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.
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