What is compensation?

Compensation can also refer to employee benefits that companies offer their staff and include items such as:

• Insurance plans (Medical, Dental, Vision, Life, and sometimes others)

• Tuition assistance

• Bonus pay

Compensation includes both money-based incentives and non-money incentives.

Base compensation is also referred to as base pay. Base compensation is the amount of money an employer pays an employee without including additional wages or benefits.

Base compensation generally comes in four different forms, including:

• Hourly base compensation. This is where workers earn an hourly wage for each hour they perform work.

• Weekly base compensation. This type of compensation is when an employer pays an employee a set amount each week.

• Monthly base compensation. Monthly compensation can come in the form of total earnings for a month from an employer or when an employer divides an employee's annual salary by 12, giving them 12 equal monthly payments in compensation.

• Annual base compensation. Annual salaries fall into this category. Employers can pay annual salaries to their employees weekly, bi-weekly, or monthly.