What Are the Different Types of Remuneration?

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  • Written By: G. Wiesen
  • Edited By: Shereen Skola
  • Last Modified Date: 07 May 2020
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Although there are a number of specific forms available, there are basically two major types of remuneration, which include direct and indirect. Direct remuneration typically refers to any sort of compensation that comes as a straightforward financial gain for employees, including salary, allowances for travel and other activities, and bonuses. There is also indirect remuneration, which provides a benefit for someone but may be less straightforward. These can include the potential for overtime pay, benefits for retirement, and more flexible schedules for employees.

Different types of remuneration often come down to various methods by which an employer can provide employees with benefits and incentives to reward them for their hard work. Many of these techniques fall into one of two basic categories: direct and indirect remuneration. One of the simplest and most common types or remuneration is the salary that is paid to an employee for his or her work. This is direct compensation that provides employees with a basic gauge of the value of their work, allowing them to recognize that the effort they put forth is rewarded with financial gain.

Direct forms can also include bonuses that employees may receive for especially impressive performance. These types of remuneration are not always available, unlike a salary, and are typically used as a method of motivation for greater performance. Not only does this give an employee a direct example of a reward for his or her work, but it demonstrates to others that they may be able to receive such compensation for increased effort. Companies can also provide allowances for employees, such as a financial stipend that is provided to an employee who travels on behalf of his or her company.

There are also some types of remuneration that are indirect, which means that they do not always provide an obvious monetary incentive for employees. For example, overtime pay is certainly a direct form, but the opportunity for such payment is indirect since it is not necessarily paid out. Many employees may find a work environment more rewarding knowing that extra effort and working overtime can be compensated in a direct way, even when they are not taking advantage of it.

Retirement benefits and flexible schedules are also indirect types of remuneration. Companies that offer retirement benefits often do so in a way that does not directly provide employees with monetary gain as they work, but which accrues value over the long run and pays off in the end. Flexible schedules do not inherently reward employees with additional money, since they are not necessarily paid more for working at unusual hours. These schedules can allow employees to work a more rewarding number of hours, however, and often give employees a sense of worth.

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