What Is a Salary Package? (With Salary Negotiation Tips)

By Indeed Editorial Team

Published 19 April 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

When you're applying for a job, the benefits package might be the first thing you consider. There are many components that an employer might offer in a benefits package. Knowing about the different components of a benefits package and what factors affect them can help you better consider job offers and negotiate for higher compensation. In this article, we explain what a salary package is and guide you through how to negotiate your salary offer with your employers.

What is a salary package?

A salary package includes more than just your base salary. It also comprises other additional benefits, such as commission, annual leave, housing subsidy or bonuses. When employers mention a salary, they're often talking about your base salary. Before accepting a position or job offer, make sure you understand every benefit included in the compensation package being offered. This helps you to make an informed decision and can influence your earning potential. A compensation package has many potential components, such as:

Salary

Salary is the fixed amount of money that an employer pays you. Depending on your role and industry, employers commonly pay salaries on an hourly, weekly or monthly basis. Your base salary can vary depending on different factors, such as experience, educational background and certifications.

Commission

Commission is an additional monetary incentive that employers pay based on your performance. It can depend on how many successful sales goals or quotas you achieve during a given period. There are a few ways that an employer can calculate your commission. For example, they may calculate based on a percentage of your total sales revenue. Commissions are popular in sales based roles. Some service-based companies also offer commissions for introducing clients.

Year-end bonus

A year-end bonus is a one-time bonus that employers give to employees at the end of the year. Companies offer year-end bonuses because they want to encourage and motivate employees. Top executives and finance professionals often earn year-end bonuses. The amount of a year-end bonus can vary depending on an employee's and the company's performance.

Double pay

Double pay, or 13th-month pay, is an extra amount of compensation commonly included in compensation packages that's paid at the end of each year. It's different from a year-end bonus as it's based on your monthly salary. Some companies also offer their employees 14th-month pay.

Annual leave

As of 2021, the Employment Law states that employees enjoy at least 7 days of paid annual leave under a continuous contract for more than 12 months, which is separate from public holidays. Annual leave is generally accumulated on a monthly basis and often depends on the length of your service under an employer. Some organisations allow you to carry over a certain amount of unused annual leave to the next year.

Sick leave allowance

As of 2021, the Employment Law states that sick leave accumulates at the rate of two paid sickness days for each completed month of employment during the first 12 months, and four paid sickness days for each completed month thereafter. There are some conditions to utilising your sick leave allowance.

You're required to have enough accumulated sick leave allowance, provide an appropriate medical certificate and take sick leave for less than four consecutive days. The daily rate of sickness allowance is equivalent to four-fifths of the average daily wages earned by an employee in the 12-month period preceding the first day of sick leave.

Other optional items in your package

Some companies also provide other compensation benefits, such as:

  • health insurance

  • staff discounts

  • subsidising training or education

  • on-site childcare

  • share incentive plan or stock options

  • meal reimbursements

  • overtime pay

Related: A Complete Guide to Types of Employee Benefits (With Tips)

Factors affecting your compensation package

Different employees from the same company may receive different benefits packages because employers and HR managers consider both external and internal factors when determining your package. Your compensation package can reflect your position's market value and if you perform better, your employer may offer raises.

Companies also determine compensation packages through benchmarking, which is a method that allows organisations to compare the pay rates of similar job roles to help them craft a final compensation package that is appropriate for a specific position. Here are some factors that may affect your benefits package:

External factors:

These are some external factors that may affect your compensation package:

  • demand for and supply of labour in a similar field

  • cost of living, such as the consumer price index

  • average wage and salary level

  • economic situation

  • legislation, such as minimum wage

  • regulation

Internal factors:

These are some internal factors that companies consider when they're determining your salary:

  • experience

  • educational background

  • job duties and responsibilities

  • certifications

Related: A Complete Guide to Understanding Salary Benchmarking

How to negotiate your salary and benefits with your employer

Sometimes, an employer may offer you a compensation package that isn't within your expectation, but you're still interested in the opportunity. You can consider negotiating your compensation package with your employer. Before you negotiate, there are preparations you can do to help get your desired compensation. It's also vital for you to know how to negotiate effectively. Here is a guide on how to negotiate your salary:

1. Know your value

Knowing your value is the most crucial part in a salary negotiation because it determines how much you can benefit a company. You can start by considering these perspectives:

  • educational qualifications

  • certification and licenses

  • skills and abilities

  • career level

  • experience

When you understand yourself better, you can use these qualifications to show employers why you deserve a better compensation package.

2. Research the compensation package for your profession

Many companies use benchmarking to determine your compensation package, but you can also do your own research. You can review advertised salaries for positions with requirements similar to your education and experience level. You can also talk to other people within your industry to get a better understanding of the range of compensation for your role. After doing some research, you can consider your desired compensation package.

3. Carefully consider an offer before giving a firm response

Before you give the hiring manager your reply, carefully read through the offer and compare it with the results of your research. Make sure it includes everything you want because your first compensation package can influence your future benefits. You can express your appreciation for the offer and ask them when they need a reply. You can say, "Thank you so much for this offer, I look forward to reviewing it. When do you need a response from me?" Most companies allow candidates to take some time to review a job offer. If you have questions about the offer, consider asking the hiring manager.

4. Practise and plan your negotiation

Candidates usually have some time to consider an offer before accepting it. During this time, you can prepare and plan a negotiation strategy. Have a plan of action and carefully list down every argument you can give for a better compensation package. For example, you can mention some successful projects that you've done before or whether you have an advanced degree.

If you're negotiating with your current employer, give them a detailed explanation of how you added value to the company. It's important to be precise by providing concrete figures to back up your claims. Consider practising your talking points to build confidence in your viewpoints. You can practise with friends or family and ask for their feedback.

Related: How to Negotiate Your Salary (Steps and Tips)

5. Present your desired compensation package clearly

You can start by giving a warm and friendly greeting. Be upfront with an employer on your request. Listen to the employer's counter-offers and ask for the reason behind them. Avoid getting distracted or talking about irrelevant topics. Focusing on the negotiation can give you more confidence.

6. Seek candid guidance

If an employer insists on a certain compensation package, you might ask if there are any workable compromises. You could say "I'm really interested in this opportunity and would love to work here. What have you done in the past with candidates to close the gap if a higher salary isn't an option?" This might be a situation they've encountered in the past and there may be options to help you move forward with the company.

Example request for salary package

Here is an example salary request you can reference:

Thank you so much for the offer. I'm happy to hear you want to bring me on to the team and I'm excited to get started, but I was hoping we could discuss my compensation. I've researched the industry we're in and considering my qualifications and experience, I would be more comfortable accepting a base salary of $30,000 for this role plus a 15% commission for any profit I bring to your company.

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