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Performance-related pay

Where part of an employee’s pay is linked to achievement of pre-defined (and agreed) targets. Performance-related pay is used for rewarding staff whose performance cannot be assessed easily through numerical measures (eg the volume or value of units or products sold). It is common to white collar workers where the annual salary of the employee is linked to their performance during the year, and is used widely by banks, building societies and insurance companies as well as for production managers or supervisors, the civil service, NHS and local government.

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