Remuneration means a reward for the service provided while compensation means making good for a loss incurred or damage caused. In the broad sense in most countries other than the USA and Europe remuneration and compensation are used interchangeably. Compensation in the view of HRM means something in return for something valuable and remuneration means the payment made by the employer to his/her employee for the work rendered by them. The main difference is that compensation is given to the employees mandatorily in certain cases whereas remuneration is fixed concerning the pay scale of the employee.
Even though compensation and remuneration look-alike in the business world the main difference is that compensation mainly includes the monetary benefits incurred by the employee and remuneration includes both monetary and non-monetary benefits or perquisites enjoyed by the employee. The law always distinguishes compensation as a coverup for loss whereas remuneration is a token of appreciation for the work rendered by the employee while in the course of action of the business. Both remuneration and compensation enhance the efficiency of the employee as both are benefiting to him in one way or other.
Salary is compensation given to the employee. Usually, this statement is used in most firms when they are asked what is salary. So, what is remuneration? Remuneration is understood in a broader sense. Remuneration not only includes the salary or the basic pay offered to the employee but is a combination of all the rewards and benefits that are stated in the salary package of the employee. This includes non-monetary benefits like provision for loans etc. which will be used in enhancing his employee contribution to the firm. Compensations are usually paid to the employees if the employee suffers an injury or loss.
Please login or Register to submit your answer