Compensation Definition

Compensation is the total cash and non-cash payments an employer gives an employee in exchange for the work they do during a pay period.

Compensation Extended Definition
Compensation is remuneration offered by an employer to an employee.

Employee compensation includes cash payments including base pay, commissions, overtime, tip income, and bonus pay. It also includes non-cash benefits like health insurance and retirement plans.

There is also nonemployee compensation. Nonemployee compensation is the money a business pays an independent contractor who performs work for them.

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Last Updated By

Rachel Blakely-Gray | Feb 15, 2023