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What Is the Difference between Salary and Remuneration?

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  • Written By: Ray Hawk
  • Edited By: E. E. Hubbard
  • Last Modified Date: 02 September 2016
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Remuneration is a broad-based term that is meant to represent all the ways in which an employee is compensated for labor and his or her role within a company. This can include a variety of rewards from cash wages to sales commissions and bonuses for performance, stock options, expense accounts, and the use of company assets such as aircraft, cars, and housing. A salary, on the other hand, is a subset of remuneration, and refers to a fixed payment for labor or services that is provided on a regular basis. Both the terms salary and remuneration are ancient references that can be traced back hundreds of years in human society, and they have generally retained their original meanings over time.

The term remuneration stems from the year 1477 AD and the original Latin word remunerationem, which literally meant “a repaying” or reward for goods and services, with it often referring to payments for official city or government duties. The term salary is traced back to the later period of the Middle Ages around 1350 AD to 1400 AD, and is derived from the Latin salarie, which literally meant “salt money.” While historical records are somewhat unclear as to the original meaning of the term, it is generally believed that Roman soldiers were sometimes paid in salt at the time as a form of salary, as this was an important commercial commodity of the day.

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Compensation for regular employees in a company is often referred to merely as wages, as they are cash payments that are usually stripped of the additional employee benefits that remuneration includes. Employee incentives like performance bonuses and stock options are typically targeted at management or executive levels within firms and are a key portion of total remuneration paid to these employees. Upper-level staff can also routinely receive fringe benefits, which are another key aspect of remuneration. These include such benefits as various types of health and life insurance, retirement payments, and care for children, as well as assistance in furthering education through tuition reimbursement.

While many remuneration benefits as of 2011 are offered to rank and file employees within some corporations, such as health insurance coverage, executive level employees often receive privileged and higher levels of related compensation. These increased forms of payment are often written into contracts and paid to executive staff even if their performance level is poor and they end up being terminated. Such forms of remuneration are often referred to as "golden parachutes," which are lavish packages paid to terminated executives that can include millions of dollars in bonuses, severance pay, stock options, and more that can easily exceed the value of their annual salaries.

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