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The main differences between these two are as follows:
a. Direct compensation is an employee's base wage. It can be an annual salary, bonus pay, holiday pay, hourly wage or any performance-based pay that an employee receives, such as profit-sharing bonuses.
b. Indirect Compensation is far more varied, including everything from legally required public protection programs such as Social Security to health insurance, medical insurance, Tax contributions, Group life insurance, retirement programs, paid leave, child care or housing.
Direct Compenation: is an employee's basic wages during his working time before retirement or leaving the company such as annual salary or hour wage . Also, bonuses payment due to high performance of an employee are considered to be Direct Compensation.
Indirect Compensation: includes health insurance, retirement programs and paid leave for an employee.
Direct compensation (house rent, bonus, allowance) is related to the salary, on the otherhand, indirect compensation (health insurance, lunch, holiday) is not related to the salary
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