This article explains how clients can add variable compensation to an EOR contract, as a financial reward for deserving EOR employees.
We offer two types of variable compensation: Unconditional and Incentive Plans.
This means that in addition to rewards like bonuses, clients can add incentive plans that are tied to tangible, performance-based results.
Please see How To Amend An Employer Of Record (EOR) Contract for details on editing a variable compensation package once the contract is active.
In this article:
What is variable compensation?
Adding variable compensation to an EOR contract
What is variable compensation?
Variable compensation allows you to specify performance-related additional amounts that you can give to your employees. It is a financial incentive to reward hard work, and a job well done.
You can request a contract amendment at any time to add variable compensation.
You can also add an Incentive Plan to a contract, offering employees additional compensation that is tied to a specific Key Performance Indicator (KPI).
Offering additional compensation based on tangible achievements is a great way to make sure your employees are focused on the right goals.
It is a financial incentive to reward hard work, and a job well done!
Adding variable compensation to a new EOR contract
✅ Step 1 – Create EOR employee contract
Please see How To Create A Full-Time Employee (EOR) Contract to begin building the employee contract.
You will enter the employee's personal details and contact information, and also provide specific details and the job role and requirements.
✅ Step 2 – Add Variable Compensation
You will need to add compensation details to the contract, including things like:
- Gross Annual Base salary
- Signing bonus
- Fixed contract allowances, either monthly or one-time
- Desired start date and working hours
- Vacation days
- Probation period
You 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 – Select Variable Compensation Details
You 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:
- Monthy: At your discretion, the employee will be paid every month
- Quarterly: At your discretion, the employee will be paid every quarter
- Annually: At your discretion, the employee will be every year
Click Add.
✅ Step 4 – Review and confirm compensation details
You can add additional variable compensation packages as needed to the contract.
Continue with the EOR contract creation flow and pay the deposit.
It is your responsibilty to apply a contract adjustment to honor the variable compensation if conditions are met.
To learn how you can manually add a Bonus as an adjustment when the compensation has been earned, please see: How To Submit And Manage Employee Expenses, Bonuses, And Payroll Adjustments
Please see How To Amend An Employer Of Record (EOR) Contract for details on editing the variable compensation details once a contract is active.
FAQs
[ACCORDION] What are the types of variable compensation that can be added to an EOR employee contract?
Variable compensation allows you 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:
- Unconditional Compensation: A general end-of-year bonus, for example
- Incentive-based Compensation: Compensation tied to certain, quantifiable achievements (KPI-based)
You can offer variable compensation as either a flat rate amount, or a percentage of the employee's base salary.
Employees may be entitled to some, or all, of the variable compensation at the sole discretion of the client. It is your responsibilty to apply a contract adjustment to honor the variable compensation if conditions are met.
[ACCORDION] How frequently can I offer variable compensation to employees?
You can add variable compensation to a payroll period every month; every quarter; or annually.
It is your responsibilty to manually apply a contract adjustment to honor the variable compensation if conditions are met.
[ACCORDION] How do I add a variable compensation plan to an active employee contract?
Variable compensation details are contractual, and therefore any changes need to be submitted as a contract amendment.
Some contract edits can be processed immediately if the employee agreement is not yet in effect; or, if the changes are considered to be beneficial to the employee.
Adding variable compensation to an EOR contract is a request that can be applied instantly if it is considered to be an upgraded benefit to the employee's terms.
Amendments are only required for modifying signed agreements. You don’t need an amendment to edit an agreement if the Scope Of Work and Employment Agreement have not yet been signed.
[ACCORDION] Can I make changes to a variable compensation plan after the contract is active?
Variable compensation details are contractual, and therefore any changes need to be submitted as a contract amendment.
Amendments are only required for modifying signed agreements. You don’t need an amendment to edit an agreement if the Scope Of Work and Employment Agreement have not yet been signed.
Variable Compensation amendment requests can be processed immediately only when the employee agreement is not yet in effect; or, if the requested change is considered to be beneficial to the employee.
If the requested change to the Variable Compensation is considered to be a reduction in the employee’s terms, the request will be reviewed internally and processed as an ‘advanced change.’ This review may take three to five business days.
[ACCORDION] Can I have several variable compensation plans within a single contract?
Yes, you can add multiple variable compensation options like bonuses and incentive plans to a single EOR contract.
Click Add variable compensation to create a new variable compensation package.
[/ACCORDION]