Glossary   > Variable Pay

Variable Pay

Variable pay is offered to the employees based on the performance and accomplishment of specified criteria. It is one part of the CTC breakup and is offered in the form of bonuses, incentives, commissions, paid-off time from work, or stock. It’s different from fixed pay, which is an amount offered regardless of employees meeting their goals.

It is the number of bonuses, incentives, compensations or the cash compensations given to an employee. It is generally paid out yearly, but many firms also follow the half yearly or the quaterly methods.

How Does Variable Pay Impact Your Employees?

When it is given to an employee after the evaluation of thier performance the productivity of an employee increases. This leads to improvement in the employee retention. The satisfaction of the employees increase as the flecibility in the income increases.

Frequently Asked Questions

What are the different kinds of variable pay?

There are three kinds such as incentive pay, bonus pay, and recognition pay.

Is variable pay included in CTC?

Yes, CTC includes all kinds of bonuses and incentives given to the employees.

Is variable pay taxable?

As it is part of CTC, it is considered completely taxable in the hands of an employee.

Does overtime count as a variable pay?

Yes, it is considered. The employees are generally paid on a time-and-a-half basis.

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