While there is a tendency to lump the terms employee benefits and employee compensation together and consider them synonymous, the two are not identical. They are similar but different in that a benefit is something of value (but usually not monetary) that is offered to an employee in return for doing a particular job or performing specified services.
Think of perks like vacation or holiday pay, insurance benefits and retirement and profit-sharing programs to better understand the definition of employee benefits. These benefits may be funded entirely by the employer or the employee may share a pre-determined portion of the cost.
Employee benefits are typically available to full-time employees who are either exempt or non-exempt. These perks may or may not be available to part-time or seasonal employees depending on the company structure. Exempt employees usually receive a fixed salary, a lucrative benefits package, and a compensation package that includes overrides, commissions or bonuses. Most exempt employees do not receive any sort of overtime pay for any extra work done during the work week.
Non-exempt employees, however, receive a fixed hourly wage but are entitled to overtime pay for working extra hours or shifts. While they also receive a benefits package, it is usually not as generous as those offered to exempt employees; these individuals may or may not receive any additional compensation such as commissions or bonuses.
Employee compensation, on the other hand, is a monetary amount paid in exchange for work: salaries, wages, commissions, bonuses and so forth. In this case, the employer funds the entire cost.
The cost of employee benefits and compensation is a cost of doing business, and as other prices of doing business increase, so does the accompanying cost of offering such programs. In fact, there is a fear that as the full implementation of Obamacare approaches in 2012, many companies may choose to stop offering benefits such as health insurance and risk paying the resultant fines. This is just one example of how government rules and regulations impact the final decision of a company as to what types of benefits and compensation packages to offer their employees and whether they opt to fund the programs themselves or require the employees to share in the costs.