Employee Incentive Agreements:

Performance based pay or incentive remuneration refers to an arrangement in which an employee is paid partly or wholly on the basis of performance of set work, objectives attained, piece rates, attainment of milestones or consultancy fees. The concept of performance-based pay or other types of payment-by-results schemes are a range of payments which are consistent with rationale to reward superior performance. Holistic legal advice from an Employment Lawyer may be advantageous to ensure that you have a thorough understanding of your options and the most effective manner to negotiate a performance based remuneration arrangement.

Different pay instruments and structures can be used to motivate employees such as executives to perform in line with the interests of the companies they work for and their shareholders. Short-term hurdles can be effective drivers of employee performance when related to appropriate targets. It is important that any employee incentive agreement be transparent and the performance targets be understood and accepted by the parties.

There is great diversity in the types of companies and business models, thus there is no single ‘right’ answer to structuring pay. It is ultimately at the discretion of your employer to ensuring that pay structures are appropriate for their company’s circumstances, and this agreement may need revision and updating over time. Our team of highly skilled Employment Solicitors may be able to assist you in negotiating and agreeing to incentive agreements so that you may maximise your salary package.

Often executives or managers have a component of their salary package which is performance based. This can include share options, bonuses based on company performance targets being met. In addition there a wide interpretation of what is considered in ‘performance’, such as there may be non financial performance which is monitored and rewarded. Short term incentives may include cash bonuses, options and shares. Long term incentive may include access to loans, long funded shares, access to further perquisite or promotions. Consultation with an experienced Employment Solicitor may provide great assistance in understanding your capabilities and reasonable performance targets that you may agree to.

If you need further legal advice on your matter, you may book an appointment with us by telephone on (02) 9233 4048 or by email to info@navado.com.au. 

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