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1. What is an Employee Compensation Agreement?

An employee Compensation agreement is an agreement that is supplemented by the original Employment agreement. This agreement helps the employer and employee to negotiate the compensation upon which the employee will render services. This agreement contains the amount of basic wages, bonus, allowances, perks, commission, health benefits etc which the employee is liable to receive from the company. Some employers prefer to add a compensation clause in the contract itself, however, it is better to make a separate agreement so that in future any negotiated amount can be easily mentioned in the agreement without altering the entire agreement.

2. Why is it important?

a. It records a negotiated change when it comes to earnings and wages for employees.

b. It helps in avoiding any disputes that may arise between the employer and employee owing to the compensation.

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