by Robert Smith

Contingent pay is any form of financial reward that is added to the base rate or paid as a cash bonus and is related to performance, competence, skill or service. Contingent pay may be consolidated in base pay, in which case it forms the basis for allowances such as sick pay and for pension arrangements. Alternatively, schemes other than skill or service-related pay may provide for awards in the form of cash lump sum bonuses. The latter arrangement is called ‘variable pay’. It is sometimes referred to as ‘pay as risk’, which has to be re-earned, as distinct from consolidated pay, which is usually regarded as continuing as long as the person remains in the job and performs it satisfactorily (Armstrong & Murlis 2004).

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