Our colleague and partner at the Labour Law Department explains the advantages and limitations of variable pay plans in this vídeo, by ADN Lefebvre:by ADN Lefebvre: El Derecho for Expansión.Companies are increasingly implementing variable pay plans to promote productivity among their employees. However, before doing so, they should take into account the different key variables, as well as the advantages, limitations and drawbacks they could cause.
Among the most important aspects to consider under Spanish Law, Ana highlights the following issues:
-Generally, the bonus is considered a wage supplement for the purpose of calculating the employee's compensation upon termination. Only when the bonus has been an exception it will not be considered in a severance payment.
-In the event of an objective dismissal, an error on calculating the severance payment due to a lack of inclusion of the bonus, will be generally considered as an excusable error. Therefore, it wouldn't cause an unfair dismissal.
-If the bonus is subject to performance conditions but the company hasn't accurately determined the criteria, the employee shall be entitled to the bonus.