Compensation/ˌkɑːmpenˈseɪʃn/ Definition 1 of 3Pro Tip 1/3Beyond Money Compensation can be non-financial, such as a favor or a benefit. He asked for extra vacation days as compensation for working weekends. Pro Tip 2/3Not Always Fair Compensation might not fully cover a loss or may seem inadequate to some people. They felt the compensation for the property damage was too low. Pro Tip 3/3Legal Context Compensation is often used in legal settings involving settlements or damages. The company offered compensation to settle the lawsuit out of court.