Section: HR & People · CompensationDifficulty: Medium
Variable Pay
USUK
Compensation linked to performance outcomes rather than fixed in the contract.
Also: at-risk pay · incentive compensation
Definition
Variable pay refers to any component of compensation that fluctuates based on individual, team, or organizational performance, as opposed to fixed base salary. Common forms include sales commissions, performance bonuses, profit-sharing, and incentive plans. Variable pay is used to drive results, share success with employees, and manage fixed labor costs during uncertain periods.
Example
“The sales team's compensation structure included a fixed salary of ₹40,000 and a variable pay component of up to ₹20,000 per month based on monthly targets.”
Synonyms
- performance pay
- incentive pay
- at-risk pay
- contingent pay
Antonyms / Opposites
- fixed pay
- base salary
Images
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Related Terms
- Performance Bonus
- Total Rewards
- Key Performance Indicator
- Incentive Compensation