This article explains how clients can add variable compensation to direct employee contracts as a financial reward.
Deel offers two types: Target Variable Compensation (TVC) (discretionary rewards like bonuses) and Incentive Plans (tied to specific, performance-based results such as sales targets).
Before you begin
You must be:
- A Deel client creating a new direct employee contract or submitting a contract amendment
- Aware that variable compensation must be manually added as a payroll adjustment before the cut-off date — Deel does not apply it automatically
- Aware that employees may be entitled to some or all of the variable compensation at the client's sole discretion
Adding variable compensation to a direct employee contract
Step 1 – Create or open the employee contract
- Begin creating a new direct employee contract or open an active contract to submit an amendment
- Enter the employee's personal details, contact information, job role, and requirements
Step 2 – Add general compensation details
- Enter compensation details including gross annual base salary, signing bonus, fixed allowances, start date, working hours, vacation days, and probation period
- Toggle on Add Gross Signing Bonus to include a one-time payment in the first payroll if needed
- Click Add Target Variable Compensation (TVC) to specify additional performance-related compensation
Step 3 – Choose the variable compensation type
- Target Variable Compensation (TVC) : Offer a flat amount or a percentage of the employee's annual base salary. Choose the payment frequency: monthly, quarterly, annually, or end of year. An additional deposit based on the total amount is required
- Incentive Plan: Link a financial reward to a pre-specified condition such as a sales target or other quantifiable performance indicator. If a specific plan cannot be completed on-platform, reach out to Deel support or your Customer Success Manager to customize it - an additional deposit may be required.
Step 4 – Review and confirm compensation details
- Add additional variable compensation packages as needed
- Continue with the contract creation flow and pay the required deposit
- When the conditions are met, you must manually apply a contract adjustment to honor the variable compensation before the payroll cut-off date
Frequently asked questions
What types of variable compensation are available?
Two types are available: Target Variable Compensation (TVC) (a general discretionary bonus, such as an end-of-year payment) and Incentive-based Compensation (tied to specific, quantifiable achievements). The client decides whether conditions have been met.
What payment frequencies are available for Target Variable Compensation (TVC)?
Target Variable compensation can be paid monthly, quarterly, annually, or as an end-of-year reward. You must manually apply a payroll adjustment to honor the payment when conditions are met.
Can I add multiple Target Variable Compensation (TVC) packages to one contract?
Yes. Click Add Target Variable Compensation (TVC) to create additional packages — you can include multiple bonuses and incentive plans within one contract.
What should I do if I need a custom plan?
Contact Deel support or your Customer Success Manager. The team will work with you to customize the plan and add it to the contract. An additional deposit may be required.