Which of the following types of compensation is considered as the reward that an employee earns in addition to his/her regular salary, based on the performance of the individual?

Which of the following types of compensation is considered as the reward that an employee earns in addition to his/her regular salary, based on the performance of the individual? Correct Answer Incentives

The correct answer is Incentives.

Key Points

• Incentives
  • An incentive is an object, item of value, or desired action or event that spurs an employee to do more of whatever was encouraged by the employer.
  • Incentives may include items such as raises, bonuses, profit sharing, signing bonuses, and stock options.
  • Employers use incentives to promote a particular behavior or performance that they believe is necessary for the organization.

Additional Information

• ​Basic Salary
  • Basic Salary is a fixed amount of money paid to an employee by an employer in return for work performed.
  • It does not include the benefits, bonuses, or other potential compensation an employee might receive in addition to the base salary.
• Tax
  • Taxes are mandatory contributions levied on individuals or corporations by a government entity- whether local, regional, or national.
  • There are two types of Taxes: Direct Taxes and Indirect Taxes.
  • Direct Taxes: It is the tax paid directly to the government by the taxpayer.
  • The general examples of this type of tax in India are Income Tax and Wealth Tax.
  • Indirect Taxes: These taxes are consumption-based that are applied to goods or services when they are bought and sold.
  • Some general examples of Indirect tax include GST, VAT, etc.
• Fringe Benefits
  • Fringe Benefits are perks that employers give to their employees above and beyond any financial compensation.
  • The most common benefits include life, disability, and health insurance, retirements benefits, etc.