How total job benefits and total employee compensation differ

How total job benefits and total employee compensation differ

To describe how total job benefits and total employee compensation differ, we must first understand the individual terms. Even though both differ, it is not unusual to see people use them interchangeably wrongly.

What is Employee Compensation?

Employee compensation refers to the wages or remuneration given to an employee for tasks performed as part of a job. Employee compensation usually comes in the form of finance, such as a paycheck or basic salary, and is based on the performance of tasks assigned by the job description.

What are total job benefits?

Total job benefits are a myriad of compensations, perks, privileges that comes with holding a job. Such benefits are indirect and not necessarily performance-based and can include medical insurance, vehicle, paid vacations, allowances, accommodation, among others, as dictated by the terms of employment or conditions of service.

Some job benefits are a legal requirement, including the payment of unemployment benefits, social security, paid leave.

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With the individual definitions out of the way, it should be easy to describe how total job benefits and employee compensation differ.

Describe how Total job benefits and total employee compensation differ

The difference between Total job benefits and total employee compensation is that the former is a term that describes all the material, opportunities and other provisions of privilege that are offered to an employee. In contrast, total employee compensation describes the basic financial remuneration for tasks performed by the employee.

Another difference is that total employee compensation aims to make the position more attractive to qualified people and help keep such employees. In contrast, total employee benefits aim to motivate employees in expectation of commitment and improved performance.

The final difference is in the taxability. Compensation is subject to tax, while benefits may be exempt or partially taxable depending on their nature.

Employee benefits required by law

Even though benefits are employers’ way of keeping the best of professionals, some benefits are mandatory by law. Such benefits include:

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Social security

Employers are required by law to deduct employees’ social security payments from their salary at source. The law also requires employers to make payments of similar amounts from their coffers towards the employee’s social security. Social security payments = Employee payment + employer payment.

Unemployment insurance

Employers are required by law to pay unemployment insurance for their employees, and this tax is to cater to unemployment benefits claimed by the employee if they’re terminated.

 Family and Medical Leave

The Family and Medical Leave Act places a responsibility on companies with an employee size of 50+ to allow employees up to 12-weeks of unpaid leave without pay to attend to medical or family duties such as birth, seek medical attention for self or a close relative.

Importance of employment benefits

Every employer worth his salt knows those good employees are at the heart of a company’s survival and success. What happens when employees aren’t appreciated enough is what every employer dreads.

For this reason, employers must provide the best benefits package they can offer. The following are some reasons why employers must provide employment benefits.

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Benefits are proven to shore up employee motivation. Motivated employees put in more effort, buy into the company’s vision more easily, and drive growth without much supervision.

Better work-life balance

Employers should be concerned about the physical well-being of their employees and their mental well-being. Benefits such as paid vacations, free healthy snacks, corporate events etc., contribute immensely to balancing work and life and improve the employee’s state of mind. Such benefits contribute toward a more fulfilled employee for better delivery on the job.

Improved performance

Benefits drive commitment and job satisfaction which can translate into enhanced performance on the job.


To conclude, the description of how total job benefits and total employee compensation differ is in the nature of what each term constitutes. Benefits are generally indirect and meant to spur commitment and improve employee turnover. Compensation is more direct and includes financial or kind remuneration, and is intended to attract the brightest professionals for the job.

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