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What is Remuneration? - Definition & Examples

Instructor: Artem Cheprasov
Remuneration or renumeration? Which one is it? In this lesson you'll learn the difference between these terms and also see examples of forms of remuneration.

What is Remuneration?

'Remuneration' seems like a tough word to remember. But have you recently gotten paid for some work by your boss or company? Well, you were remunerated. Remuneration basically refers to payment. In other words, it is compensation or reward for doing something. More technically, we can define remuneration as the sum of all the financial and nonfinancial compensation an employee receives.

But don't get this term confused with 'renumeration', which can be used to refer to the re-counting something! The 'm' and 'n' are switched in these terms. The correct term, 'remuneration', comes to use from the Latin 'remuneratus', which means 'to reward'.

Let's consider some examples of remuneration.

Financial Compensation

Bob recently signed a full-time employment contract at a marketing agency stipulating that he was to receive a salary of $75,000 per year as compensation for his work. So, salary is a form of remuneration. Unlike with Bob's full-time job, Jill recently started working part-time at a local grocery store. She is being paid $10.00 per hour. Hourly pay is another form of remuneration. That $10.00/hour job jumps to $15.00/hour if Jill works overtime. So, overtime pay is also a kind of remuneration.

Olga has been an employee of an insurance company for a decade now. As part of her slightly more comprehensive remuneration package, she gets more than just a salary. She's also compensated via commission. So, when she manages to sell a policy, Olga gets a cut of the profits, or a commission, on top of her salary. Her commission is 25% of every insurance policy she sells.

John is the vice president of a bank. While he earns a salary like Bob and Olga, he doesn't earn any commission. However, he can get a bonus at the end of every year for his performance or the performance of the company as a whole. John's bonus is usually higher in bull markets than during bear markets, when the bank doesn't do so well.

Non-Financial Compensation

Of course, there's more to remuneration than just financial compensation. Remember, remuneration also includes nonfinancial benefits.

For example, Natalie get a yearly salary as a financial benefit for her work but she also gets nonfinancial benefits, like:

  • 10 days of vacation
  • 5 personal days
  • 5 sick days
  • Health insurance coverage

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