A difference between merit pay and incentive pay is:

Merit pay varies from one measured period $($i$.$e$.,$ a month or a quarter$)$ to another. Incentive pay is added to the employee's base pay$-$it is the pay increase an employee gets for their performance.

Merit pay is paid when an employee earns an award or recognition based on the guidelines of that recognition, whereas incentive pay is paid to encourage future behavior $-$behavior that has not yet been demonstrated by the employee.

Merit pay is added to an employee's base pay$-$it is the pay increase an employee gets for their performance. Incentive pay varies from one measured period $($i$.$e$.,$ a month or quarter$)$ to another.

Merit pay is based on the result of a $360-$degree performance feedback process whereas incentive pay is based on a supervisor$-$driven performafrime feedback process.