What do you call a fixed amount of money paid by the employer to the employee?

Remuneration is any type of compensation or pay for providing services. The term includes pay in the form of a salary, wage or commission, but can also incorporate non-monetary incentives and allowances such as a company car, medical plan, accommodation, or meals.

Competitive remuneration can assist in attracting top quality candidates and make existing staff happier and more productive. Extra allowances like bonuses and holidays can incentivise performance and retain key staff for longer as well as attracting more talented employees.

To ensure alignment, it is recommended businesses develop a remuneration policy. This policy could incorporate an outline of the guiding principles that decide how the company compensates staff and provide clarity in terms of current market rates, as well as superannuation, minimum entitlements, and any extra benefits.

Remuneration Package

Remuneration packages are based on a mutual agreement between the employer and employee. For this reason, employers are reasonably free to structure remuneration packages as they see fit if the employee agrees. However, the package must also satisfy the minimum pay and conditions of employment under the National Employment Standards (NES) contained in the Fair Work Act 2009 or the minimum wage under the applicable Modern Award or enterprise agreement covering your employee for the employee’s classification. It should also meet any additional requirements in the employment contract.

The remuneration package should be structured according to the employee’s role and responsibilities, industry standards, and the current market rate for similar positions, taking into consideration the location of work and any skill shortages within the industry.

Below are the most common types of remuneration and their meanings.

Commission Pay

Employees on a commission agreement are paid according to their results, generally the amount they sell. Employees are generally partially or additionally compensated by commission payments. An employee can be paid on a commission only basis when an employee is award free, or an award or enterprise agreement allows an employee to be paid this way. An employer is usually free to structure incentive-based commission payments as they wish to encourage high performance, however employees must earn at least the national minimum wage or the award minimum rate for their classification.

Commonly, sales-based commission will maintain strict criteria of a minimum number of sales or value of deals, and once achieved engage a commission payment of a fixed amount or percentage of value.

Piece Rates

A piece rate is where an employee gets paid for every piece, item or task completed.   Each job, hour or other unit is paid separately, rather than periodically. For example, the ‘piece’ could be the amount of fruit picked or the number of items packed in a certain period of time. Piece rates are typically paid instead of an hourly, daily or weekly wage – but there are exceptions in some industries.

Piecework agreements must be in writing and set out the pay rate per piece and how results are measured. If there is no formal agreement, the employee is not considered a piece worker and must get the national minimum hourly or weekly rate according to their applicable Award.

An employee can only be paid via piece rates if their Modern Award or Enterprise Agreement allows for this method of payment, in which case they must earn at least the minimum award rate for the job they do, or if the employee is Award-free then they must receive at least the national minimum wage.

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Remuneration Bonuses and Incentives

Depending on the company remuneration policy and employment contracts, some employees may receive a bonus. These bonuses can be rewarded to an individual for good performance or the whole team after a particularly successful project, quarter, or year.

Businesses may offer a range of cash and non-cash incentives. These incentives are designed to reward employees who go above and beyond the expectations of their role. Good incentives not only help employees feel valued and motivated – they can boost employee satisfaction and performance over the long-term.

For advice on how to pay your employees and other useful information, fill out the online form below to request a free initial consultation.

What Is The Difference Between Remuneration, Wage And Salary?

Remuneration

Remuneration is a broader term that covers both salary and wages. Remuneration is all the compensation an employee receives for services rendered, both monetary and non-monetary.

A wage is a rate of pay affixed to the amount of hours worked, generally a short period of time such as per hour, or per day. 

A salary is a fixed regular payment for the work an employee does that is not affixed to the number of hours it takes to do the work, usually paid monthly or annually and agreed upon in an employment contract.