Compensation is payment or something valuable given to make up for work done, time spent, or harm suffered. When adults talk about their compensation, they usually mean their salary and benefits like health insurance or paid vacation days. A lawyer might receive compensation for the hours she works on a case. A factory worker receives compensation for building products.

The word also applies when someone suffers a loss or injury. If a store accidentally breaks your bicycle, they might offer compensation by paying for repairs or giving you a new one. If a company pollutes a farmer's land, they might owe him compensation for the damage. In this sense, compensation tries to balance the scales by making things right after something has gone wrong.

Sometimes compensation isn't money at all. A teacher might give you extra credit as compensation for volunteering after school. A friend might offer to help you with math as compensation for you teaching them to play chess. The core idea remains the same: giving something valuable in return for what someone has provided, contributed, or lost.