Indirect Compensation

Posted in Human Resource Terms, Total Reads: 6546

Definition: Indirect Compensation

Indirect Compensation refers to the non monetary benefits in contrast to the direct compensation which refers to the monetary benefits provided to the employees by the organization they serve.

Indirect compensation is not paid directly to the employee. It is calculated as an additional component to the base salary figure. It includes everything from legally obligated health insurance to child care, social security etc.

The various components of the indirect compensation for the employees may be:


•Leave Travel

•Leave Policy

•Retirement Benefits

•Flexible timings


•Overtime Policy

•Holiday Lodges


Insurance: This covers life and accidental insurance.

Leave Travel:  This includes travel allowances and leave allowances for holidays

Leave Policy: This includes sick leave, casual leave, maternity leave and other leaves which an employee is entitled to.

Retirement Benefits: This includes pension allowances and other old age benefits

Flexible timings: This includes the option to come to office at timing apart from normal office hours in case of emergency and personal problems.

Hospitalization: This includes medi-claims and other health benefits, claims of medical check up and medication expenses and more.

Overtime Policy: This includes being paid for working beyond normal office hours for their service and associated facilities.

Holiday Lodges: This includes access to company guest house and guest quarters on company visits or holidays.


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