Variable Pay
As the name suggests, it would vary month on month and is usually performance driven.
So if say you are a sales officer, you would have two parts of salary - fixed part and variable part.
Fixed part would include all statutory components like basic, DA, HRA, Medical reimbursement, Food allowance, etc.
Variable pay is linked to your performance is paid accordingly.
There is usually a maximum limit set for same/similar roles. Say for example that the maximum amount alloted to the people for sales officer role is 15,000 pm
And there would be a level of performance expected from you - Say for example getting a sales revenue of 1 or 1.5 lacs would be your optimum or best performance.
So at the month end, your actual performance would be compared to the expected performance and the variable pay (or incentives as is other name for it) would be paid in same ratio as between the two performance.
Bonus however is slightly different.
A bonus is usually given annually, and most often the employers distribute bonus in Diwali.
However, Bonus can be paid at different times by breaking the amount.
A company is not liable to pay bonus for the first 5 years or till it gets profitable (whichever is earlier) from the date of its start.
Thereafter it becomes mandatory for the firms to pay bonus to the employees.
Usually companies take set-off and set-on approach which is nothing but certain adjustment amount to be taken care so that if in a given period the profitability of the company is low, the bonus is not held.
Every year, the company determines a percentage of profit to be distributed to the employees as bonus. (A bonus is something paid to all in addition of their monthly salary)
There is I think some bare minimum compliance to be followed. Again, not all employees qualify to receive bonus, there is a limit depending on the salary that people get. However, many companies distribute bonus to the employees getting higher pay in the name of ex-gratia (kindly correct me if i am wrong)
Again say for example as per calculation it comes out that bonus paid to the employees would be say 1000 for the year, the employer can pay the whole amount at one go or he can break the amount and pay it in parts to them.
Bonus need to be paid within 8 month of financial closing.
Hope I was able to answer your query.