Question

Hi there! I came across the following quote from an article I was reading:  "Performance‐related pay (PRP) rewards employees with a financial payment, either consolidated or non‐consolidated, following an assessment of their performance and, typically, the achievement of objectives.” what does the writer mean by consolidated or non consolidated?

Answer 1

Good question, In industry the pay-out depend upon how the company and individual person he/she is performing and based on that yearly/semi-annually/monthly performance bonus/additional pay out is there.

As part of consolidated and non-consolidated concerned, consolidated is the percentage of total pay-out to employee including salary or emoluments and contribution towards the pension part of the employee. Unlikely, non-consolidated part, pension is not considered as total salary.

Example, Mr. Joe getting yearly salary $ 150,000 and contribution towards his pension plan is $ 20,000. In that particular year company perform well and company decided to pay 10% of performance salary to every individual on their consolidated salary and non-consolidated salary.

Here, as part of consolidated salary, he will get the performance bonus $ (150,000 + 20,000) 10% = $ 17,000

Non-consolidated salary, he will get $ 150,000 * 10% = $ 15,000

I have explained here with very lay men language. Hope this can be make more understandable.