What is Incentive pay?

Whether you're a beginner or an expert, you will find this Glossary useful.

Incentive pay is a motivational tool used as an additional compensation awarded to employees for results they achieved. 

Incentive pay definition

Incentive pay is a motivational tool used as an additional compensation awarded to employees for results they achieved.

Main goal of incentive pay is for employees to remain motivated, work hard and strive for the best possible results. Employers can often buy pre-made incentive schemes from vendors who are then responsible for provision of incentives while the tax liabilities still remain under the employer domain.

Types of incentive pays

Incentive pays are usually some kind of financial bonuses but there is also an option of non-monetary incentives.

Incentives can be classified as casual incentives and structured incentives where casual incentives are a small token of appreciation for an outstanding performance and structured incentives include giving a specific percentage of achieved number of sales.



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