Definition:
Variable pay is employee compensation that changes as compared to salary which is paid in equal proportions throughout the year. Variable pay is used generally to recognize and reward employee contribution toward company productivity, profitability, team work, safety, quality, or some other metric deemed important.
The employee who is awarded variable compensation has gone above and beyond his or her job description to contribute to organization success. Variable pay is awarded in a variety of formats including profit sharing, bonuses, holiday bonus, deferred compensation, cash, and goods and services such as a company-paid trip or a Thanksgiving turkey.
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Also Known As: variable compensation
