Variable Pay

What is Variable Pay?

Variable Pay is the payment made by the employer to the employee in exchange for his/her additional contribution to the company above and beyond their normal job’s KRA (Key Responsibility Areas). It is also known as performance-linked pay and is mostly paid in the form of an incentive, bonus, or commission.

Variable Pay is mostly determined on the basis of two factors – employee performance and the company’s overall performance. Usually, companies use a goal setting method based on which variable payment is calculated.

Also, See: Incentive Pay | Severance Pay