What is Indirect Compensation?

Indirect Compensation definition

Non-monetary remuneration provided to employees, including annual leave, overtime allowance, health insurance, life assurance, company car and mobile and pension funds. Note that both ‘standard’ contractual features (annual leave) as well as valuable benefits (healthcare) can be included in indirect compensation.

Indirect compensation compares to direct compensation, which is monetary remuneration paid directly to employees for their services, starting with a basic salary. The total remuneration package is a combination of direct compensation and indirect compensation.