Drafting an appointment letter with a salary and incentive structure can be a bit complex, but it's absolutely doable. Here's a step-by-step guide:
Step 1: Basic Details
Begin with the basic details of the employee and the company. This includes the employee's name, position, department, and the company's name and address.
Step 2: Job Description
Include a brief job description, outlining the duties and responsibilities of the position.
Step 3: Compensation Structure
Now, you need to detail the compensation structure. Explain that the salary consists of 70% fixed pay and 30% variable pay (incentives). This can be phrased as follows:
"Your total compensation will be ________ per annum. 70% of this, amounting to ________ per annum, will be your fixed pay. The remaining 30%, which equals ________ per annum, will be your variable pay or incentive."
Step 4: Incentive Calculation
Next, explain the calculation factors for the incentive. Whether it's based on performance, sales, or other criteria, make sure to mention how it's calculated and disbursed. If the calculation is too complex to explain in the letter, you can mention that further details will be provided in an addendum or during a one-on-one meeting.
Step 5: Other Details
Finish the appointment letter with other necessary details like start date, working hours, probation period, leave policy, termination clause, etc.
Step 6: Company Policies
Mention that the employee must adhere to the company's policies, rules, and regulations.
Step 7: Acceptance
End the letter by asking the employee to sign and return a copy of the letter as acceptance of the offer.
Remember, as per India's labor laws, it's crucial to be transparent about the employee's compensation structure. It's also advisable to have your appointment letter reviewed by a legal expert to ensure there are no violations of the Payment of Wages Act, 1936, and other applicable laws.