Pay · HR glossary

Variable Pay

Variable pay is compensation that changes according to defined conditions rather than remaining a fixed salary amount. It may depend on individual, team or business performance.

Example

A salesperson earns a base salary plus commission calculated on eligible completed sales under the employer's written incentive plan.

What to keep in mind

Explain the measurement period, eligibility, payment timing and adjustment rules. A target variable-pay figure is not a guaranteed payment unless the terms explicitly provide that guarantee.

Further reading

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