Salary Reduction Letter
This Notice of Reduction of Salary is a letter explaining that you are reducing an employee’s pay when your business is facing challenging times.
Last updated January 29, 2025
Suitable for Australia
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What is a salary reduction letter?
What is a salary reduction letter?
When should you use a salary reduction letter?
When should you use a salary reduction letter?
What should be in a salary reduction letter?
What should be in a salary reduction letter?
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Frequently asked questions
What is a salary reduction letter?
keyboard_arrow_upWhen should you use a salary reduction letter?
keyboard_arrow_upWhat should be in a salary reduction letter?
keyboard_arrow_upWhat protections does this document provide my business?
keyboard_arrow_upAre there any legal risks in reducing an employee’s salary?
keyboard_arrow_upCan I use this letter for performance-related pay reductions?
keyboard_arrow_upWhat should I do after issuing the notice?
keyboard_arrow_upView Sample Salary Reduction Letter
The Legal Risk Score of a Salary Reduction Letter Template is Medium
Our legal team have marked this document as medium risk considering:
- Reducing employee salaries may lead to decreased morale and productivity, which could affect the overall performance of the business.
- There is a risk of increased employee turnover as individuals may seek higher-paying opportunities elsewhere in response to the salary reductions.
- If not done properly, this process could create a breach of the Fair Work Act.
Articles about Salary Reduction Letter
Is it Legal to Reduce an Employee’s Salary?
Reduced cashflow and a tough economic climate may make you consider reducing an employee's salary. Find out if it's legal here.
How To Avoid Legal Trouble When Reducing an Employee's Pay
Are you considering reducing an employee's pay? Check out this article to find out how you can do this legally!
How does Salary Sacrifice work?
Salary sacrifice allows you to increase your retirement fund. This article sets out some limitations on salary sacrifice you should be aware of.
Is It Legal to Demote an Employee?
Have you recently been demoted? Are you unsure if it is legal? Read our guide on whether it is legal to demote an employee.
What Costs Can An Employee Salary Sacrifice?
A salary sacrifice occurs where an employee relinquishes a portion of their paid salary to pay for another expense (such as a car). Find out more here.
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Resigning During Probation: How Much Notice? (2025 Update)
Resigning during probation might seem like a simple process. In reality, there's much more to it. Here's what you need to know.
How to Distinguish Misconduct from Poor Performance
Poor performance and misconduct can both severely impact your business. Find out how to differentiate between them in this article.
Resigning Without Notice: Can Employers Withhold Pay?
Are you entitled to withhold an employee’s entitlements if they resign without notice? What are the legal implications? Read our guide to find out more.
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