Salary, benefits and incentives: a jargon buster
Company car, health insurance, golden hello... what's in your package? Take a look at our job benefits jargon buster.
Organisations often offer a range of benefits as part of their remuneration package. It's important to know what the different elements are, their true value, and which to choose if your employer is flexible.
- Bonus It’s pretty obvious… bonuses are extra payments. They’re often related to the company’s performance, but some are awarded for individual excellence. Many companies give a Christmas bonus, which can be useful for buying presents or if you want to soak up some winter sunshine.
- Commission If you work in sales or marketing, you may get commission. You have a basic salary and for every sale you make you get a percentage of the profit. The more you sell, the more you earn. You have more motivation, which is good for you and for the company.
- Company car A free car from your new employer? Sounds fantastic… what’s the catch? Bear in mind that there are financial implications; company cars are taxed on the basis of the price when first registered. You may want to consider whether you need a car with a large capacity or whether running a car with a smaller engine could improve your income tax situation. As a result of rapid depreciation of new cars, many people are now opting for a salary increase instead of a car allowance. If you’ve already got a car, you may get an allowance, paid with your salary instead. This may be more economical if you don’t plan to drive much. If you do want to take the company car, find out whether you or the company will be paying for the petrol, and if you get any personal mileage.
- Golden hello A golden hello is a special bonus awarded when you join a company. Employers realise that moving and starting a new job can be expensive, so a golden hello is designed to help you settle in to your new position. You could use the money to buy new clothes for your new job, as a deposit on a house or flat, or for a season ticket.
- Health insurance Private health insurance, in essence, means you’ll be able to have consultations, tests and operations without joining the end of an NHS waiting list. It’s just like any other health insurance, but you don’t have to pay for it. In some cases the insurance will cover your immediate family as well. Again, bear in mind that you will have to pay income tax on the cash value of the health insurance. There may also be 'excesses' on some forms of treatment.
- Mobile phone You know what the mobile phone is. Some companies provide you with one for calls connected to work. This is particularly useful if your job entails lots of time out of the office. Some phones are exclusively for work-related calls, but your employer may cover some personal calls as well.
- Pension plan It seems ridiculous to start saving for your old age when you’re starting your first job, but it’s not. Really. Large companies often have their own schemes, others have recommended providers. If you are earning more than £10,000, your employer will automatically enrol you in its pension scheme when you start work, though it is possible to opt out if you want to. Usually you put in a little money each month, your company puts some in too and the tax man returns some of what he took. By the time you reach retirement, you’ll have a nice pot of money. If an employer is willing to contribute (or match your contribution) to a pension and you decide to opt out, you are kind of rejecting an extra bit of money your employer wants to give you. But, of course, you have to make an informed decision on the best action for you at any given time.