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Glossary Terms
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Employment compensation encompasses the myriad ways in which employees are remunerated for their work, extending beyond just monetary payment to include various benefits and perks.
It forms a critical aspect of the employer-employee relationship and plays a significant role in attracting, retaining, and motivating talent within an organization.
Employment compensation refers to the total remuneration received by an individual in exchange for their work or services provided to an employer.
It encompasses various forms of payment, including wages, salaries, bonuses, commissions, benefits, and any other monetary or non-monetary rewards provided to employees.
Non-employment compensation refers to income received by individuals that is not directly tied to employment, such as investment income, rental income, royalties, or other forms of passive income.
Unlike employment compensation, which is earned through work or services provided to an employer, non-employment compensation is typically generated from investments, business ownership, or other sources.
Workmen's compensation, also known as workers' compensation, is a form of insurance that provides wage replacement and medical benefits to employees who suffer injuries or illnesses while performing their job duties.
It is a legally mandated system designed to protect workers and employers by providing financial assistance to injured workers and reducing the risk of lawsuits against employers.
The compensation given to employees typically includes monetary payments such as wages, salaries, bonuses, commissions, and profit-sharing, as well as non-monetary benefits like health insurance, retirement plans, paid time off, stock options, and other perks or incentives provided by the employer.
The Federal Employees' Compensation Act (FECA) is a U.S. law that provides workers' compensation benefits to civilian federal employees who are injured or become ill due to their job. Administered by the Department of Labor’s Office of Workers' Compensation Programs (OWCP), it covers:
FECA is the exclusive remedy—employees cannot sue the federal government for job-related injuries. Claims must be filed within 3 years.
No, they are different. Workers' compensation provides no-fault benefits (like medical care and wage replacement) to employees injured on the job. Employers liability insurance, on the other hand, covers legal costs if an employee sues the employer for negligence not covered by workers' compensation.
Workers' compensation benefits are intended to provide financial assistance to employees who are injured or become ill due to their job duties.
While receiving workers' compensation benefits may not directly affect future employment opportunities, it could potentially impact an individual's ability to perform certain job duties, especially if the injury or illness results in long-term disability or limitations.
Employment compensation is essential for attracting and retaining talent, boosting employee morale, and maintaining a competitive edge in the labor market. It reflects the value a company places on its workforce.
A fair and transparent employees compensation system also helps foster trust and reduce turnover rates.
Indirect compensation—such as health insurance, retirement benefits, paid time off, and wellness programs—adds value beyond base salary.
It helps attract top talent, improves job satisfaction, and increases employee loyalty, which reduces turnover and recruitment costs.
Compensation is typically provided on a regular schedule—weekly, bi-weekly, or monthly—depending on the employer’s policies. Some components like bonuses or performance incentives may be distributed quarterly or annually.
Workers' compensation, in contrast, is activated when an employee suffers a job-related injury or illness and requires medical or wage-loss benefits.
The two main types of employment compensation are:
Workers' compensation is a form of indirect compensation that serves as a safety net for workplace injuries or illnesses.
Compensation is usually structured through a compensation policy or strategy that defines salary ranges, performance bonuses, and benefits packages.
Employers evaluate job responsibilities, industry benchmarks, and individual performance to determine pay.
Workers' compensation operates through insurance coverage that employers are legally required to maintain, providing financial support to injured employees without litigation.
