What is Compensation Salary? Understand not to make mistakes when paying employees

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What is Compensation Salary?  Understand not to make mistakes when paying employees

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You know what scompassionate salary? It's important to find out why your company may be paying employees the wrong way!

O compensation wage it is the practice of paying the salary installments in a unified manner to employees, without specifying what each one refers to on the payroll.

Many people don't know the difference between salary and pay. Although they are used synonymously by most, they are different concepts.

Therefore, it is essential to know the meaning of each one of them to maintain your company's financial health.

THE remuneration it is the set of everything that the employer gives to its employees in exchange for the performance of their work, which includes the salary. Therefore, it is possible to consider the salary a type of remuneration, but never the other way around.

Meanwhile, the wage it is the reward that the employer pays employees for providing a service for a certain period.

Thus, all amounts that are paid to the employee, in addition to their salary, are other forms of remuneration such as in the case of payments of overtime, corporate benefits, between others.

All these forms of remuneration are guaranteed to professionals by Consolidation of Labor Laws (CLT).

Along with these guarantees, the legislation still obliges companies to specify all worker payments with the payroll. When that doesn't happen, we have what is known as compensation wage.

What is Compensation Salary?

O compensation wage it is the practice of paying the salary installments in a unified way to the employees. In it, there is no specification of what each one refers to on the payroll.

This practice is prohibited in the UK. Therefore, your company must have a prepared accounting team. It is necessary to generate the payslip of all employees in the right way.

To assist your company in this mission, we explain in detail the reasons why it is prohibited and we bring what the law says about it. Check it out below.

Salary and compensation concepts

These two terms that cause much doubt among workers have some distinctions defined by law that deserve attention. That's why it's important to know what your differences are.

what is salary

Salary is the benefit paid directly to professionals by the company as a result of their employment contract. It is carried out in exchange for the services provided and for the employee's time offered to the company.

According to the CLT, in its article 458, the salary consists of:

“In addition to payment in cash, housing, clothing or other ‘in natura' installments that the company, under contract or custom, usually provides to the employee.”

there are different salary types, which can be divided into:

  • Base salary: defined in the employment contract;
  • Minimum wage: defined by law;
  • Salary floor: defined by class unions;
  • Professional salary: regulated by professional categories;
  • Net salary: the exact amount received after labor tax deductions;
  • Gross salary: total received before tax deduction;
  • Salary on demand: new payment method in the UK. Click here and find out.

what is remuneration

Remuneration is the sum of the payment made by the company, joining the salary paid directly and other payments indirectly. This action is also included in the CLT. Article 457 reinforces:

“The employee's remuneration, for all legal purposes, in addition to the salary due and paid directly, as consideration for the service, includes the tips he receives.”

In addition to tips, there are other types of remuneration received by employees, such as hazard pay or unhealthiness, awards, commissions, among others.

Basically, remuneration refers to the total payment of earnings added by the worker.

Comprehensive salary

After fully understanding these two concepts, it is necessary to pay attention to what is compensation wage. This practice refers to the payment of the worker's remuneration without discriminating the amounts and rights paid in the month in question of payment.

In order to avoid a compulsory salary, the company must ensure that the payroll includes the payments broken down for everything the employee has done in the last thirty days, item by item.

All values ​​must be specified for the safety of both the company and its employees. Thus, the organization can protect itself from suffering future lawsuits regarding the receipt or not of these amounts.

O Superior Labor Court (TST) and the labor legislation (CLT) prohibits the Comprehensive salary.

According to paragraph 2 of art. 477 of the CLT It is like TST Statement 91, salary amounts must be paid prominently on the salary payment receipt. Otherwise, the compensation wage will be characterized.

The 2nd paragraph of art. of CLT says:

“The instrument of termination or receipt of discharge, whatever the cause or form of dissolution of the contract, must have specified the nature of each installment paid to the employee and itemized its value, the discharge being valid only for the same installments ”.

The statement nº 91 of the TST states:

“Null is the contractual clause that sets a certain amount or percentage to comprehensively meet various legal or contractual rights of the worker”.

New form of payment: what is salary on demand?

The CareerBuilder survey, conducted in 2017, attested that 78% of respondents are barely able to settle the bills with their salary.

In addition, of the more than 3,000 respondents, about ¾ of them also attested that they have one or more debts accumulated. Clear sign that something needs to change, do you agree?

O salary on demand is a modality that has been gaining strength in the market and aims to add flexibility so that employees are paid for hours worked but not yet paid. Something that alleviates many of the financial problems — and those generated by the challenges of closing the accounts.

Let's look at a simple example: if the company is in the habit of making payments to its human resources only on the 30th, or on the fifth business day of each month, professionals are limited to that.

If an outstanding account will earn interest in that period when there is no more money in the account, the debts pile up. However, with the offer of salary on demand, the professional can receive payment for the days already worked whenever he wants. Best of all, it has the flexibility to plan your month.

We recommend that you read this article to better understand wage on demand. In it you will understand the features of HR Consultant UKy, a corporate benefit of payments on demand.

Why is Compensation Wage prohibited?

It can often happen that the contract between the employer and its employees is made verbally. This opens up loopholes so that labor rights are not paid correctly.

For example: when a worker works overtime, on his payroll there must be an itemized amount in relation to them. They will vary according to the amount of overtime worked that month.

If they are not detailed in the payslip, the professional may not receive the correct amount and not notice the error.

This can also happen with the other remunerations, such as night bonuses, commissions and additional for length of service, among others.

Consequences of non-compliance with legislation

According to the CLT, the employer is required to prove that he has properly paid for the services of his team. Therefore, in case of disrespect for the law through the compensation wage, it is possible for the employees to demand their rights in court.

If this happens, even if the company has made the correct payments, it will not be able to prove it. Without proof on the payroll, the law assumes that the payment did not happen.

Therefore, the Labor Justice may force the organization to pay them again. In addition, it will still be necessary pay fines and redo all pay calculations to compensate the employee.

If you are concerned about the fines your company may receive, we recommend that you download this free guide. It contains essential tips to avoid fines for your business. Answer the form and receive:

How to Avoid Problems with Compensation Pay

In order to avoid problems caused by a compensation wage, your company must always have proof of the payments made, through the employees' payslip.

It is necessary to have an efficient accounting team to avoid mismanagement of employee payments. Always remember that it is essential to provide employees with a copy of the payroll.

This receipt must include:

  • the identification of the company;
  • the value of the remuneration, with the breakdown of the installments;
  • the net amount paid;
  • days worked or total production;
  • at overtime;
  • the discounts made, including for Social Security, and the amount corresponding to the FGTS.

Only in this way will you be able to keep your organization safe from the complications of commuting wages.

Your company is looking for a Human Resources platform efficient? Meet HR Consultant UK, the best HR software in the UK!

With our system you will:

  • reduce the time in your employee termination admission processes;
  • have a clearer and safer process;
  • avoid penalties, fines or any risk related to legal issues and company information management.

THE Sherpa it's the one that delivers an amazing experience and still solves the real problem the customer has. Talk to an expert and find out how to reduce 30% of your HR costs.

Want to learn more about Compensation Pay and other topics critical to the success of your business? Follow HR Consultant UK on Facebook, Instagram and Linkedin.


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. Our HR consultant in London can assist you if you live in London. Suppose you live further afield thats not an issue! Visit our HR Consultants Near Me page to find the best consultancy nearest to you.
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