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What Are the Different Remuneration Models?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 16 November 2016
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Remuneration models are structures and formats used to provide compensation to individuals in return for their efforts on behalf of an organization. The exact type of models used will depend a great deal on the nature of the relationship between the individual and the organization, and any provisions for compensation that are included in a contract that governs that relationship. Many organizations operate with the use of several remuneration models based on classes or levels of employees, with some being used for hourly employees while others serve as the basis for compensation related to salaried employees.

One of the more common remuneration models has to do with hourly remuneration. This model will include the base wage per hour afforded to employees that are compensated at a fixed rate per hour as part of their employment. Depending on the nature of the business, this model may also include provisions for contributions to a pension or other form of retirement fund, the possibility of bonuses, and even partial payment of health insurance in the overall compensation bundle.

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Similar remuneration models are often in place for salaried employees. Along with the base salary included in the package, there may also be bonuses and commissions paid under the auspices of programs currently in place with the employer, stock ownership plans, and employer contributions to retirement plans. Typically, the elements found in this type of compensation model are detailed in an employment contract, making it easy to determine the total value of the employment package.

Remuneration models may also be extended to individuals who work with companies as independent contractors. With these models, the compensation may be on a per hour basis or a flat rate for each service unit that is provided to and accepted by the client. It is unusual for remuneration models to include other forms of compensation such as health insurance coverage, although some companies may serve as the means for contractors to obtain insurance through a group plan, with the contractor paying the entire cost of the coverage.

The choice and complexity of the remuneration models will depend greatly on the nature of the business itself. Smaller businesses may operate with the use of a combination of basic hourly and salaried models, while a larger corporation may find that models combining various forms of compensation above basic salary or wages is necessary in order to compete for qualified employees within the local economy. Labor laws will also have an impact on how the remuneration models are structured, sometimes ensuring that employees are offered a wage that at least meets minimum governmental standards.

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