Variable Pay
Variable pay is the part of compensation that depends on performance — individual, team or company — rather than being guaranteed like fixed salary.
Also known as: performance pay, incentive pay, bonus component
It is usually quoted inside CTC, which is where the trouble starts: a package described as ₹20 lakh with a 20% variable is a guaranteed ₹16 lakh and a possible ₹4 lakh, and candidates rarely read it that way.
The payout mechanics need to be explicit — what it is measured against, over what period, when it is paid, and what happens if someone leaves before payout. The last one is the most disputed and the least often written down.
Variable pay only changes behaviour when the measure is within the person's control and they can see where they stand during the period. A component settled once a year against a formula nobody can compute is a deferred payment, not an incentive.
Handled in SignHR
Performance Management
Performance management software — KPI scorecards, review cycles with calibration, goals and OKRs, 360 feedback, PIPs and recognition in one HR platform.
See performance managementRelated terms
CTC (Cost to Company)
CTC is the total annual cost an employer bears for an employee — salary, allowances, employer contributions and benefits combined — not the amount the employee receives.
Statutory Bonus
Statutory bonus is a share of profits payable to eligible employees under the Payment of Bonus Act, calculated as a percentage of wages and subject to minimum and maximum rates.
Performance Review
A performance review is a periodic, documented assessment of how an employee has performed against agreed objectives, usually feeding pay, promotion and development decisions.
Gross Salary
Gross salary is total earnings for a period before any deductions — basic, allowances and any other earnings added together, but before PF, tax or recoveries.