Compensation Glossary

Allocation period is the timeframe when managers are required to allocate their assigned budget to employees and submit their worksheets for approval.

Base pay is the fixed compensation received by an employee at regular intervals. The base pay of an employee can be expressed as an hourly rate or as a weekly, monthly, or annual salary.

Monetary payments added to an employee's wages as a reward for good performance.

In Dayforce, bonus eligible salary defines how much of an employee’s salary is eligible for bonus.

Bonus factors are the criteria used to determine bonus payouts. Many companies use a combination of organizational results and individual performance as bonus factors. For example, a bonus may be determined by revenue the company earned for a specific period and an employee’s customer service scores.

The portion of the total target bonus that will be used for target bonus payouts.

Compa (or comparative) ratio is usually expressed as a percentage and looks at how each employee’s pay compares to either the control salary or control rate defined for their job assignment, depending on the employee’s pay type and pay class.

Compensation is the monetary and non-monetary payments that are given to employees in exchange for the work they do for the business.

Compensation cycles provide guidelines and decision support to managers as they allocate their assigned budget to employees as salary increases or bonuses. Using Dayforce, you can create multiple compensation cycles to support various compensation structures within your organization.

Compensation guidelines help managers determine the correct amount to award employees based on specific criteria. This ensures that all employees are compensated fairly and consistently according to configuration.

Compensation metrics define your organization's individual and business metrics to reward eligible employees in a compensation period.

The compensation period is the timeframe used to evaluate employee compensation. For example, an organization might determine merit increases or bonuses based on the calendar year or a fiscal year. Furthermore, many companies choose to align the compensation period with their performance review cycle.

In Dayforce, compensation plans allow organizations to reward bonus to employees based on their contributions by supporting multiple bonus plans for different groups of employees with different metrics and calculation rules. Compensation plans also track employee eligibility in different bonus plans for a given period for changes such as employee promotions and transfers. You can configure the details of the compensation plan with multiple effective date records. You can configure details like the waiting period, target payout, bonus eligible salary, period details, bonus factors, and proration rules for the compensation plan.

An across-the-board salary increase, or supplemental payment intended to bring pay in line with inflation in a geographical area.

An FTE is a standard of one employee working 40 hours/week. An FTE of 1.0 means that the employee is considered a full-time worker. One FTE job assignment may be split into two job assignments, such as one job assignment for 0.4 FTE (16 hours/week) an the other for 0.6 FTE (24 hours/week).

In Dayforce, a lump sum payment is a one-time payment made to employees who have reached the maximum salary in their pay grade. Awarding a lump sum amount allows managers to provide additional compensation for these employees.

A market adjustment is an increase to the employee’s pay based on market movement.

Data about the current labor and talent market, including information about the type of industry, company size, and locations where companies compete to hire employees.

A merit increase is a performance-based raise to an employee’s pay.

In Dayforce, the term Pay Component refers to the different types of rewards that can be allocated to employees during a compensation cycle. There are two types of pay components that can be awarded in Dayforce: salary increases and bonuses.

A pay grade is a range of pay that employees should earn for certain job assignments. Multiple job assignments can be grouped in the same pay grade.

A pay range is the upper and lower limits of compensation including a minimum, midpoint, and maximum.

Payout factor represents the payout percentage for each factor. The default payout factor is automatically awarded to the employee and is not currently dependent on meeting the target. This percentage can be greater than 100% if the employee exceeds the target for that factor.

A point on a rank-ordered scale, found by arranging a group of data points in order of magnitude from lowest to highest. The first percentile approximates the lowest number found, while the 100th percentile is the highest.

The change of an employee from one job assignment to a new job assignment that has a higher salary range maximum.

Proration is to allocate by dividing or distributing proportionally based on a set of configured rules.

In Dayforce, the proration factor adjusts the employee reward based on the configured rules for the pay component, depending on factors like any inactive periods, new hire status, or salary increases during the compensation period.

The exact middle of the range, equidistant to the range minimum and range maximum, and aligned to the market value for the job.

An individual’s pay compared to the complete pay range or how far into a pay range an employee’s pay has progressed. Range penetration is calculated as (Pay Rate - Range Minimum) ÷ (Range Maximum – Range Minimum).

A reward letter is a letter that recognizes an employee for contributing to the company’s success and includes monetary awards that the employee will receive.

Salary benchmarking is a more focused and detailed process than a normal salary survey. Benchmarking gives a complete breakdown of the compensation package allowing companies to compare salary and benefits available within specific sectors and companies.

An employee's total salary increase in a single fiscal year. Examples of salary increases are merit increases, promotional increases, and equity increases.

Salary range is the range of pay employers decide to pay employees in a particular job or function.

Target bonuses ensure that you are rewarding employees when they meet their targets and that you are effectively retaining talent. Target bonuses are defined as a percentage of the employee’s annual salary and are assigned based on job assignment. In Dayforce, target bonuses can also be assigned at the employee level if you want to award a specific employee a different bonus than others in the same job assignment.

Variable pay is the portion of compensation determined by an employee’s performance. When employees achieve their goals, variable pay is provided as part of their compensation. Variable pay is a one-time payment that must be re-earned each performance period.