What is Incentive Pay ?
‘Incentive Pay’ refers to the extra compensation provided to the employees in cases where the employee has gone above and beyond their normal work to fulfil their duties. This is different from their normal compensation as well as any additional benefits which they normally receive.
The most common form of incentive pay is the encashment of leaves as well as some additional cash payment provided to those employees who have never taken a leave the previous year. Another common form of incentive pay is the sales incentive which salespersons receive for closing a deal.
It is not necessary for the incentive pay to be a cash reward. Some companies might also provide team lunch or pay for a family vacation as a form of reward pay. Such kind of incentive pay is referred to as ‘casual incentives’.