Direct Compensation – This includes pay that employees receive directly in exchange for their labor.
Base Pay – Fixed amount paid, usually hourly, weekly, or monthly.
Incentives or Bonuses – Performance-based pay to motivate or reward achievements.
Commissions – Common in sales roles – pay based on sales generated.
Indirect Compensation – his includes all non-cash benefits that add value for employees. Examples include health insurance, retirement plans, paid time off, employee discounts, and wellness programs.
Market-
based:
Pay based on external market rates.
Skill-based or competency-based:
Pay increases with skill development.
Compensation tied to results or achievements.
Total rewards approach:
Combines monetary, benefits, and developmental rewards.
Labor laws (e.g., minimum wage, overtime regulations)
Equal pay laws (e.g., gender equity)
Tax and reporting rules