Compensation of employees for the use of labour comes under which of the following category?

factor income

The correct answer is option 4: factor income

Compensation to employees is a part of wages and salaries under the computation of NI with the help of Income method.

Factor income: This refers to the income earned by the various factors of production used in the production process. These factors include land, labor, capital, and entrepreneurship.
Compensation of employees: This is the payment made to employees for their labor services. It encompasses wages, salaries, bonuses, and other benefits.