Essential TOEIC Vocabulary Items on Salaries and Benefits You Need to Master for the TOEIC Exam

Letter

Word/Phrase

Meaning

Example

A

allowance  /əˈlaʊəns/

an amount of money given for a specific purpose

"Employees receive a travel allowance when visiting clients."

annual leave  /ˈænjuəl liːv/

paid time off work that employees are entitled to each year

"She has 25 days of annual leave, which she can take whenever she wants."

accrued benefits  /əˈkruːd ˈbenɪfɪts/

benefits that increase in value over time with an employee's length of service

"After five years with the company, her accrued benefits include additional vacation days and increased pension contributions."

aggregate salary  /ˈæɡrɪɡət ˈsæləri/

the total earnings from all sources of employment

"His aggregate salary from his primary job and consulting work puts him in a higher tax bracket."

B

benefits package  /ˈbenɪfɪts ˌpækɪdʒ/

a collection of non-salary compensation provided to employees

"The company offers an attractive benefits package including healthcare and retirement plans."

bonus  /ˈbəʊnəs/

an amount of money added to wages on a seasonal basis, especially as a reward for good performance

"He received a substantial bonus after exceeding his sales targets."

base salary  /beɪs ˈsæləri/

the initial amount of salary offered to an employee, not including benefits, bonuses or other incentives

"Her base salary is $60,000, but with commission she earns much more."

bereavement leave  /bɪˈriːvmənt liːv/

paid time off following the death of a family member

"The company policy includes five days of bereavement leave for immediate family members."

back pay  /bæk peɪ/

payment of wages that are owed from a previous period

"After the labor dispute was resolved, workers received back pay for the two weeks they were locked out."

C

commission  /kəˈmɪʃn/

a fee paid to a salesperson for selling something, usually calculated as a percentage of the sale

"Real estate agents typically earn a 6% commission on property sales."

compensation  /ˌkɒmpenˈseɪʃn/

the money and other benefits received for working

"His total compensation includes stock options worth over $50,000."

cost of living adjustment (COLA)  /kɒst əv ˈlɪvɪŋ əˈdʒʌstmənt/

an increase in wages to counteract inflation

"The company provides an annual cost of living adjustment based on the national inflation rate."

cafeteria plan  /ˌkæfəˈtɪəriə plæn/

a benefits plan allowing employees to choose from a menu of options

"Through the cafeteria plan, she allocated more funds toward childcare and less toward retirement."

capped bonus  /kæpt ˈbəʊnəs/

a bonus with a maximum limit regardless of performance

"Even though sales exceeded targets by 50%, the capped bonus meant he couldn't earn more than $10,000 extra."

D

deduction  /dɪˈdʌkʃn/

an amount subtracted from gross income for taxes, insurance, etc.

"Payroll deductions include income tax, Social Security, and Medicare contributions."

dental insurance  /ˈdentl ɪnˈʃʊərəns/

insurance that covers the cost of dental treatment

"The dental insurance plan covers two check-ups and cleanings per year."

disability insurance  /ˌdɪsəˈbɪləti ɪnˈʃʊərəns/

insurance that provides income when an employee is unable to work due to illness or injury

"Short-term disability insurance covers 60% of his salary for up to six months."

discretionary bonus  /dɪˈskreʃənəri ˈbəʊnəs/

a bonus given at the employer's discretion rather than based on fixed criteria

"The CEO awarded a discretionary bonus to the team that completed the project ahead of schedule."

demotion  /diːˈməʊʃn/

a reduction in rank or position, often accompanied by a salary decrease

"Following the performance issues, he accepted a demotion to a non-managerial role with a 15% pay cut."

E

employee stock ownership plan (ESOP)  /ɪmˈplɔɪiː stɒk ˈəʊnəʃɪp plæn/

a plan that gives workers ownership interest in the company

"Through the ESOP, long-term employees have built significant equity in the company."

expense account  /ɪkˈspens əˈkaʊnt/

an arrangement by which an employer pays for expenses incurred by an employee for business purposes

"Managers have expense accounts to cover client dinners and business travel."

equity compensation  /ˈekwɪti ˌkɒmpenˈseɪʃn/

non-cash payment in the form of company shares or options

"Startup employees often accept lower salaries in exchange for substantial equity compensation."

exempt employee  /ɪɡˈzempt ɪmˈplɔɪiː/

an employee not entitled to overtime pay due to their job duties and salary level

"As an exempt employee, she doesn't receive overtime pay regardless of how many hours she works."

employment contract  /ɪmˈplɔɪmənt ˈkɒntrækt/

a formal agreement outlining the terms of employment including compensation

"His employment contract specified a three-year term with performance reviews every six months."

F

flexible benefits  /ˈfleksəbl ˈbenɪfɪts/

a system where employees can choose benefits from a range of options

"The flexible benefits program allows employees to select the healthcare plan that best meets their needs."

fringe benefits  /frɪndʒ ˈbenɪfɪts/

additional benefits supplementing an employee's salary

"Company cars and gym memberships are popular fringe benefits in the tech industry."

401(k) plan  /fɔː əʊ wʌn keɪ plæn/

a retirement savings plan sponsored by an employer

"The company matches employee contributions to the 401(k) plan up to 6% of their salary."

fixed salary  /fɪkst ˈsæləri/

a predetermined amount paid regularly regardless of hours worked

"Unlike hourly workers, managers receive a fixed salary regardless of overtime."

furlough  /ˈfɜːləʊ/

a temporary leave of absence with reduced or no pay

"During the economic downturn, staff were placed on furlough at 80% of their normal salary."

G

gross pay  /ɡrəʊs peɪ/

the total amount of money earned before deductions

"Her gross pay is $5,000 per month, but after deductions she takes home about $3,800."

group insurance  /ɡruːp ɪnˈʃʊərəns/

an insurance plan offered to members of a group, typically employees of a company

"The group insurance premium is much lower than what I'd pay for an individual policy."

guaranteed bonus  /ˌɡærənˈtiːd ˈbəʊnəs/

a bonus that will be paid regardless of performance

"The job offer included a guaranteed bonus of $5,000 after the first year of employment."

gratuity  /ɡrəˈtjuːəti/

a sum of money paid to an employee at the end of a period of employment

"Upon retirement, he received a gratuity equivalent to one month's salary for each year of service."

golden handcuffs  /ˈɡəʊldən ˈhændkʌfs/

financial benefits that encourage employees to remain with a company

"The deferred compensation plan acts as golden handcuffs, making it financially difficult to leave the company."

H

health insurance  /helθ ɪnˈʃʊərəns/

insurance that covers medical expenses

"The company pays 80% of employees' health insurance premiums."

hourly wage  /ˈaʊəli weɪdʒ/

payment calculated according to the number of hours worked

"The minimum hourly wage in this state is $15."

hazard pay  /ˈhæzəd peɪ/

additional compensation for performing dangerous work

"Miners receive hazard pay due to the inherent risks of working underground."

health savings account (HSA)  /helθ ˈseɪvɪŋz əˈkaʊnt/

a tax-advantaged account for medical expenses

"She contributes to her HSA pre-tax to cover future medical costs not covered by insurance."

hiring bonus  /ˈhaɪərɪŋ ˈbəʊnəs/

a one-time payment made to a new employee

"The competitive job market has led many tech companies to offer substantial hiring bonuses."

I

incentive  /ɪnˈsentɪv/

something that encourages a person to do something

"Sales teams receive incentives for exceeding their quarterly targets."

income tax  /ˈɪnkʌm tæks/

tax paid on personal income

"A significant portion of her salary goes toward income tax payments."

indemnity  /ɪnˈdemnəti/

compensation for harm or loss

"The insurance policy provides indemnity for work-related injuries."

increment  /ˈɪŋkrəmənt/

a regular increase in salary

"She receives an annual increment of 3% to account for inflation."

individual retirement account (IRA)  /ˌɪndɪˈvɪdʒuəl rɪˈtaɪəmənt əˈkaʊnt/

a tax-advantaged personal savings plan for retirement

"He contributes to a Roth IRA in addition to his employer-sponsored retirement plan."

J

job classification  /dʒɒb ˌklæsɪfɪˈkeɪʃn/

a system for objectively evaluating and ranking jobs to determine relative worth and appropriate compensation

"After the job classification review, several positions were upgraded to higher salary bands."

jury duty leave  /ˈdʒʊəri ˈdjuːti liːv/

paid time off for serving on a jury

"His employer provides jury duty leave at full pay for up to two weeks."

job-sharing  /dʒɒb ˈʃeərɪŋ/

an arrangement where two people share the responsibilities and pay of one full-time position

"The job-sharing arrangement allows both employees to work part-time while maintaining professional careers."

K

key person insurance  /kiː ˈpɜːsn ɪnˈʃʊərəns/

insurance policy a business takes out on essential employees

"The company has key person insurance on its founder and lead developer."

knowledge-based pay  /ˈnɒlɪdʒ beɪst peɪ/

compensation based on an employee's knowledge and skills rather than job title

"The firm implemented knowledge-based pay to reward employees who developed specialized expertise."

L

life insurance  /laɪf ɪnˈʃʊərəns/

insurance that pays out a sum of money upon the death of the insured

"The company provides basic life insurance equal to twice the employee's annual salary."

lump sum  /lʌmp sʌm/

a complete sum of money paid at once, rather than in installments

"She received a lump sum payment of $10,000 as a signing bonus."

long-term disability  /lɒŋ tɜːm ˌdɪsəˈbɪləti/

insurance that provides income when an employee is unable to work for an extended period

"Long-term disability benefits begin after short-term benefits are exhausted and can continue until retirement age."

leave of absence  /liːv əv ˈæbsəns/

an extended period of time away from work

"He took a six-month leave of absence to complete his advanced degree."

longevity pay  /lɒnˈdʒevəti peɪ/

additional compensation based on length of service

"After 10 years with the company, employees qualify for longevity pay increases."

M

maternity leave  /məˈtɜːnəti liːv/

a period of absence from work granted to a mother before and after the birth of her child

"She's taking six months of maternity leave after her baby is born."

minimum wage  /ˈmɪnɪməm weɪdʒ/

the lowest wage permitted by law

"The restaurant ensures all staff receive at least the minimum wage plus tips."

merit increase  /ˈmerɪt ɪnˈkriːs/

a pay raise based on performance

"Her exceptional performance review resulted in a 5% merit increase."

meal allowance  /miːl əˈlaʊəns/

money provided for food expenses

"Field technicians receive a daily meal allowance when working away from their home base."

matching contributions  /ˈmætʃɪŋ ˌkɒntrɪˈbjuːʃnz/

employer payments to a retirement plan that match employee contributions

"The company offers matching contributions of up to 5% of salary to the retirement plan."

N

net pay  /net peɪ/

the amount of salary or wages received after deductions

"Her net pay is about 70% of her gross salary after tax and benefit deductions."

notice period  /ˈnəʊtɪs ˌpɪəriəd/

the time between notification of resignation and the final day of work

"He gave a two-week notice period before leaving for his new job."

non-compete clause  /nɒn-kəmˈpiːt klɔːz/

a contract provision prohibiting an employee from working for competitors for a specified period

"The non-compete clause prevented him from working for rival firms for 12 months after leaving."

non-monetary benefits  /nɒn-ˈmʌnɪtri ˈbenɪfɪts/

benefits that do not involve direct payment

"Flexible working hours and remote work options are valuable non-monetary benefits."

negotiated salary  /nɪˈɡəʊʃieɪtɪd ˈsæləri/

pay rate determined through discussion between employer and employee

"Her negotiated salary was 15% higher than the initial offer."

O

overtime  /ˈəʊvətaɪm/

time worked beyond normal working hours, usually paid at a higher rate

"She earned time-and-a-half for working overtime during the busy season."

occupational pension  /ˌɒkjuˈpeɪʃənl ˈpenʃən/

a pension scheme arranged by an employer for employees

"The occupational pension plan allows employees to contribute up to 10% of their salary with employer matching."

on-call pay  /ɒn-kɔːl peɪ/

compensation for being available to work if needed outside normal hours

"Medical staff receive on-call pay even when they aren't called into the hospital."

opt-out provision  /ɒpt-aʊt prəˈvɪʒn/

a clause allowing employees to decline participation in a benefit program

"The retirement plan includes an opt-out provision for employees who prefer to manage their own investments."

output-based pay  /ˈaʊtpʊt beɪst peɪ/

compensation based on production or results rather than time worked

"Piece-rate workers receive output-based pay determined by the number of units they produce."

P

paternity leave  /pəˈtɜːnəti liːv/

leave taken by a father shortly after the birth of his child

"He took two weeks of paternity leave when his son was born."

performance-related pay  /pəˈfɔːməns rɪˈleɪtɪd peɪ/

a system where part of an employee's pay is based on how well they perform

"The sales team operates on a performance-related pay structure with quarterly reviews."

pension plan  /ˈpenʃən plæn/

a regular payment made during a person's retirement from an investment fund

"The company matches employee contributions to the pension plan up to 5% of their salary."

paid time off (PTO)  /peɪd taɪm ɒf/

a bank of hours that employees can use for any absence from work

"The company's PTO policy combines vacation, sick leave, and personal days into one flexible bank of time."

profit sharing  /ˈprɒfɪt ˈʃeərɪŋ/

a system where employees receive a portion of company profits

"The annual profit sharing bonus distributed 10% of company profits among all employees."

Q

quarterly bonus  /ˈkwɔːtəli ˈbəʊnəs/

a bonus paid every three months, typically based on company or individual performance

"The sales team receives quarterly bonuses when they exceed their targets."

qualification allowance  /ˌkwɒlɪfɪˈkeɪʃn əˈlaʊəns/

additional payment for holding specific qualifications

"Teachers with advanced degrees receive a qualification allowance on top of their base salary."

R

raise  /reɪz/

an increase in salary

"She negotiated a 5% raise during her annual review."

retirement benefits  /rɪˈtaɪəmənt ˈbenɪfɪts/

payments and services provided to employees after they retire

"The company offers generous retirement benefits including pension and healthcare coverage."

relocation package  /ˌriːləʊˈkeɪʃn ˈpækɪdʒ/

benefits offered to employees who must move for work

"The relocation package included moving expenses, temporary housing, and assistance selling his previous home."

retention bonus  /rɪˈtenʃn ˈbəʊnəs/

payment made to an employee to encourage them to stay with the company

"During the merger, key employees were offered retention bonuses to prevent them from leaving."

reimbursement  /ˌriːɪmˈbɜːsmənt/

payment for expenses incurred by an employee for work purposes

"The company provides reimbursement for work-related training and certification."

S

salary  /ˈsæləri/

a fixed regular payment, typically paid on a monthly basis

"His annual salary of $75,000 is paid in monthly installments."

severance pay  /ˈsevərəns peɪ/

payment made to an employee who is being dismissed

"She received three months of severance pay after her position was eliminated."

stock options  /stɒk ˈɒpʃənz/

the right to buy company stock at a specified price within a specified period

"As part of her executive compensation, she received stock options vesting over four years."

sick leave  /sɪk liːv/

paid time off due to illness

"Employees accumulate one day of sick leave for each month worked."

shift differential  /ʃɪft ˌdɪfəˈrenʃl/

additional pay for working less desirable hours

"Night shift workers receive a 15% shift differential on top of their base wage."

T

tax deduction  /tæks dɪˈdʌkʃn/

an expense that reduces taxable income

"Contributions to the retirement plan are a tax deduction that lowers your overall tax burden."

time off  /taɪm ɒf/

a period of absence from work

"Employees receive 15 days of paid time off annually."

tuition reimbursement  /tjuˈɪʃn ˌriːɪmˈbɜːsmənt/

a benefit that helps employees pay for educational courses

"The tuition reimbursement program covers 80% of approved educational expenses."

thirteenth month pay  /ˌθɜːˈtiːnθ mʌnθ peɪ/

an additional month's salary paid as a bonus, often at the end of the year

"In many countries, the thirteenth month pay is a mandatory benefit provided to all employees."

tips  /tɪps/

extra money given by customers for good service

"Waitstaff often earn more from tips than from their hourly wage."

U

unemployment benefits  /ˌʌnɪmˈplɔɪmənt ˈbenɪfɪts/

financial assistance for unemployed workers

"After being laid off, he applied for unemployment benefits while searching for a new job."

unpaid leave  /ʌnˈpeɪd liːv/

time off work without pay

"She took three months of unpaid leave to travel around South America."

upskilling allowance  /ʌpˈskɪlɪŋ əˈlaʊəns/

financial support for developing new skills

"The company provides an annual upskilling allowance to help employees stay current in their field."

V

variable pay  /ˈveəriəbl peɪ/

compensation that changes according to performance or results

"Her variable pay includes commission and quarterly bonuses based on sales targets."

vesting period  /ˈvestɪŋ ˌpɪəriəd/

the time an employee must work before gaining full ownership of certain benefits

"Stock options have a four-year vesting period with a one-year cliff."

vacation pay  /vəˈkeɪʃn peɪ/

compensation received during paid vacation time

"She receives vacation pay at the same rate as her regular salary."

vision insurance  /ˈvɪʒn ɪnˈʃʊərəns/

insurance that covers eye examinations and corrective lenses

"The vision insurance plan covers an annual eye exam and provides an allowance for glasses or contacts."

voluntary benefits  /ˈvɒləntrɪ ˈbenɪfɪts/

optional benefits that employees can purchase through their employer

"Voluntary benefits include supplemental life insurance and legal assistance plans."

W

wage  /weɪdʒ/

a fixed regular payment earned for work or services

"He earns an hourly wage of $22."

workers' compensation  /ˈwɜːkəz ˌkɒmpenˈseɪʃn/

insurance that provides medical benefits and replacement of wages to employees injured at work

"The factory worker received workers' compensation while recovering from his on-the-job injury."

wellness program  /ˈwelnəs ˈprəʊɡræm/

employer-sponsored initiative to improve employee health

"The wellness program includes gym membership discounts and health screenings."

withholding tax  /wɪðˈhəʊldɪŋ tæks/

tax deducted from income at source

"The withholding tax is calculated based on your W-4 form information."

work-from-home allowance  /wɜːk frəm həʊm əˈlaʊəns/

stipend for expenses related to remote work

"The company provides a work-from-home allowance to cover internet and home office expenses."

Y

yearly bonus  /ˈjɪəli ˈbəʊnəs/

an extra payment given once a year, usually based on performance

"The company distributes yearly bonuses after the annual financial results are announced."

yield  /jiːld/

the return or profit on an investment, such as a retirement plan

"The retirement fund's annual yield averaged 7% over the past decade."

Z

zero-hour contract  /ˈzɪərəʊ aʊə ˈkɒntrækt/

an employment agreement where the employer is not obligated to provide minimum working hours

"Though flexibility is a benefit, workers on zero-hour contracts often face income uncertainty."

zone pay  /zəʊn peɪ/

differential compensation based on geographical location

"The company uses zone pay to adjust salaries according to local cost of living."