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What does "differential pay" typically refer to in the workplace?

Compensation related to performance

Additional pay for employees working in undesirable conditions

Differential pay refers to additional compensation provided to employees who work in undesirable or challenging conditions compared to their standard pay. This type of pay is often used to attract and retain employees in roles that may involve hazards, unpleasant environments, or hours that are less desirable, such as night shifts or positions that require significant physical labor. By offering differential pay, organizations aim to incentivize workers to accept these roles despite the potential difficulties associated with them.

In contrast, performance-related compensation is linked to an individual’s job performance and achievements, while bonuses for increased productivity are typically given for specific outputs or milestones. Standard hourly wage adjustments involve regular pay increases based on factors like inflation or tenure but don’t specifically account for the nature of the work performed.

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Bonuses for increased productivity

Standard hourly wage adjustments

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