation package.

The significance of total remuneration

The labour market for specific disciplines is more competitive than others. Thus, employers set up attractive remuneration packages to attract the most skilled individuals. This approach makes them stand out from their competition.

Companies do not only offer a handsome total remuneration package to attract new employees. They also improve the current salary structure and compensation package of current employees.

Total compensation is a primary reason people accept job offers besides a passion for the profession. An attractive total payment package is also why employees remain at their current jobs. 

How to calculate total remuneration

Expertly calculating a total remuneration package can help you manage global compensation seamlessly. It can also enable you to negotiate fair salaries. 

The first step is simplifying the total process by grouping remuneration into financial and non-financial sets. Calculate the total monetary compensation, such as bonuses, hourly salary (including overtime), and commission.

Sum up all the non-cash remuneration, including paid time off, vacations, and healthcare, separately. Add the figures from the direct and indirect compensation for the total remuneration.

What is the difference between remuneration and salary?

Remuneration is not the same as salary. A salary is the primary payment for an employee's services to a company in legal tender. Employees receive a salary according to a set payroll cycle, such as weekly, bi-monthly, monthly, or yearly, depending on the country. 

A salary is part of the total remuneration package. Meanwhile, a total remuneration package encompasses basic pay and other monetary and non-monetary compensation. 

Salaries are fixed and continuous. Meanwhile, certain conditions may apply to total remuneration. While salaries are strictly financial, total remuneration may not be in cash.

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