Whether you're managing a team or negotiating a job offer, understanding remuneration is critical to getting pay right.

But what exactly is remuneration, and why does it matter so much in today’s workplaces?

Let’s break it down.

What is remuneration?

Remuneration refers to the total compensation an employee receives in exchange for their work. It’s more than just salary; it includes base pay, bonuses, allowances, commissions, and any other financial or non-financial benefits provided by an employer.

Put simply, remuneration is what someone earns for doing their job.

Components of remuneration

Remuneration is usually broken down into two categories:

1. Direct remuneration

This includes all financial compensation, such as:

• Base salary or hourly wages

• Bonuses (e.g., performance or annual bonuses)

• Commission payments

• Overtime

• Shift allowances

2. Indirect remuneration

This refers to non-cash benefits that contribute to an employee’s overall compensation package, including:

• Superannuation or retirement contributions

• Health insurance

• Company car or transport allowance

• Flexible working arrangements

• Professional development opportunities

• Employee wellness programmes

Why is remuneration important?

Getting remuneration right matters. Here's why:

• Attract and retain top talent: Competitive remuneration helps you stand out in the job market.

• Boost motivation and performance: Fair and transparent pay contributes to employee satisfaction and productivity.

• Ensure compliance: Understanding what counts as remuneration is key to meeting employment and tax obligations, particularly in countries like New Zealand and Australia where certain entitlements are tied to total remuneration.

• Support pay equity: Having visibility over all aspects of remuneration makes it easier to identify and close gender or ethnicity pay gaps.

  
  

Remuneration vs. Salary: What’s the difference?

It’s easy to confuse remuneration with salary, but they’re not the same.

Salary refers only to the fixed regular payment (usually monthly or fortnightly), while remuneration includes all earnings and benefits associated with a role.

For example, if you earn a $90,000 salary and receive a $10,000 bonus and a $5,000 car allowance, your total remuneration is $105,000.

How employers can structure remuneration

Designing a remuneration strategy is both an art and a science. Here’s what employers should consider:

• Benchmark against the market: Use real-time data to understand what similar roles pay.

• Be transparent: Clearly outline what’s included in total remuneration to avoid confusion, as well as your methodology you use to set remuneration.

• Link pay to performance or outcomes: Align incentives with company goals.

• Review regularly: Market conditions change, so should your remuneration approach accordingly.

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Remuneration and compliance in New Zealand

In New Zealand, understanding remuneration is critical for complying with employment law, including:

• The Holidays Act 2003

• Minimum wage entitlements

• Pay equity legislation

Certain entitlements, like annual leave pay or public holiday rates, are calculated based on an employee’s gross remuneration, not just their base pay.

Final thoughts

Remuneration is more than a pay packet, it's a reflection of how your organisation values its people.

For employees, it’s about knowing your worth.

For employers, it’s about attracting, retaining, and rewarding great talent.

Looking to benchmark remuneration accurately?

If you want to compare remuneration across roles, industries, or locations in real-time, tools like LiveRem can help. Make pay decisions with confidence, based on data that reflects today’s market, not last year’s.