Remuneration is an umbrella term that refers to compensation you give your employees for their work. A total remuneration package includes both monetary payments like salaries and commission payments, and non-monetary compensation like travel and meal allowances. In any event, remuneration packages can help your business:
- retain staff for longer;
- remain competitive amongst other employers; and
- generate a good company culture that promotes employee well-being.
This article outlines some general considerations to help decide what you should include in your employee’s remuneration package.
What Are Remuneration Packages?
Remuneration packages are a set of monetary and non-monetary compensation that rewards employees for their labour. A good starting point would be basing your remuneration packages on the agreement between you and your employees. However, you are generally free to design the package according to the needs of your employees and your business.
Additionally, the package should:
- meet the minimum standards set out in the National Employment Standards (NES);
- be consistent with the financial compensation under the modern award or enterprise agreement that covers your employees; and
- align with the terms in your employee’s contract.
Importantly, the minimum standards set out in the NES cannot be diminished by a modern award, enterprise agreement or employment contract. Rather, these instruments can only build on the standards set out by the NES.
Types of Remunerations
You can think about your employee’s remuneration in both monetary and non-monetary terms.
Financial Compensation
Financial compensation for your employee’s services may include:
- base salary or wage;
- commission payments based on their performance;
- any bonuses;
- paid leave;
- your employer superannuation contribution;
- health insurance; or
- reimbursements for travel.
Indeed, the types of financial compensation you include in your employees’ remuneration packages will largely depend on the minimum standards set out in the NES and your employee’s award or enterprise agreement. However, if you fail to pay your employees correctly, you could face unwanted legal proceedings. To avoid this, it would be wise to seek out the advice of a lawyer to ensure you compensate your employees correctly.
Non-Financial Compensation
A remuneration package can also provide a range of non-financial benefits to your employees. This can include:
- a company car;
- flexible work arrangements; or
- child care stipends or on-site daycare.
In any event, a combination of financial and non-financial benefits can be highly beneficial for your business.
Continue reading this article below the formWhy Are Remuneration Packages Important?
Reducing Staff Turnover
As you likely know, staff turnover measures the number of employees that leave your business in a set amount of time. Depending on what industry your business operates in, high turnover rates generally indicate employee dissatisfaction with their work. In the long run, this can be detrimental to your business, considering the resources required to acquire and train your staff continually.
To help retain your staff longer, remuneration packages can incentivise your employees to continue working for your business. Indeed, employees are more likely to stay with a business if they have a fair remuneration package that rewards them for their services. Likewise, the benefits associated with your employee’s employment can make their time spent working more worthwhile. This might encourage greater productivity and overall satisfaction with their work.
Remaining Competitive
Employee dissatisfaction might also stem from the possibility that other employers are offering more lucrative remuneration packages than your business. Of course, your business is often limited by its resources. However, offering your employees a range of benefits can help your business stay competitive when recruiting its employees. This can then help your business hire the best employees in the field.
Additionally, different allowances and bonuses can also incentivise performance within your business. This can allow your business to meet its performance targets and surpass its competitors.
Generating a Healthy Corporate Culture
A remuneration package often covers a range of benefits, from allowing your employees to take leave to care for their loved ones to providing childcare stipends. In any event, remuneration packages can generate a healthy corporate culture that focuses on the well-being of your employees. This can have a positive impact on staff retention and your employee’s productivity.
Whether it’s your first hire or your fiftieth, this guide will help you understand the moving parts behind building a high-performing team.
Key Takeaways
Remuneration packages include both monetary and non-monetary compensation for your employee’s work. They can help your business:
- retain skilled staff for longer;
- remain competitive against other places of employment; and
- generate a healthy corporate culture.
If you need help scoping out a remuneration package, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
No, the National Employment Standards are the minimum employment standards in Australia. So, you cannot use the relevant award or draft an enterprise agreement in a way that diminishes these minimum standards.
Staff turnover refers to how many employees leave your business and need a replacement in a certain period of time. Depending on the type of work within your business, low turnover rates can indicate employee loyalty and satisfaction with your business. In comparison, high turnover rates can indicate employee dissatisfaction.
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