Incentives

Meaning & Definition

Incentives are the rewards offered to employees in order to make them attain certain objectives or performance targets. These incentives may be either monetary or non-monetary and are intended to serve the purpose of motivating employees to work more productively.

Why Incentives Matter?

• Motivates employees to work harder and meet their goals.
• Increases production and efficiency within the workplace.
• Increases job satisfaction among employees.
• Improves healthy competition in the organization.
• Assists in retaining high-performing employees.

Legal Considerations

Incentives are associated with:

• The Payment of Bonus Act, 1965 (eligible bonuses).
• The Income Tax Act, 1961 (financial incentives are taxable income).

There should be clarity regarding policies, eligible beneficiaries, and conditions for payment of incentives.