Typically total job benefits and total employee compensation are two different types of remuneration that people often used reciprocally. It is clear that both these terms are distinct from each other but most people used them incorrectly. Whatever Employers offer their employees in exchange for labor is their total remuneration. Because all the bonuses, incentive benefits, and base salary are included in total remuneration. A basic difference between job benefits and employee compensation is that compensation is monetary whereas job benefits are non-monetary. Keep reading this post because I will deeply describe how total job benefits and total employee compensation differ.
How Total Job Benefits And Total Employee Compensation Differ | 2023
Total Employee compensation is employees’ total income which includes all incentives, perks, and long-term bonuses like stock options and other equity for their good job.
According to United States federal law ERISA, employees’ total job benefits consist of retirement and health plans. Employees are also provided with insurance like life insurance, health insurance, dental insurance, etc.
Other benefits included retirement benefits, paid and non-paid vacations, disability income benefits, daycare advantages, sick leaves, and tuition indemnity.
What do total job benefits mean?
All types of perks and compensations that employees get from their specific company are called total job benefits. For example, life insurance plans, health insurance, paid time off, pension plans, transport facilities, allowances, travel packages, accommodation, and more.
Employees don’t need to worry about their base income because they can get job benefits in addition to their basic salary. Job benefits are offered indirectly to employees because some benefits are mandatory and others are voluntary.
The kind of benefit doesn’t matter because all kinds of benefits are considered employee benefits. In the United States, every state has different requirements for employee benefits.
Because some employee benefits are legally required and others are not. Employees’ benefits which are legally required are included medicare, social security, and workers’ compensation benefits.
Employee benefits are also referred to as fringe benefits because these are additional benefits with employees’ basic income.
Also, these benefits are not monetary benefits and employees don’t need to show their 100% performance on the job to avail of these benefits. But sometimes employees’ job performance matters in getting these benefits.
What does total employee compensation mean?
Total employee compensation means employees’ total income or remuneration which employers give to employees for performing their jobs nicely and completing organizational tasks effectively.
Employees’ total compensation consists of basic salary, incentives, commissions, a 401(k) match, overtime pay, all cash or non-cash remunerations, and much more.
Typically total employee compensation depends upon the performance of employees and how efficiently they complete all the tasks. Employees can receive their compensation directly from their specific company.
There are two types of total employee compensation; direct compensation and indirect compensation. The basic wage or benefits that employees get in the form of money is considered direct compensation.
Indirect compensation includes any type of insurance and retirement benefits that employees can get according to their employment. Employees can receive indirect compensation in both cash and non-cash forms.
Total employee compensation often included non-monetary privileges like mobile phones or company vehicles. Total compensation is beneficial for employers because it helps in attracting and retaining new and best workers.
Total Job Benefits vs Total Employee Compensation
Although these terms appear interchangeable, these are two different kinds of compensation or remuneration; monetary and non-monetary.
Total job benefits are non-monetary remunerations or compensations; offer various privileges and opportunities to employees. Whereas total employee compensation offers economic rewards to their employees in exchange for the work they have done for the organization.
Total job benefits are indirect remuneration that employers payout their employees for their good work. On the other hand, total employee compensation is a direct remuneration that employers payout their employees for their performance.
Total job benefits are typically tax-free or sometimes comparatively taxable. Meanwhile, total employee compensation is completely taxable, and often a little part is exempted from taxation.
Total job benefits are advantageous because they enhance the performance and morale of employees. whereas total employee compensation is the mean of finding the best talent so that the company’s performance increases.
The main difference between total job benefits and total employee compensation is taxability. Salary is the payment that employees receive for the work they perform.
Total compensation has several different components which are not included in total employee benefits. But both have some additional advantages for employers and employees.
How To Calculate Compensation Of Employees
If you want to know your total compensation, you will have to calculate your basic salary with some extra benefits according to current dollar rates.
Because you not only receive a basic income from your employers instead several other benefits like incentives, insurance, perks, bonuses, and commissions are included in total compensation.
Therefore, you need to add the value of all these things to your total compensation and just calculate it. As the dollar rate varies, total employee compensation also varies because the value of each thing in compensation is calculated according to dollar value.
You just need a calculator or a single sheet of paper to write down the value of each thing.
First of all, you need to write your basic income value.
Add the value of each thing that your employers provide you like insurance ( life, health insurance), commissions, bonuses, and whatever else you receive from your employer. You can get detail of these things either from your company benefit portal or by contacting HR.
At the 3rd number you should add the value of your retirement benefits or 401(k) benefits that your employer payout.
If you want to get precise numbers, you should also add the value of the following things; like add the value of each free coffee or meal that your company provides you.
Multiply the exact value of everything by the number of consumptions of that thing every year.
Then add these numbers to your total compensation. Add the value of tax-saving benefits like parking.
Also, add the values of your PTO or paid time off and gym indemnity.
Consequently, you will be able to find your exact numerical value that tells how much your employers provide you.
Do employee benefits decrease total employment compensation?
Employee benefits can affect total employment compensation by the addition of these benefits because total employee compensation is the money that employers pay out to their employees directly.
But the impact of employee benefits is positive on total employee compensation which will be higher for employers.
The percentage of the value of total employee benefits is approximately 30% of overall employee compensation.
Total job benefits include the total amount that an employee receives from employers in addition to gross pay and total employee compensation includes the actual salary with total job benefits following deductions.
Employee benefits offer more advantages to employees therefore companies always try to provide extraordinary employee benefits so that they can fascinate the best talent.
The value of these benefits continuously increases as compared to exact salaries. Because the main purpose of these benefits is to boost the productivity of the organization and attract top employees so that the total employment compensation also positively improves.
Does total compensation include health benefits?
Of course! total compensation includes all health benefits. Because total employee compensation consists of total pay packages such as medical or health care benefits, paid-off time, and perks pay.
Medical benefits coverage is the most common item that are included in total employee compensation. Several other items are also included such as hourly rate salary, paid or non-paid leaves including holidays, sick leaves, and paid time off.
Different types of insurance like disability insurance, health insurance, and life insurance. Employees’ pension and retirement plans such as 401(k) and 403(b). Employees comply with outlay account details.
Employees’ education or tuition plans. opportunities for development and learning for employees. Expenditures of employees relocation. Opportunities for career advancements for employees.
What are legally required benefits in the US?
In the united states, some employee benefits are legally required and others are not. According to the U.S. Bureau of Labor Statistics, there are two basic forms of employee benefits such as legally required benefits and voluntary benefits.
Voluntary benefits included life insurance and paid leaves. Legally required benefits included benefits for employees and their families such as medical care, retirement income, mitigating economic hardships, and cove workers’ liabilities that result from illnesses and injuries.
Legally required benefits are
- Social security
- Federal and state unemployment insurance
- workers compensation
The most important thing is the cost of these benefits because employers have to pay the cost of these benefits either in the form of compulsory insurance premiums or payroll tax.
According to the U.S. Bureau of Labor Statistics (BLS) in December 2011, the average cost of employee benefits was $2.33 per hour and 8.1% for total compensation.
Why are employee benefits so important?
The total employee benefits are so important because they can improve organizations’ experience to engage new employees. When employers offer benefits to their employees means they build their employee’s trust and ensure that they are not only spending on their health benefits but also securing their future. Employee benefits are also important because employers can find great talent for their business.
The core difference between employees’ job benefits and employees’ compensation is that benefits are completely non-monetary perspectives of jobs but employee compensation is the monetary aspect of the employee’s jobs. I hope this post helps you a lot to describe how total job benefits and total employee compensation differ.