Question

A raise given to an employee based on how well the employee has done his or her job is known as a(n):

a) Cost-of-Living Adjustment
b) Merit Increase
c) Bonus
d) Commission

Answer 1

A raise based on performance is called a merit increase, which is distinct from cost-of-living adjustments, bonuses, and commissions. It represents a permanent addition to the base salary.

Step-by-step explanation:

A raise given to an employee based on how well the employee has done his or her job is known as a merit increase. Different forms of pay increases include cost-of-living adjustments (COLAs), which are tied to inflation rates, bonuses, which are one-time rewards for performance or achievements, and commissions, which are earnings based on sales or performance metrics. A merit increase, on the other hand, is a permanent increase to the base salary and reflects the employer's recognition of the employee's exceptional work performance. As an example, consider a situation where an employee's job pays $10 per hour, and due to their outstanding work, the boss rewards them with a $2 per hour raise. This represents a 20% growth rate in pay.