# Remuneration: Defining Employee Compensation

![Remuneration: The total compensation paid for work or services.](https://www.investopedia.com/thmb/AN5P6_iODqWHtfxzNVC2LUCvsi4=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Remuneration_final-556ee65085a8457fa9be7f09aba49bd0.png)

*— Investopedia / Michela Buttignol*

> **Definition**
>
> Remuneration is the total compensation received by an employee for their work, encompassing salary, bonuses, commissions, and other monetary benefits.

## What Is Remuneration?

Remuneration is the total compensation received by an employee including base salary, bonuses, commission payments, overtime pay, and any other monetary benefits that the employee receives.

Perks such as an on-site gym or vacation time aren't counted as compensation because they don't involve money paid to the employee. However, benefits such as the use of a company car may count as remuneration and may be taxable income. Tips, although they are paid by customers rather than employers, count as compensation.

### Key Takeaways

*   Remuneration is the total amount an employee receives for performing a job, including salary and all other monetary benefits.
*   A company contribution to a retirement plan is deferred compensation and qualifies as remuneration.
*   Remuneration may include a combination of salary, stock shares, bonuses, and other financial compensation.
*   Tips are considered part of remuneration.

## Determining Compensation

At the executive level, remuneration can include options, [bonuses](https://www.investopedia.com/terms/b/bonus.asp), expense accounts, and other forms of compensation detailed in an employment contract. The total depends on many factors, including:

*   The employee's value to the company. Employees with in-demand skills are likely to get more perks.
*   The job type. Some are straight hourly or salaried positions, while others offer base pay plus commissions, bonuses, or tips.
*   The company's business model. Some companies pride themselves on their generous employee remuneration and may offer bonuses, employee stock options, and [401(k) plan](https://www.investopedia.com/terms/1/401kplan.asp) matching contributions.
*   The general state of the economy. If jobs are plentiful but talent is scarce, companies offer benefits to attract the best candidates, translating into higher remuneration.

> **Fast Fact**
>
> If it's remuneration, it's generally taxable. The IRS has a guide to taxation of fringe benefits.

## Types of Remuneration

The most common type of remuneration is in the form of wages or salary. Many sales positions offer a commission on sales or a percentage of the amount sold.

Positions in the food service and hospitality industries often rely on tips, as the minimum wage for these jobs is usually substantially less than the state's general [minimum wage](https://www.investopedia.com/terms/m/minimum_wage.asp).

Other benefits may include health insurance, retirement plan matching contributions, sick days, personal days, and reimbursement for work-related travel or other expenses.

### The Golden Hello

A company anxious to attract a person with a unique skillset or an outstanding reputation may offer yet another type of remuneration: the [golden hello](https://www.investopedia.com/terms/g/goldenhello.asp#:~:text=A%20golden%20hello%20is%20a,installments%20over%20a%20specified%20timeframe.). This is a signing bonus, due when the employee starts the job.

> **Important**
>
> The golden parachute guarantees an executive a generous payout in case of termination and is written into a contract before the job begins.

### Indirect Remuneration

Another type of remuneration at the executive level is [deferred compensation](https://www.investopedia.com/terms/d/deferred-compensation.asp), which sets aside a portion of an employee's earnings to be redeemed later. One example is a retirement plan that includes an employer matching [a certain amount contributed by an employee](https://www.investopedia.com/ask/answers/03/072903.asp).

Remuneration may also refer to the benefits an employee receives from the company, such as [health insurance](https://www.investopedia.com/terms/h/healthinsurance.asp) coverage, gym memberships, and the use of a company mobile device or car.

## Minimum Wage Laws

The minimum wage is the lowest remuneration employers can legally pay most employees. The minimum wage varies by state, although the state minimum must at least equal the federal minimum wage of $7.25 per hour.

As of Jan. 2025, 21 states increased their minimum wages. Those with hourly rates of $15.00 or more include Delaware, Illinois, Maryland, New Jersey, New York, California, Connecticut, Massachusetts, Rhode Island, and Washington. Washington state boasts the highest state minimum wage of $16.66 (Washington D.C. would top the list at $17.50 if it were a state). Despite these increase, 20 states still use the federal minimum wage of $7.25 an hour.

## What Does Remuneration Mean According to the IRS?

Remuneration is the total amount paid to an employee. It may include a salary or hourly rate, bonuses, commissions, or any other payment. According to the IRS, remuneration is the total of earnings and other taxable benefits and allowances.

## What Is the Difference Between Salary and Remuneration?

Salary is a form of remuneration. For many, salary and remuneration are the same. They are paid a flat salary or hourly rate for their work. For others, salary is only one part of remuneration. Salespeople may receive a small salary plus income from commissions based on their sales.

## What Is Another Word for Remuneration?

Compensation is a fair synonym for remuneration. It implies total payments. Salary or wages may be only one part of remuneration.

## The Bottom Line

Remuneration is the total compensation earned, such as salary, bonuses, commission payments, overtime pay, or other monetary benefits. Federal law requires that most workers receive a minimum hourly wage, currently $7.25, although many states pay a higher rate.

> **Article Sources**
>
> 1.  Economic Policy Institute. "[Over 9.2 Million Workers Will Get a Raise On January 1 From 21 States Raising Their Minimum Wages](https://www.epi.org/blog/over-9-2-million-workers-will-get-a-raise-on-january-1-from-21-states-raising-their-minimum-wages/)."
>     
> 2.  Internal Revenue Service. "[Section 3121. Definitions](https://www.irs.gov/pub/irs-drop/rr-04-109.pdf)."