Profit sharing refers to various incentive plans introduced by businesses that provide direct or indirect payments to employees that depend on companys profitability in addition to employeees regular salary and bonsuses. 

In publicly traded companies these plans typically amount of allocation to share to employees.  Profit sharing is a scheme whereby employers undertake to pay a particular portion of net profits to their employees on compliance with certain service conditions and qualifications.

The purpose of introducing profit sharing schemes has been mainly to strengthen the loyality of employees to the firm by offering them an annual bonus provided they are on the service rolls of the firm for a definite period.

The share of profit of the worker may be given in cash or in the form of shares in the company. These shares are caleld bonus shares. In India the share of the worker is governed by payment of Bonus act.