Skill-based pay is a salary system that determines an employee’s pay based on his or her knowledge, experience, education or specialized training. Depending on the company, the employee might also receive a higher salary for earning formal certification in his or her industry. What differentiates skill-based pay from standard job-based pay systems is that employees under a job-based pay system are paid for performing their jobs even if they aren’t proficient at those jobs. While this particular pay system is one of the most widely used, it can be somewhat confusing, mainly because there are several different types of skill-based pay, such as depth-oriented plans and breadth-oriented plans.
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