There are a lot of reasons to supplement employee wages with additional pay. You may find yourself looking for ways to correct an error, show appreciation, improve performance, encourage participation in a program or sweeten the deal for a new hire.
Whatever the reason, knowing the different types of additional pay and how they serve the employment relationship is an important part of Human Resources management. This article will show you the basics of additional pay and when to use it like a pro!
Additional pay is whatever compensation you give to an employee that is above or beyond their base
hourly rate or
salary. Examples of additional pay include wellness bonuses, overtime, payout of accrued time off and back pay.
Base pay is the rate your employee agrees to for the regular work they do. An employee’s base pay is a fixed rate and can be hourly, weekly, monthly or yearly. Additional pay is any compensation that exceeds the rate your employee receives in exchange for their services. Unlike base pay, additional pay is a one-time or short-term adjustment.
There are several reasons why you might issue additional pay to an employee. Some types of additional pay are required by law while others are optional or at the company’s discretion. Below are several examples of additional pay and why you might issue them to an employee.