Economics/Business

Difference between salary and remuneration/types of the both

Salary and remuneration are issues that are interlinked, but they do not mean the same thing. Some particularities differ the concepts and knowing them is essential for companies. In this content, we will present the differences, types of salary and remuneration, in addition to showing how people management can adopt good practices to be in line with labor legislation. Difference between salary and remuneration

What is the difference between salary and remuneration?

The main difference between salary and remuneration is that each of the concepts represents an entry on the employee’s payroll . In summary, remuneration is not exactly a type of salary . But salary can be considered a type of remuneration . 

Therefore, it is critical that companies and HR analysts fully understand the meaning of one and the other.

What is salary?

This is the reward paid to the employee for providing services within a specified period . Furthermore, it represents an exchange or consideration that the employer must pay directly to the professional for normal working days. 

Thus, the employee shares his knowledge, performs activities and spends his time, while the company pays for the tasks performed. Brazil adopts the minimum wage, that is, the government defines and readjusts an amount that must be paid to the employee whose weekly workday is 44 hours. 

Furthermore, the salary is more linked to the private sector and the civil service, which follow different salary rules, depending on the instance (municipal, state and federal). 

In addition, some states set regional standards , generally higher than the national minimum. São Paulo, Paraná, Santa Catarina and Rio Grande do Sul are examples of states that define their own salaries. 

What is remuneration?

Represents all income that an employee receives as payment . In general, compensation contains the corporate benefits indicated in the employment contract, in addition to the salary itself. 

In this sense, remuneration can follow the form of work required by the company, being hourly, monthly, per task, etc. The main remuneration factors are: Difference between salary and remuneration

  • nightly surcharge;
  • overtime pay;
  • hazard pay;
  • profit sharing (PL);
  • equity participation;
  • box break;
  • paid weekly rest (DSR);
  • unhealthy conditions;
  • tips and gratuities ;
  • travel and lodging expenses on business;
  • commissions and percentages;
  • incentives granted by the organization. 

What are the salary types?

Minimum wage

It is determined by law by the government and represents the lowest amount that a company can pay an employee with a monthly workload of 220 hours. In Brazil, the national and state minimum wages are in effect, also known as the regional wage. 

Base salary

It is the one established in the employment contract signed between employer and employee. Thus, it represents the fixed salary , without additions, as additional and variable values. 

professional salary 

It is the minimum amount that can be paid to professionals of a certain category . This type of salary is regulated by the trade union, by sentence or by collective agreement. 

Minimum wage

The floor has the same definition of the professional salary and the amount paid is proportional to the extension and complexity of the work of each position . Certain professional categories have a salary floor fixed by law or by collective agreement. Thus, when the collaborator integrates a class, he must receive a value corresponding to that category. 

Gross salary

It is the same as the base salary and consists of the amount received by the employee before the application of discounts, such as INSS (social security), IRRF (income tax), among others. 

net salary

Represents the final amount received by the worker after deducting the labor fees due . In other words, it is what is “left over” of the gross salary after deducting mandatory taxes and other payroll deductions. Difference between salary and remuneration

What are the types of remuneration? 

functional remuneration 

It is one of the most traditional in companies and is linked to the job and salary plan . This remuneration is paid to each existing position , based on the description of tasks and responsibilities that belong to the employee. 

Functional compensation is exemplified in positions of leadership or high technical specialization that demand more responsibility. It is a remuneration model that establishes a hierarchy, promotes balance in the work environment and a feeling of justice among employees. 

skill pay

It considers the knowledge and skills of professionals. Therefore, the company pays based on what the employee knows how to do, and not on the position he or she holds. Compensation for skills encourages qualification and professional development. Once the employee understands that there is a link between the benefits received and the levels of specialization he has. 

Variable salary

It is not a fixed remuneration and may vary according to aspects determined by the company or the manager. In general, this type of compensation is linked to the employee’s performance , commitment and ability to deliver results. 

Therefore, the amount paid at the end of the month will vary . Since it can be larger or smaller, depending on the results obtained by the employee. But one caveat is important: remuneration cannot be less than the current minimum wage. 

equity interest 

It is also variable remuneration, but it is not very popular in Brazilian companies. Thus, it is applied in publicly traded organizations and consists of offering the employee a fraction of the company , even if small. In stock participation, the professional can receive dividends or make a profit from the sale of financial securities. Difference between salary and remuneration

In addition, share-based compensation serves as a motivating factor for employees, as they will be more committed to results and feel part of the company. 

Commissions and awards

They represent a type of variable remuneration, being very frequent in companies and playing a fundamental role in motivating employees. A commission is a percentage awarded to an employee when he or she manages to meet goals or performs some activity established by the organization, such as closing contracts or sales. 

The awards, on the other hand, follow the rules of the commissions and are also linked to the achievement of goals. But they can be individual or by teams, that is, when reaching a goal, the company offers something pre-established, which can be a financial benefit, a material reward or an experience, for example, travel. 

indirect salary

It is one of the benefits that complement the employee’s remuneration . The most usual ones are: meal allowance, health allowance, daycare allowance, dental or health plan. This is an advantageous strategy for organizations, as it manages to engage professionals, in addition to attracting and retaining talent . 

Compensation for skills

Defined by the offer of a higher value for one professional and lower for another, as it will depend on what is required from the worker to perform their function . In practice, we can illustrate how the remuneration paid to an employee whose fluency in English is a requirement for the position. Difference between salary and remuneration

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