How Do Total Job Benefits and Total Employee Compensation Differ?
There are many differences between total job benefits and total employee pay. The former includes all the benefits a person may enjoy as part of their job, such as health insurance and paid time off, while the latter includes only wages. Combined, these two figures make up the total compensation of an employee. The former is simpler to calculate and includes fewer payroll taxes. The latter, however, is more complex and includes payroll taxes as well as benefits paid to employees.
Employee benefits include social security and Medicare, Federal and State unemployment insurance taxes, health and life insurance, and paid time off. Employees may also find perks such as vacation and paid sick days valuable, which can be beneficial to some companies. You may also find tuition assistance, educational benefits, opportunities for advancement, and relocation expenses.
Total employee compensation consists of the total salary plus the value of other compensation packages provided by the employer. The annual compensation may also include bonuses or commissions. In addition to salaries, employees may be offered stock options or equity in the company. These items will be subject to taxes.
When it comes to total compensation packages, the right mix is key. The package should be tailored to the needs of the employee. It should include non-monetary benefits and recognition programs, which attract and retain top employees. Employees who feel appreciated are less likely to look for other employment opportunities. You can determine the right compensation package for your employees by understanding the differences between total employee pay and total job benefits.
When comparing employee compensation packages keep in mind that approximately 31% of total compensation costs is made up of employee benefits. The remaining 7.1% is made up by legally required benefits. Benefits for full-time employees should be considered in total compensation assessments. In addition to salaries, employers should also factor in the value of health insurance benefits.
Base salary is the amount an employee is paid regularly. Additional compensation, such overtime pay or bonuses, can be added to the base salary. The base salary can be as high as 50% of an individual’s take home pay.
In addition to salaries, benefits include housing paid by the employer, free utilities, daycare, tuition reimbursement, paid vacation, and more. Providing employees with these benefits helps motivate them to perform better. If these are provided, an employee is more likely to stay. This improves the overall quality and profitability of the company.
In determining compensation, time-off benefits are also important. These benefits include vacation time, paid sick time, and holiday pay. These benefits may be paid in lump sums. To calculate total compensation, you must evaluate the value of all benefits over a calendar year. This is done by multiplying the number of days taken off by the rate per day.