Total remuneration: How to Create an Ideal Compensation Scheme


Remuneration includes all types of compensation – it isn’t limited to a salary or wage that employers must provide for an employee for the work. In this article, we will elaborate on the notion and its types.

An In-Depth Definition: What Is Total Remuneration?

The total remuneration definition includes a total sum of compensation that an employee receives annually for their work. The package is made up of an annual salary, financial benefits like pension plans, incentives, and bonuses, as well as non-financial benefits like a gym membership or access to counseling services.

Non-financial rewards make up a significant part of annual remuneration. By this, employers enhance their HR brand and aim to retain and attract talent, providing more lucrative terms of work.

With annual remuneration, the total pay is typically counted yearly. An employee is usually assigned a sum to be paid for a year, which is allocated on a quarterly, weekly, monthly, or semi-monthly basis. The same applies to other types of compensation.

Considering everything mentioned above, the annual remuneration meaning implies the sum of compensation an employee is to receive for a year.

How Does Remuneration Work?

The remuneration system may vary from company to company. Managing a company’s remuneration is an executive power. The ultimate rule is to comply with the laws on the state and federal levels.

In particular, this implies following the U.S. Equal Employment Opportunity Commission regulations. According to these provisions, no discrimination should take place when determining the amount of compensation. The Commission addresses the following classes: race, religion, sex, color, age, national origin, genetic information, and disability. Besides this, businesses should check state regulations that may cover additional groups.

Types of Remuneration

An employee’s annual remuneration is made up of several types of compensations they are to receive. The types of allocated remunerations depend on fulfilled work and can be as follows:


Employees that receive a salary aren’t subject to overtime pay that is fostered by the Fair Labor Standards Act. Typically, they discuss an annual amount of pay with an employer that is paid on a monthly or weekly basis. Salaried employees also receive pay during vacations, sick leaves, and holidays.

Typically, the following employees fall under this category: professional, administrative, computer, or executive employees. Owners that work for corporations may also be subject to a salary besides other payments like dividends.


Wage implies payment for the number of worked hours. A waged-employee agrees with an employer on an hourly rate, based on which the remuneration is counted. Such workers must receive higher pay for overtime.


Commissions are usually paid to sales representatives based on their performance. Typically, they have a percentage of every deal that is attributed to their total remuneration. Different companies manage the commission system differently. Some, for example, introduce increasing rates when a sales rep exceeds the KPI.


Incentives can have financial and non-financial nature. Financial bonuses are paid as an addition to the salary. It’s in the employer’s authority to decide when to grant a bonus and for what. Some common cases are:

  • Reward at the end of the project
  • Reward for performance
  • End-of-year holiday bonus

Non-financial incentives come in the form of presents, wellness programs, or trips. They are introduced for the sake of improved motivation and loyalty. Sometimes, they are granted to executives instead of stocks.


Remuneration includes any type of compensation; therefore, it encompasses:

  • Rental and meals paid by an employer, as well as covered relocation expenses.
  • Store certificates, merchandise, and store credits
  • Social Security and Medicare

We can also attribute here payments for the amount of work done – for example, the number of words translated or garments sewn.

An employee can be subject to receive several types of compensations that eventually make up his/her total remuneration. Besides this, employers shouldn’t forget about non-financial perks if they want to enhance the attractiveness of their HR-brand. To develop an effective HR strategy, check out Talenteria’s recruitment marketing tools, or reach out to us for ideas!