Supplemental Income
Summary Definition: Additional income or compensation employees receive in addition to their normal wages.
What is Supplemental Income?
Supplemental income is extra money or gifts employees earn on top of their regular wages. It can come in the form of bonuses, stock options, or flexible benefits.
The key characteristic is that employers aren’t required to give supplemental income. They can use it to reward good work and attract top talent, but it’s ultimately their decision.
Key Takeaways
- Supplemental income is extra compensation an employer receives, often based on merit, at an employer’s discretion.
- It can take different forms, such as bonuses, stock options, etc.
Supplemental Income Examples
Employers can offer supplemental income in a variety of forms:
- Bonuses — Bonuses recognize and reward things like excellent performance or special achievements. Monetary bonuses can be given as either a lump sum or spread out over time, while non-monetary ones can include items like gift cards or event tickets.
- Commissions — Commissions are a type of bonus based on the amount of sales or revenue an employee generates. Since they’re often a percentage of the value of a sale, they’re a great way to motivate employees and boost performance.
- Stock Options — This type of supplemental income allows employees to purchase shares of the company’s stock at a set or discounted price. As the company succeeds and grows, so does the value of the shares and the employee’s profit.
- Tuition Reimbursement — Some companies will reimburse employees who enroll in classes that benefit their skills or role within the organization.
Supplemental Income Benefits
| Employer Benefits | Employee Benefits |
| Increased employee satisfaction with their job and the company overall | Financial flexibility to spend, save, or invest money |
| Improved productivity with more engaged and loyal employees | Professional development opportunities or training that'll help with career advancement |
| Reduced employee turnover with a happier workforce | Retirement planning and savings for long-term goals |
| Attract top talent due to better compensation and a motivated office environment | Improved work-life balance from having more flexibility with managing time and priorities |
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