Variable remuneration: find out what it is and what types there are.

Variable remuneration is normally advertised by companies as a benefit, just like gym pass, medical assistance and many others.

As a result, many people have doubts about the topic. After all, is it an additional payment or a type of salary?

If you are facing this question, don't worry, because in today's content we will explain everything about the subject. Continue reading to find out.

What is variable remuneration?

When we talk about variable remuneration, those who are not familiar with the subject may believe that it is a type of salary.

Although it is called “remuneration”, variable remuneration works as a benefit or addition to the regular salary.

In this way, Companies that work with variable remuneration usually offer benefits and possibilities to complement the salary base, such as commissions, bonuses or profit sharing.

The application of this concept varies greatly depending on the company, as some offer bonuses for performance, others for profit and there are even those that offer employees the possibility of determining their own salary.

In any case, what you must understand is that variable remuneration is not synonymous with unpredictable salary or lack of a salary base.

In many cases this variation can be calculated, and is paid together with the salary, so it does not replace it.

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What types of variable remuneration are there?

Most companies rely on variable remuneration as an incentive for employees.

Some variable earnings are monthly, while others are received annually, so it is important to know which modality is applied in the company where you work.

Check out the main types applied in the current job market below.

1. Bonus

Bonuses are a type of variable remuneration that is justified by the performance of the employee or team.

Therefore, employees who meet targets or who help complete an important project receive a bonus corresponding to the achievement.

In general, this bonus can be calculated based on the employee's salary, as a percentage of gross salary, or based on the value of the “prize” received for completing the goal/project.

In the case of being calculated by the prize, each collaborator receives a percentage corresponding to the position or level of participation in the project.

2. Remuneration for results/performance 

When we talk about remuneration for results/performance, we are referring to a type of variable remuneration that is based on the value that the employee generates for the company.

In general, this type of remuneration is common for self-employed professionals, or those who work on a project basis, so that they receive a percentage of the profits from that project.

This approach is very common in the marketing sector, for example, where the analyst receives a percentage of the profits obtained from the strategy used by him.

3. PLR 

PLR (Profit Sharing) is a type of variable remuneration paid by large companies upon meeting profit targets.

So, in practice, the company sets a profit target for the year, and if the team reaches the stipulated number, the PLR is distributed.

In general, this remuneration is paid as a bonus and is defined by the employee's salary, being a percentage of the gross value.

There are companies that distribute annual PLR, while others pay it semi-annually, as this depends on the target set for the period.

4. Commission 

Commission is the most popular type of variable remuneration, as it is very common in the sales sector, where salespeople earn a percentage of each completed transaction.

In general, commissions are payments outside of salary, so the employee receives salary + commissions, which is an important supplement to income.

It is worth mentioning that there are cases in which workers only receive commissions, as is generally the case in the real estate brokerage sector, for example.

It is important to highlight that commissions are not calculated based on the employee's salary, but rather on the value of sales and negotiations carried out by him/her in a given period.

Variable remuneration: what precautions are necessary when accepting this proposal?

It is very likely that you came across this material because you received a job offer with variable pay, and as we have seen, in most cases this works as a supplement to the salary.

But, before accepting any proposal, it is important that you pay attention to some details, such as:

1. In some companies, variable pay means there is no fixed salary., so that the employee receives payment for his performance. 

Be aware of this to avoid proposals that will make you feel financially insecure. If you are interested in not having a fixed salary, that’s fine, but avoid accepting proposals that are not in your best interests.

2. Check whether variable remuneration is included in the employment contract, since the company is only obliged to pay PLR, for example, if this is explicitly stated in the employment contract.

3. Find out about the payment of variable remuneration, as there are companies that face numerous lawsuits for not paying commissions and bonuses owed to employees.

In any case, having variable pay options at work is an excellent way to receive extra monthly payments or on specific occasions during the year.

Therefore, if the company offers bonuses, profit sharing or performance-based earnings, evaluate the proposal carefully, as it may be interesting for you.

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