QS Study

Differentiate between Compensation and Benefits

Compensation is the total cash and non-cash payments that you give to an employee in exchange for the work they do for your business. Employee benefits are optional, non-wage compensation provided to employees in addition to their normal wages or salaries. The accurate compensation and benefits schemes make sure that hard-working employees are satisfied moderately and in the most cost-effective way for the company.

The differences between compensation and benefit are as follows:


  • It is guaranteed payment,
  • In presence of compensation, an employee will not get extra motivation.
  • This is the payment for the work.
  • All of the employees get this.
  • Organizations are obligated to provide this.
  • Compensations are always tangible.
  • It is the same for an equal level of the job.
  • Salary and bonus are the examples of compensation.


  • It is not guaranteed payment.
  • In presence of benefits, employees will be motivated.
  • This is extra of the job payment.
  • Experienced and skilled workers mainly gain this.
  • Organizations are not obligated.
  • Benefits may be tangible or intangible.
  • It can vary at the same level of the job.
  • Retirement plans, health life insurance, life insurance, disability insurance, vacation, employee stock ownership plans, etc. are the example of employee benefits.