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Performance Related Pay - types and how to document legally



Mon 8 January 2024 Performance Related Pay - types and how to document legally

Performance-related pay (PRP) is a widely used form of compensation that rewards employees based on their individual or team performance. It is a way for employers to motivate and retain employees, and to align their pay with their business goals.

If you need legal advice on incentivising your employees with performance related pay, we can advise and draft the necessary documents to protect your interests as employer. If you are involved in a dispute about performance related pay, we are experienced in advising whether you are employer or employee. Please call or email and 1 of our employment law specialist lawyers can advise.

Types and Forms of PRP

The most common types of  Employment Related Pay are :-

Which Industries or Sectors Use PRP?

PRP is  used in a variety of industries and sectors, including sales roles to motivate employees to meet their sales targets, marketing,to reward employees for achieving marketing goals, such as increasing website traffic or brand awareness and finance, staff such as targets for reducing costs or increasing profits.

Performance related pay is also common in the technology sector, especially in the form of share options for start ups and fast growth businesses.

Individual PRP vs. Team-Based PRP

PRP can be either individual-based or team-based. Individual-based PRP rewards employees based on their own performance, while team-based PRP rewards all members of a team based on the team's overall performance.

Legal Risks and Legal Work

Employers who want to implement some form of performance related pay need to be aware of the legal risks involved, such as:

Planning and Documents Needed

To minimise legal risks, employers should carefully plan their PRP schemes and ensure that they are:

Key Documents

Employers should have the following key documents in place for their PRP schemes:


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The British Conveyancing Awards - Mustafa Hassan
ISO 27001
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LEAP Modern Law Conveyancing Awards
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