How to Pay Employees on an Interim Assignment

When employees are on an interim assignment, they are often asked to take on additional responsibilities, and it is important to ensure that they are fairly compensated for their work. While there are various approaches to managing temporary assignments, there are four common approaches to compensating employees on an interim assignment.

Compensating employees for an interim assignment with a cash bonus is the most common approach, according to nearly 400 Compensation professionals. The second most popular approach is to make no adjustment to an employee’s salary for an interim assignment.

Temporarily Pay Employees Market Competitive Wages

One approach for compensating employees on an interim assignment is to pay them market-competitive wages for the duration of their assignment. Adjusting pay to a rate comparable to what a qualified new hire would reasonably ensure employees are paid competitively for the work they are performing during their assignment.

This approach has a few drawbacks, however. The employee taking on the interim assignment may not have the skills or experience required for the job on a full-time basis. By paying them market competitive rates, you may be paying beyond what your compensation philosophy would suggest is appropriate.

Further, when the interim assignment is over, the employee’s pay adjustment will be reduced to pre-assignment rates. This reduction in pay may be perceived as a pay reduction in pay, rather than an incentive for taking on additional responsibilities.

To manage this perception, it is important to set expectations. Clearly communicating with the employee that the increased compensation is only temporary and that they will return to their previous compensation when the assignment is over can help to manage expectations.

Temporarily Adjusting the Employee’s Salary to the Minimum of the New Range

One option for compensating employees on an interim assignment is to bring them to the minimum of the new pay range if they are paid below. This option may align with an organization’s compensation philosophy ensuring that employees are paid at least the minimum amount for their role. This option also ensures that employees that may be using the interim assignment as a stepping-stone into the role are not paid more than might be warranted, based on their skills and proficiency.

This approach also allows flexibility if the employee is promoted. If the employee performs well, the Organization may further adjust their pay to reflect their performance during the interim assignment.

Provide a Cash Bonus

The most popular option for compensating employees on an interim assignment is to provide a cash bonus to recognize their elevated responsibilities during their assignment. Cash bonuses are popular for a number of reasons:

• Bonuses can be tied directly to work performed and the period of time, reinforcing the employee’s value to the Organization. One-time bonuses “send a message that we appreciate you stepping in and taking care of things,” Wendy Walters of Walter’s HR and Compensation Consulting explains.
• Bonuses are not likely to be perceived as a takeaway at the end of the interim assignment, which can be the case if an employee has become accustomed to an elevated rate of pay.
• The bonus amount can be modified to reflect the Employee’s performance during the interim assignment

Providing a cash bonus, while the most popular option, does have one disadvantage in that an employee may be asked to take on additional responsibilities for a period of time, and their recognition is delayed. Defining the period of time for the interim assignment, and consistent communication with the employee is important to minimize this potential drawback.

Make No Adjustment to Pay

The final option is to make no adjustment to pay. This option may be appropriate when the interim assignment is for a short duration or is a lateral move. Additionally, if the employee is already being paid at a rate that is aligned with the interim role they are taking on, there may be no need to adjust their pay.

However, it is important to communicate with the employee why their pay is not being adjusted, especially if they were expecting a pay increase or bonus for taking on the interim assignment.

Determining When to Pay for Interim Responsibilities

Here is where we get to the classic Consultant answer of “It depends.” Since each option has its own benefits and drawbacks, it is important to choose the option that aligns with the organization’s compensation philosophy and assignment.