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What is a Salary Reduction Agreement?
A salary reduction agreement is a written legal agreement between a company and its employee outlining the terms of transferring percentages of the employee's salary to a 401(k), 403(b), or IRA retirement plan. These voluntary agreements allow a company, at the discretion of the employee, to reduce the employee's compensation so the company can contribute that reduced amount to their selected retirement accounts.
The salary reduction agreement can also allow an employee to forgo an increase in their salary, with that increase being contributed by the employer to their retirement plan. The agreement often includes a reduction in taxable compensation, with the employer's compensation being considered "before tax."
Common Sections in Salary Reduction Agreements
Below is a list of common sections included in Salary Reduction Agreements. These sections are linked to the below sample agreement for you to explore.
Salary Reduction Agreement Sample
Exhibit 10.1
SALARY REDUCTION ACKNOWLEDGEMENT
This Salary Reduction Acknowledgement (“Acknowledgement”) is made by and between [_____] (the “Executive”) and Grid Dynamics Holdings, Inc. (the “Company”) (collectively referred to herein as, the “Parties”), as of [_____], 2020 (the “Effective Date”).
WHEREAS, Executive entered into an Executive Employment Agreement with Grid Dynamics International, Inc., dated [_____],which the Company assumed on March 6, 2020, (as hereinafter amended, the “Employment Agreement”), and
WHEREAS, Executive’s current annualized base salary is $[_____] (the “Current Base Salary”) and the Parties have agreed to a reduction of Executive’s annualized base salary to $[_____] as of the Effective Date (the “New Base Salary”).
NOW, THEREFORE, the Parties agree as follows:
1. Salary Reduction. Executive acknowledges and agrees that Executive’s annualized base salary shall be reduced to the New Base Salary as of the Effective Date (the “Base Salary Reduction”), until June 30, 2020. For the avoidance of doubt, effective as of July 1, 2020, Employee’s annualized base salary shall be the Current Base Salary, provided Employee remains continuously employed with the Company through such date.
2. No Good Reason. Executive further acknowledges and agrees that neither the execution of this Acknowledgement nor the Base Salary Reduction nor any subsequent incremental or full increase to Executive’s New Base Salary (even if any such increase does not raise Executive’s annualized base salary back to the Current Base Salary) will constitute “Good Reason” or any similar term under the Employment Agreement or any other agreement or contract between Executive and the Company or any of its affiliates, and that the Salary Reduction shall not trigger any “constructive termination” rights that Executive may currently have, if at all, in any of Executive’s compensation arrangements with the Company, including any employment agreement, offer letter and/or equity award agreement.
3. Tax Consequences. The Company makes no representations or warranties with respect to the tax consequences to Executive with regard to the salary reduction provided under Section 1 and/or any other consideration provided to Executive under this Agreement.
4. Entire Agreement; No Oral Modification. This Acknowledgement may only be amended in a writing signed by Employee and the Company (or its successors). This Acknowledgement constitutes the entire agreement and understanding between the Parties concerning the subject matter of this Acknowledgement and, supersedes and replaces any and all prior and simultaneous agreement, whether written or oral, concerning the subject matter of this Acknowledgement.
5. At-Will Employment. This Acknowledgement should not be construed to create or imply the creation of a contract of employment for a specified term between the Company and the Executive, nor should it be construed as a guarantee of employment for a specific period of time. In all circumstances, employment with the Company is “at-will”, which means that either the Executive or the Company can terminate the employment relationship at any time, with or without cause and with or without prior notice. This at-will relationship may only be changed by an individual employment Acknowledgement for a specific term signed by the Executive and a representative of the Company.
GRID DYNAMICS HOLDINGS, INC. | EXECUTIVE | |||
By: | Date: | |||
Date: |
-2-
Reference:
Security Exchange Commission - Edgar Database, EX-10.1 2 ea120480ex10-1_griddynamic.htm FORM OF SALARY REDUCTION ACKNOWLEDGMENT, Viewed October 14, 2021, View Source on SEC.
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Meet some of our Salary Reduction Agreement Lawyers
Susan T.
General practitioner since 2005, general practice; civil disputes, torts.... logo Call us: (410) 878-7006 Menu Services Maryland Mobile Last Will & Testament Services All Maryland Legal Services Susan C. Trimble Attorney at Law WHAT WE ARE ABOUT Susan C. Trimble, is an established attorney in the Maryland area. Her work is infused with commitment to her community and family. is tailored to your wants and needs. Here you will find an approachable, personable and conscientious advocate. EDUCATION: Juris Doctorate (JD). University of Baltimore School of Law, Baltimore, Maryland, USA. 2006. Bachelor of Science (BS), English Literature. Towson University, 1989. Associate in Claims, (AIC) certification. Fraud Claims Law Associate, (FCLS) certification.
Leonid G.
I have been practicing law since 2018. I used to be a litigator at a nationwide practice before going in-house at a fintech company. I have experience drafting NDAs, SaaS contracts, service agreements, and stock purchase agreements.
February 10, 2024
Ann D.
Ann R. Dougherty, Esquire practices in both Pennsylvania and New Jersey with over 25 years of experience and has taught legal writing at the Delaware Law School of Widener University. Ann’s experience includes general liability, commercial property and bad faith insurance coverage litigation. Ann has successfully represented corporations in declaratory judgment matters concerning environmental and asbestos exposure, handled excess recoveries, comprehensive claim reviews and negotiated cost sharing agreements. She has also represented religious organizations including risk management strategies. In addition to practicing law, Ann also teaches introductory Philosophy and Ethics courses. Ann is a member of the Philanthropic Educational Organization for Women and the Daughters of the American Revolution. She has served on the Boards of the American Lung Association of the Mid-Atlantic for Delaware and the Wilmington Ballet Academy.
February 12, 2024
Lissette E.
Litigation and Immigration Attorney with over 12 years of experience.
February 20, 2024
John V.
Education: Georgetown Law (83), Yale (75- BA in Economics), Hotchkiss School (1970). Practice areas have included commercial litigation, individual litigation, and securities litigation and arbitration.
February 27, 2024
V. Yvette S.
I am a highly skilled attorney, fluent in English and Spanish with 20 years of legal experience and 8 additional years of real estate, project finance, banking, financial, securities, and start-up company experience. I worked 6 years with 2 international law firms and handled extremely complex work for all types of clients, 3 years with a Federal Government Regulator, and 5 years in various compliance management positions at national and international financial institutions. I am licensed in New York and North Carolina. I will handle federal litigation on a non-contingency basis. I also practice Appellate Advocacy for constitutional, employment, consumer, and corporate laws. I am skilled in many different NY and NC laws. I have successfully represented clients with state and federal regulatory investigations. I can help you with the FDA, SEC, OCC, CFPB, FDIC, FR and certain state regulators.
February 28, 2024
Bradford T.
I have been practicing law for almost 23 years.
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