Last updated March 2021
This chapter outlines the potential legal risks in designing and implementing bonus and incentive schemes, and how you might avoid them.
What are bonuses and incentives?
Bonuses and incentives are variable remuneration, as opposed to fixed remuneration.
Variable remuneration is not guaranteed or certain, and the amount varies according to the individual employee and business performance and outcomes.
Fixed remuneration refers to amounts of remuneration that are guaranteed and certain, such as salary and superannuation. Fixed remuneration is usually paid as cash but some fixed remuneration might constitute benefits, including those subject to fringe benefits tax, and other allowances.
You might pay variable remuneration to employees to encourage them to perform and behave in a way that is consistent with your interests.