Indirect compensation, also known as non-cash compensation, is a salary that an employee receives in the form of benefits rather than money. Common benefits offered are Life Insurance, Health Insurance, Disability insurance, 401(k) retirement plan, Medical savings accounts (MSA), and Dependent care accounts. Indirect compensation is a method of providing compensation to anyone who is not on the payroll of an organization. Indirect compensation has been proven to be more cost-effective than other forms of compensation for employers and employees alike. Indirect compensation can be a beneficial program for any company or non-profit entity. It promotes good customer relations and increases job satisfaction by offering rewards and incentives to non-exempt employees such as salespeople, mechanics, technicians, service writers, and many more. The benefits can be in the form of cash bonuses, gift cards, stock options, or even merchandise.
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