Remuneration
Remuneration: what it means and why the definition matters
Remuneration is more than salary. It is the full value an employer provides in exchange for work — and the specific meaning changes depending on whether you are applying the Income Tax Act, the BCEA or a reward policy.
Three definitions employers work with
Remuneration for tax
The Income Tax Act defines remuneration for employees' tax purposes, and that definition drives the PAYE calculation. It includes salary, bonuses, commission, taxable allowance portions and taxable fringe benefits.
Remuneration under the BCEA
The BCEA definition determines what is used to calculate leave pay, notice pay and severance. It is not identical to the tax definition, which is why using one figure for everything produces incorrect payouts.
Remuneration as reward
The reward view is the whole employee value proposition: guaranteed pay, variable pay, benefits and non-financial value. That is the view used in total remuneration and benchmarking.
Components of a remuneration package
- Guaranteed pay: basic salary and fixed allowances
- Variable pay: performance bonuses, incentives and commission
- Benefits: retirement funding, medical scheme, group risk — see benefits and allowances
- Employer contributions and statutory employer costs
- Non-cash value such as flexibility, development and job security
Why the definition affects money
Calculating leave pay on basic salary when the contract makes an allowance part of remuneration underpays the employee. Treating an allowance as fully taxable when a portion is not overstates PAYE. Both are common, both are correctable, and both are found in a payroll review.
Setting remuneration in practice
Sound remuneration decisions rest on market data, internal consistency and affordability. Patuza supports that with benchmarking and modelling through the Net Pay Simulator (NPS).
Frequently asked questions
What is remuneration?
Remuneration is the total value an employer pays or provides to an employee for their work, including salary, allowances, bonuses, benefits and employer contributions. The precise legal meaning depends on whether tax or labour legislation is being applied.
Is remuneration the same as salary?
No. Salary is the fixed cash component. Remuneration includes salary plus allowances, variable pay, benefits and employer contributions.
Which definition of remuneration applies to leave pay?
The BCEA definition, which differs from the tax definition. Employers should confirm which components of the package are included before calculating leave, notice or severance payments.
Who decides remuneration levels?
The employer, informed by market benchmarks, internal equity, affordability, applicable bargaining council or sectoral minimums and any employment equity obligations.
Use the Net Pay Simulator to test package structures, employer cost and net pay outcomes before you commit to them.
Explore NPSRelated services
- Payroll processing →
Monthly and weekly payroll processing, calculations, payslips and statutory deductions.
- Payroll advisory →
Payroll consulting on process, controls, systems, compliance risk and payroll optimisation.
- Employee benefits administration →
Medical aid, retirement funds, group risk and allowances administered through payroll.
Related topics
- Total remuneration →
Total cost to company: how guaranteed pay, benefits and employer contributions add up.
- Package structure →
Structuring packages: guaranteed pay, variable pay, benefits and flexible components.
- Net pay →
How take-home pay is derived from gross remuneration, deductions and tax.
- Employer cost →
The true cost of employment: contributions, statutory levies and cost beyond the salary line.
Related insights
- Understanding total remuneration →
How to read a cost-to-company offer and compare it fairly against another.
- Remuneration structuring guide →
Structuring packages for value and compliance.
- Net Pay Simulator (NPS) →
Remuneration and net-pay intelligence.