This article explains how clients can add variable compensation to employee contracts as a financial reward for deserving EOR employees and direct employees.
Deel offers two types of variable compensation: Variable Compensation and Incentive Plans.
This means that in addition to general rewards like bonuses, clients can add incentive plans that are tied to tangible, performance-based results.
Clients must manually add variable compensation that an employee has earned as an adjustment prior to the payroll cut-off date.
In This Article:
What Is Variable Compensation?
Adding Variable Compensation to an Employee Contract
What Is Variable Compensation?
Variable compensation allows clients to specify performance-related additional amounts that can be given to employees. It is a financial incentive to reward hard work and a job well done.
Offering additional compensation based on tangible achievements is a great way to ensure employees are focused on the right goals.
Clients can add a variable compensation plan when creating a contract or request a contract amendment to an active contract at any time to add variable compensation.
Variable compensation can include something like an end-of-year bonus to a deserving employee, while an incentive plan is tied to an employee meeting specific, predetermined performance goals or sales targets.
Employees may be entitled to some, or all, of the variable compensation at the sole discretion of the client. It is the client's responsibility to honor the compensation if conditions are met.
Adding Variable Compensation to a New Contract
✅ Step 1 – Create an employee contract
Enter the employee's personal details and contact information, and provide specific details about the job role and requirements.
✅ Step 2 – Add General compensation details
Add compensation details to the contract, including:
- Gross Annual Base Salary
- Signing bonus
- Fixed contract allowances, either monthly or one-time
- Desired start date and working hours
- Vacation days
- Probation period
Clients can toggle on the option to add a Gross Signing Bonus, which is a one-time payment to the employee as part of their first payroll.
Click Add Variable Compensation to specify additional compensation to be included in the contract.
✅ Step 3 – Choose Variable Compensation Type
There are two options for variable compensation:
- Variable Compensation
- Incentive Plan
Variable Compensation
Clients can offer variable compensation as either a flat rate amount or a percentage of the employee's annual base salary.
Choose the variable compensation frequency:
- Monthly: The employee will be paid every month at the client's discretion
- Quarterly: The employee will be paid every quarter at the client's discretion
- Annually: The employee will be paid every year at the client's discretion
- End of Year: The employee will be paid at the end of the year at the client's discretion
Note: Clients will be required to pay an additional deposit based on the total amount.
Incentive Plan
Select "Incentive Plan" to reward an employee with a financial reward if they meet pre-specified conditions, such as hitting a predetermined sales target or other quantifiable performance indicator.
Note: All Incentive Plans will be reviewed and approved by Deel's legal team. Deel may update the exact wording that will be included in the Incentive Plan agreements.
If clients have a specific request for an incentive plan that cannot be completed on-platform, please contact us and the team will work with clients to customize the incentive plan and add it to the contract. An additional deposit may be required.
✅ Step 4 – Review and confirm compensation details
Clients can add additional variable compensation packages as needed to the contract.
Continue with the contract creation flow and pay the deposit.
It is the client's responsibility to apply a contract adjustment to honor the variable compensation if conditions are met.
Please note that Variable compensation must be manually added to the payroll as an adjustment prior to the payroll cut-off date.
FAQs
[ACCORDION] What are the types of variable compensation that can be added to an employee contract?
Variable compensation allows clients to describe and specify bonuses to employees as a financial reward for a job well done.
There are two types of variable compensation that can be added to a contract:
- Variable Compensation: A general end-of-year bonus, for example
- Incentive-based Compensation: Compensation tied to certain, quantifiable achievements
Employees may be entitled to some or all of the variable compensation at the sole discretion of the client.
It is the client's responsibility to apply a contract adjustment to honor the variable compensation if conditions are met.
[ACCORDION] How frequently can clients offer variable compensation to employees?
Clients can add variable compensation to a payroll period every month, every quarter, annually, or as an end-of-year reward.
It is the client's responsibility to manually apply a contract adjustment to honor the variable compensation if conditions are met.
[ACCORDION] Can clients have several variable compensation plans within a single contract?
Yes, clients can add multiple variable compensation options like bonuses and incentive plans to a single contract.
Click Add Variable Compensation to create a new variable compensation package.
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