Human Resources is full of terminology that can easily confuse both employees and managers alike. Many HR terms sound similar and are often used interchangeably, but subtle differences can have significant implications. Misunderstanding these distinctions can lead to miscommunication, misaligned expectations, and in some cases, compliance or legal issues.
Clear understanding of HR language is essential for fostering effective workplace communication and ensuring that policies and procedures are implemented correctly. Help your employees better understand their roles, responsibilities, and benefits, and create a more transparent and professional work environment.
1 . Compensation vs Benefits
Compensation refers to the total remuneration an employee receives for their work. This includes
- Base salary
- CPF
- Bonuses
- Commissions
- Any other cash payments
Benefits are non-cash perks provided to employees.
- Health insurance
- Paid leave
- Wellness programs
- Employee discounts.
While compensation reflects what an employee is paid directly, benefits are additional incentives that support well-being and job satisfaction. Understanding the difference ensures clarity when discussing total rewards packages and crafting job descriptions.
2. Contract OF Service vs Contract FOR Service
Contract of Service
Establishes an employer-employee relationship. The employee works under the employer’s direction, is entitled to statutory benefits, and the employer is responsible for contributions such as CPF.
Contract for Service
Is used when hiring independent contractors or freelancers. The contractor delivers a service or completes a project but operates independently, and statutory employment benefits do not apply.
Misclassifying these contracts can lead to legal and financial liabilities, so it is crucial to identify the correct type of engagement you have enlisted.
Performance Management vs Appraisal
Performance Management
Is a continuous process that includes
- Goal setting
- Feedback
- Development discussions throughout the year.
Performance Appraisal
Is a formal evaluation, typically conducted annually or semi-annually, where you assess and document your employees’ performance.
While appraisal is part of performance management, the two are not the same. Relying solely on appraisals can overlook opportunities for ongoing improvement.
Burnout vs Quiet Quitting
Burnout
Is a state of chronic physical and emotional exhaustion caused by prolonged stress, overwork, or lack of support. It often manifests as decreased motivation, fatigue, and declining performance in employees.
Quiet Quitting
Is a behavioural trend where employees limit their work to their formal job responsibilities, refusing to go above and beyond.
Understanding the distinction can help your HR team identify underlying issues and address them appropriately, whether through wellness initiatives, workload adjustments, or engagement strategies.
Build Clarity and Confidence in Your HR Practices
Clear communication and precise understanding of HR terminology are foundational to building a productive, compliant, and engaged workplace. Whether you’re navigating employment contracts, managing performance, or addressing employee well-being, getting the language right matters.
At Verti Human Capital, we specialise in helping organisations across Singapore streamline their HR processes, ensure compliance, and foster positive workplace cultures. From policy development to employee engagement strategies and regulatory guidance, our experienced team provides tailored HR solutions that support your business goals.
Don’t let HR jargon hold your business back. Reach out to us at contactus@verti.sg or +65 6909 5691 to learn more.