Compensation beyond an employee’s regular salary or wages is defined as payments intended to augment standard earnings. This can include bonuses, overtime pay, commissions, severance pay, and various other forms of additional remuneration. For example, a sales representative might receive a base salary plus commission on each sale, with the commission considered an element of this additional compensation.
Such remuneration serves several important functions. It can incentivize employees to achieve specific goals, reward exceptional performance, and provide financial security during transitions, such as job loss. Historically, these types of payments have evolved from simple bonuses to complex compensation structures designed to attract and retain talent, aligning employee interests with organizational objectives. They also represent a significant component of total compensation and can influence employee morale and satisfaction.
