How Recompense Works

Incentives are an essential part of getting people to do their jobs, and the market uses different forms of compensation to achieve this objective. Recompense provides meaningful incentives for tasks or actions performed through the assurance of due payment. Recompense usually comes in two forms. The first is positive recompense which includes bonuses, wages, salary to workers in exchange for their work. As a company owner, you may choose to reward your employees by giving them cash incentives based on their performance in achieving past goals.

The second form is negative recompense which includes payment or monetary compensation that results from a worker's lawsuit or penalty. When a worker is subject to harm on the job, your business may be legally obligated to pay recompense as compensation. Many companies make pre-payments to special accounts to ensure they can pay out recompense payments at the right time.

In legal matters, a court may require an individual or firm to make recompense payment for previous losses or damages incurred through a series of tasks or events under judgment. Expenses eligible for recompense may occur throughout the duration of a case. Upon legal court order, the accused party is required to pay the damaged party all recompense payment in full. The court outlines the terms of legal recompense payments and bases awards on the court's legal view of adequate and just compensation for damages or loss.

Recompense Example

Here is an example of positive recompense. You are an employee at Hammer Constructions, a construction company looking to expand its reach to more countries in the region. As the marketing department head, you decide to achieve this goal by marketing the product using market research and an implementation plan. Hammer Constructions then gives you a $2,000 salary bonus for helping the company to expand its goal of expansion.

The second type of recompense is negative recompense. For example, while working for Hammer Constructions, you get into an accident with a manufacturing machine. Someone had already reported that this machine was faulty, but the company refused to fix it. Upon taking the case to a legal court, Hammer Constructions is found guilty and is ordered to make a recompense payment of $2,000 to you as compensation for the damages you suffered.

Recompense vs. Compensate

While it may appear that recompense and compensate are similar, they are not exactly the same. To compensate means to reward an employee for hours spent working, usually as wages or salary and benefits. This reward may include

  • Profit-Sharing distributions
  • Merit Pay or recognition
  • Benefits like dental, car insurance, life insurance, family insurance, sick leave, vacation leave, study leave, and retirement
  • Incentive plan or achievement award

To recompense someone is to give them a monetary incentive in return for previous actions or losses. To compensate an employee is to provide them with money or benefits in return for work they have done or the company expects them to do.