Total compensation refers to the cash wages that an employee earns, combined with any non-cash benefits that are paid by the employer on behalf of the employee. This means that it embodies all monetary payment for the employees, including any incentives and bonuses as well. Additionally, the non-cash benefits include incentives from employers such as holiday pay, life insurance, vacation time, health insurance and more. It is vital to understand the meaning of total compensation. This allows for the employee to put into perspective the advantages of staying at a particular job. In many instances, the non-cash benefits that are available are not immediately visible to the employee and their value underestimated. However, these supplementary earnings incredibly boost any base salary. Compensation specialists can adequately communicate to employees the differences between their base pay and total compensation. Ideally, this is something that should be revealed to the employee when they are going through the recruitment process. Total compensation may be a deciding factor for a skilled worker seeking to join a progressive organisation. Only the employees who are salaried or exempt receive base pay, as opposed to an hourly rate. The base pay is different from what the employees take home. It includes the amount that will later be deducted and paid as tax.
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