What is variable compensation plan?

What is an example of variable pay?

Variable pay is employee compensation that changes. … 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.

What is fixed and variable compensation?

Fixed pay is the fixed amount of salary that an employee gets at the end of the month whereas Variable pay is the incentive paid to the employee, monetary or non-monetary, based on their performance for the month.

How do you calculate variable compensation?

How is it Calculated? Variable compensation as a percentage of total compensation is calculated by adding up all variable compensation and dividing that sum by total compensation.

Why do employers use variable pay?

A primary benefit of variable pay programs for employers is they provide flexibility and allow an organization to reward employees through profit gain rather than operational expenses. … Variable pay programs help an organization to: Control costs. Enhance motivation and boost productivity of employees.

Why do companies give variable pay?

Variable pay, also known as performance pay, is used to recognise and reward employee contribution above and beyond their normal job requirements, towards company productivity, profitability, quality and the like.

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Who gets variable pay?

Variable pay is one of the five main components of total rewards in any organization and is usually a percentage of fixed pay. Employers typically pay employees variable pay for success related to the personal, team, or company performance.

What variable pay means?

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

Is variable pay part of CTC?

CTC. … CTC is inclusive of monthly components such as basic pay, various allowances, reimbursements, etc. and annual components such as gratuity, annual variable pay, annual bonus, etc.

Is variable pay the same as commission?

Commissions and bonuses are both a form of variable pay – money that is determined by sales activities in addition to the fixed (base) pay. … The actual amount earned is determined by the commission rate, which is a percentage of the revenue on the sale.

Is variable salary taxable?

How variable salary is taxed? The variable pay constitutes a significant part of the salary structure and is completely taxable in the hands of the employee, same as the fixed component. It is important for an employee to track the expected variable pay to ascertain the possible tax liability.

Does Wipro have variable pay?

The variable pay policy in Wipro, which is known as the Quarterly Performance Linked Compensation (QPLC), is decided every year and given to the employees on a quarterly basis. … Company sources say variable components comprise around 10 per cent of most Wipro employees’ total cost to the company (CTC).

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