What Is Variable Pay?

Variable pay is part of sales compensation that is determined by an employee’s performance. When employees meet their goals, variable pay is given as a bonus, commission, or incentive.   

Comparison With Base Salary

While variable pay, as the name suggests, varies with an employee’s performance, base salary is fixed and stays the same irrespective of how an employee performs. 

Together, variable pay and base salary for the pay mix. 

When Are Employees Given Variable Pay?

Typically, employers give this type of pay to employees when they demonstrate success related to the team, company, or themselves. 

Usually, this kind of pay is announced beforehand or acts as a reinforcement for employees to perform better. 

Mostly, employers give variable pay to employees in the form of cash, paid time off from work, or cash.


Related Terms
Paid time off
Biweekly pay