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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Frequently asked questions
Use this Notice of Reduction of Salary if:
- You would like to reduce an employee’s pay due to reasons other than their performance.
- You would like to concisely explain to the employee why the pay cut is necessary.
- You want to follow all the proper processes in reducing the employee’s pay
- You would like to have a record of the reduction of salary.
What does the Notice of Reduction of Salary cover?
- Explains the reasons why the pay cut is necessary.
- Informs the recipient when the pay cut will be implemented
- Sets out the new pay rate and the effective date
Other names for Notice of Reduction of Salary include:
- Notice of Pay Reduction
- Salary Reduction Letter
- Notice to Reduce Payment
- Notification of Pay Deduction
Further information:
- Reducing an Employee’s Pay: What You Need to Know (2019 Update)
- Avoiding the Pitfalls of Redundancy: Lessons for Employers
View 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.
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