Topic 5 – Compensation & Benefits (MGT340)

50 vocabulary flashcards covering key terms and concepts from Topic 5: Compensation & Benefits.

Compensation

All forms of pay or rewards given to employees arising from their employment, including wages, incentives, bonuses and benefits.

Direct Financial Payment

Cash payments made regularly to employees, such as wages, salaries, commissions and bonuses.

Indirect Financial Payment

Monetary-valued benefits not paid in cash, e.g., insurance coverage or paid vacation.

Non-financial Payment

Rewards with no monetary value that still provide employee satisfaction, e.g., flexible schedules or on-site gyms.

Wages / Salaries

Regular cash payments to employees in return for labour, usually based on time worked.

Incentive / Commission

Performance-based pay to individual employees, common for salespersons, managers or executives.

Bonus

Extra financial reward granted for performing one’s job well or surpassing targets.

Time-Related Pay System

Employees are paid for a set period (hourly, weekly, monthly) regardless of individual productivity.

Piece-Rated Pay System

Employees are paid according to the number of units produced (payment by results).

Overtime

Working hours that exceed normal working hours; compensated at higher hourly rates.

Overtime Rate – Ordinary Working Day

1.5 × normal hourly rate for overtime performed on a regular work day in Malaysia.

Overtime Rate – Rest Day

2 × normal hourly rate for overtime worked on an employee’s rest day in Malaysia.

Overtime Rate – Public Holiday

3 × normal hourly rate for overtime worked on a gazetted public holiday in Malaysia.

Shift Work

Work schedule where two or more groups alternate to cover hours outside the normal pattern (e.g., double day, three-shift).

Flexitime

System allowing employees to choose starting and stopping times within employer-set limits.

Flexitime – Bandwidth

Total span of time during which employees can choose their working hours in a flexitime system.

Flexitime – Core Hours

Mandatory hours during which all flexitime employees must be present at work.

Flexitime – Flexibands

Periods within the bandwidth when employees may arrive or leave at their discretion.

Flexitime – Settlement Period

Timeframe over which total hours worked are calculated to ensure contractual hours are met.

Part-Time Work (Malaysia)

Employment where average hours do not exceed 70 % of a full-time worker’s normal hours.

Statutory Benefits

Benefits required by Malaysian laws (Employment Act, EPF Act, SOCSO Act, etc.).

Non-statutory Benefits

Employer-provided benefits offered voluntarily beyond legal requirements.

Maternity Leave (Malaysia)

98 days paid leave for female employees with up to five surviving children, after at least 90 days of service.

Paternity Leave (Malaysia)

Seven days paid leave for fathers, limited to five children and requires legal marriage.

Rest Day Entitlement

One whole rest day per week for employees under Section 59 of the Employment Act.

Public Holiday Entitlement

Minimum paid gazetted holidays: 11 days (Peninsular), 14 (Sabah), 16 (Sarawak); five are fixed by law.

Annual Leave (Malaysia)

Paid leave: 8 days (

Sick Leave (Malaysia)

Paid sick leave: 14 days (

Employees Provident Fund (EPF)

National mandatory retirement savings scheme ensuring employees have funds at/after age 60.

EPF Contribution Rates

Employees (under 60): 11 % of wages; employers: 12 % of wages.

Employees Exempt from EPF

Domestic servants, foreign workers, and government pensionable employees are not required to join EPF.

Employees Social Security Organization (SOCSO)

Provides compensation for work injuries, occupational diseases or invalidity.

SOCSO Contribution Rates (<60 yrs)

Employer pays 1.75 %, employee pays 0.5 % of monthly wages under Employment Injury & Invalidity Scheme.

SOCSO Contribution Rates (≥60 yrs)

1.25 % of wages paid by employer only under Employment Injury Scheme.

Time-off Payments

Paid leave for events such as marriage, emergencies, pilgrimage, studies or bereavement.

Health Care Benefit

Employer payment of medical, hospital, optical or dental bills and hospitalization coverage.

Financial Services Benefit

Low-interest loans for housing, vehicles, computers and similar items provided by employer.

Retirement Benefits (Employer-Provided)

Extra EPF contributions or special retirement funds beyond statutory requirements.

Educational Assistance

Employer support such as libraries, course fee payments and scholarships for further studies.

Subsidies and Services

Perks like canteens, transport, childcare, club membership, staff quarters or free flights.

Importance of Benefits

Benefits attract, retain and motivate employees, raising morale and productivity.

Reward System

Planned financial and non-financial incentives designed to drive desired employee behaviours.

Financial Rewards

Monetary incentives such as wage increments, bonuses, profit-sharing and commissions.

Non-financial Rewards

Recognition-based incentives like performance awards, letters of appreciation or travel sponsorships.

Wage Increment

Permanent salary increase given for good performance, motivating continued effort.

Profit-Sharing Scheme

Plan granting employees a share of company profits based on quarterly or annual earnings.

Commission (Sales)

Percentage-based pay awarded to sales staff for achieving or exceeding sales targets.

Performance Award

Recognition for special achievements (e.g., Worker of the Month) often with a certificate or gift.

Long Service Award

Token of appreciation (e.g., gold watch, trip) given to employees for loyalty and extended tenure.

Sponsorship to Attend Conferences

Employer-funded opportunity for high performers to attend seminars, conferences or overseas tours.