What Is the Difference between Salary and Remuneration?

Ray Hawk
Ray Hawk
The terms salary and remuneration are ancient references that can be traced back hundreds of years.
The terms salary and remuneration are ancient references that can be traced back hundreds of years.

Remuneration is a broad-based term that is meant to represent all the ways in which an employee is compensated for labor and his or her role within a company. This can include a variety of rewards from cash wages to sales commissions and bonuses for performance, stock options, expense accounts, and the use of company assets such as aircraft, cars, and housing. A salary, on the other hand, is a subset of remuneration, and refers to a fixed payment for labor or services that is provided on a regular basis. Both the terms salary and remuneration are ancient references that can be traced back hundreds of years in human society, and they have generally retained their original meanings over time.

High-level executive payment contracts use the term "remuneration" rather than salary to indicate that a total compensation package can consist of more than just wages.
High-level executive payment contracts use the term "remuneration" rather than salary to indicate that a total compensation package can consist of more than just wages.

The term remuneration stems from the year 1477 AD and the original Latin word remunerationem, which literally meant “a repaying” or reward for goods and services, with it often referring to payments for official city or government duties. The term salary is traced back to the later period of the Middle Ages around 1350 AD to 1400 AD, and is derived from the Latin salarie, which literally meant “salt money.” While historical records are somewhat unclear as to the original meaning of the term, it is generally believed that Roman soldiers were sometimes paid in salt at the time as a form of salary, as this was an important commercial commodity of the day.

Bonus payments may be used to encourage competition among sales teams.
Bonus payments may be used to encourage competition among sales teams.

Compensation for regular employees in a company is often referred to merely as wages, as they are cash payments that are usually stripped of the additional employee benefits that remuneration includes. Employee incentives like performance bonuses and stock options are typically targeted at management or executive levels within firms and are a key portion of total remuneration paid to these employees. Upper-level staff can also routinely receive fringe benefits, which are another key aspect of remuneration. These include such benefits as various types of health and life insurance, retirement payments, and care for children, as well as assistance in furthering education through tuition reimbursement.

An employee's salary is only one aspect of his or her remuneration.
An employee's salary is only one aspect of his or her remuneration.

While many remuneration benefits as of 2011 are offered to rank and file employees within some corporations, such as health insurance coverage, executive level employees often receive privileged and higher levels of related compensation. These increased forms of payment are often written into contracts and paid to executive staff even if their performance level is poor and they end up being terminated. Such forms of remuneration are often referred to as "golden parachutes," which are lavish packages paid to terminated executives that can include millions of dollars in bonuses, severance pay, stock options, and more that can easily exceed the value of their annual salaries.

What Is Remuneration?

Access to a car service might be a part of an executive's remuneration.
Access to a car service might be a part of an executive's remuneration.

Remuneration is the money or services paid in exchange for work or services performed. Remuneration is often an all-encompassing term that refers to workers’ compensation in exchange for their labor. Remuneration refers to the total payment for employment.

This term includes salary, benefits, bonuses, and other options. Remuneration encompasses the term salary, which refers solely to the contracted amount of money paid in exchange for the labor rendered. It also includes any indirect or direct monetary payments or any taxable benefits.

What Is the Difference Between Renumeration vs Remuneration?

Renumeration may include time off for pregnancy.
Renumeration may include time off for pregnancy.

While the Oxford English Dictionary lists the original terms as interchangeable, colloquial usage points to otherwise. In everyday speech and usage, renumeration works as simply a common misspelling of remuneration. The ‘m’ and the ‘n’ frequently are swapped as people work out which word they are supposed to use and how.

Though the OED links the two as interchangeable, there was always an alternate usage. The alternate use and the more recent definition for renumeration set it apart from its confused cousin. Since the 1500’s an alternate meaning of renumeration is listed as a verb; it is the action of numbering or renumbering something, or it can mean counting or recounting items. Since money regularly involves counting, not only does the similar spelling of these two words confuse people, but the subtle differences in their definitions do too.

Do All Employees Get Remuneration?

Paid time off for maternity leave is one part of remuneration.
Paid time off for maternity leave is one part of remuneration.

Technically, the lowest amount that any employee can be paid is minimum wage. While that amount is set at the federal level, it can still vary from state to state. Despite the flux of amounts, it must still be equal to or greater than the federal minimum wage. Some occupations, however, do not make that wage, nor are their employers required to meet the minimum. These occupations include:

  • Laborers on small farms
  • Seasonal workers
  • Students
  • Contractors
  • Restaurant service staff
  • Apprentices

If you wonder how people can live if they don’t make minimum wage, it can be very challenging. Tips, commissions, and bonuses are also considered remuneration even though it is based on unstandardized customer remuneration, not money from the employer. Many people struggle with the legitimacy of that system and are working to change it for livable wages.

What Are Examples of Remuneration?

People in salary-based positions often receive wages and a basic benefits package. Those stationed in higher tier positions in management or at executive levels may have heftier remuneration packages that include even more benefits. Remember, to be remuneration, it has to translate to money in the employee's pocket. Popcorn and pizza Friday isn’t a remuneration benefit, but a daily food allowance is.

Basic Packages

Many employment contracts include basic wages and salary information in addition to the services you are required to complete in return. Remuneration can consist of immediate benefits like bonuses and allowances, but it can also include deferred benefits. Deferred benefits include matching 401(k), stocks, and retirement from which you will benefit later. For many mid-level jobs, you can expect the employer to offer a basic benefits package that includes many if not all of the following remuneration options:

  • Wages or salary
  • Bonuses
  • Matching
  • Retirement
  • 401(k)
  • Expense accounts
  • Allowances
  • Stock

Clever Contracting

At mid to high-level positions, contracts become a little more competitive. Many different companies often seek one candidate, so the ideal contract must offer special remuneration to ensure they catch the person they feel is suitable for the job. Candidates will negotiate for both golden hellos and golden parachutes as part of their signing process.

Golden Hello

golden hello is simply a signing bonus. Golden hellos can be found from entry-level jobs up to executive-level positions. The sign-on bonus amount differs concerning the position, but the premise is still the same.

Golden Parachute

The golden parachute is similar to the hello, but employees use it as an exit strategy. To ensure that their financial security is adequately protected, the employee will include language about severance packages or the amount of money and benefits they will receive if the employer terminates the contract.

Are Perks the Same as Remuneration?

Perks are not the same as remuneration, although benefits and perks are often used interchangeably in conversation. Perks are not technically counted as money in employees’ pockets. Benefits, however, do equal compensation whether it is now or deferred. Perks are extra and exist over and above compensation, like pizza and popcorn Friday or on-site gym. Benefits are included in your contract and taxable, like food allowances and company-sponsored gym memberships.

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    • The terms salary and remuneration are ancient references that can be traced back hundreds of years.
      By: alejandro dans
      The terms salary and remuneration are ancient references that can be traced back hundreds of years.
    • High-level executive payment contracts use the term "remuneration" rather than salary to indicate that a total compensation package can consist of more than just wages.
      By: olly
      High-level executive payment contracts use the term "remuneration" rather than salary to indicate that a total compensation package can consist of more than just wages.
    • Bonus payments may be used to encourage competition among sales teams.
      By: DragonImages
      Bonus payments may be used to encourage competition among sales teams.
    • An employee's salary is only one aspect of his or her remuneration.
      By: Diana Valujeva
      An employee's salary is only one aspect of his or her remuneration.
    • Access to a car service might be a part of an executive's remuneration.
      By: stockyimages
      Access to a car service might be a part of an executive's remuneration.
    • Renumeration may include time off for pregnancy.
      By: Africa Studio
      Renumeration may include time off for pregnancy.
    • Paid time off for maternity leave is one part of remuneration.
      By: armina
      Paid time off for maternity leave is one part of remuneration.