Skip to main content
Integrated Service Center

Compensation Plan

A component of pay used to assign monetary amounts to a worker’s pay. For example, in addition to salary there are allowances, such as a car allowance, or a cell phone allowance. Some compensation plans, for example, an award, are discretionary. An employee is not paid from these compensation plans in every paycheck. By contrast, other plans, like a salary plan, are included in every paycheck.