Employees may receive both direct and indirect compensation as part of their salary packages. Direct compensation is any pay regularly and directly made to an employee; indirect compensation covers benefits that may be part of the employment contract.
Wages and Salary
Direct compensation includes salary and wages paid. This includes contractual pay, overtime, commissions, payment for unscheduled time, workers' compensation payments and any retroactive pay.
Holidays and Leave
Payment for holidays and leave is also included in direct compensation. Leave includes sick time, funeral leave, maternity leave, military duty or other paid time away from work.
All forms of bonuses are included in direct compensation. These include bonuses for performance, longevity, signing and others.
Other paid or reimbursed allowances are included in direct compensation, including travel and meals and some medical care when it is paid by the employee and reimbursed.
What doesn't fall under direct compensation is indirect compensation, of which the employee is the beneficiary, but does not receive directly. Such compensation includes contributions to retirement accounts, tax contributions, and medical and other forms of insurance.
- Photo Credit Ridofranz/iStock/Getty Images
Cost of Workplace Accidents and Injuries
When you take into consideration the fact that most working age Americans spend approximately 40 to 50 percent of their waking hours...
What Is the Difference Between Direct & Indirect Objects?
A direct object receives the action of the verb. An indirect object, on the other hand, tells for or to whom or...
Explain Indirect and Direct Conflict
Fully understanding the nature of indirect and direct conflict is vital for turning clashes into opportunities. A conflict might start with a...
How to Write a Compensation Plan
How to Write a Compensation Plan. The compensation plan that you write for your company must provide your managers with an important...
How to Calculate Direct Labor Cost
An article that explains what direct labor costs are and which employees are part of direct labor costs.
How to Calculate Your Compensation Package
It's common today for a compensation package to consist of more than a base salary, especially for senior roles in an organization....
What Is the Meaning of 'Compensation & Benefits'?
"Compensation" refers to money received for work, such as wages, salaries and tips, while the word "benefits" describes job extras provided by...
Is Reimbursement a Form of Compensation?
Reimbursement is not a form of compensation. It is money you receive for paying out of your own pocket for expenses that...
Definition of Sales Force Compensation
Sales force compensation pertains to the manner in which sales representatives are paid. Some sales reps have 100 percent of their wages...
Difference Between Direct and Indirect Stock Option Sales
Stock options are a type of derivative that give you the right to buy or sell a specific number of shares of...
List of a Construction Company's Direct & Indirect Costs
A construction company's direct costs are costs incurred for an individual project, whereas indirect costs benefit multiple projects.