Pay that fluctuates based on performance, results, or other factors.
Variable pay is any component of compensation that is not fixed and instead varies based on individual, team, or organizational performance. Types of variable pay include performance bonuses, sales commissions, profit sharing, gain sharing, and piece-rate pay. Variable pay motivates employees by aligning rewards with results and allows organizations to manage labour costs in line with business performance. Payroll software calculates variable pay components based on configured rules and integrates them into the payroll run.
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