Global HR Glossary

Supplemental pay is more than just a paycheck boost — it’s a way for employers to reward hard work, motivate employees, and enhance overall compensation packages. We'll break down what supplemental pay is, types, and implications.

What is Supplemental Pay? 

Supplemental pay refers to compensation provided to employees over and above their regular earnings. This includes overtime, bonuses, commissions, and other additional payments that are not part of an employee's regular salary.

Types of Supplemental Pay

• Overtime Pay: Compensation for hours worked beyond the normal work schedule.
• Bonuses: Discretionary or non-discretionary payments based on performance.
• Commissions: Earnings based on the sales an employee generates.

Implications and Management

• Tax Handling: Supplemental wages are subject to specific tax rules, often withheld at a higher rate.
• Employee Motivation: Can significantly enhance motivation and job satisfaction.
• Regulatory Compliance: Employers must carefully manage and report supplemental pay to comply with labor laws.