A salary continuation agreement (SCA) is an arrangement between an employer and an employee that ensures the employee will continue receiving a portion of their salary in the event of certain circumstances, such as long-term illness or disability. This type of agreement can provide peace of mind and financial stability for both employees and employers.
If you’re considering creating an SCA, it’s important to understand what should be included in the agreement. Here’s a sample SCA that can serve as a starting point:
1. Purpose: Explain the purpose of the agreement and the circumstances under which it will be activated. For example, “This agreement is designed to provide financial support to employees who are unable to work due to illness or disability for an extended period of time.”
2. Eligibility: Specify which employees are eligible for the SCA. This may include all full-time employees or only those who have been with the company for a certain amount of time.
3. Duration: Outline how long the SCA will be in effect and under what conditions it may be terminated.
4. Salary Continuation: Detail the amount of the employee’s salary that will be continued under the SCA. This may be a percentage of their regular salary or a fixed amount.
5. Benefit Reductions: Specify any reductions in benefits the employee will receive as a result of the SCA. For example, if the employee is receiving disability benefits from a government program, the SCA may stipulate that the amount of the SCA will be reduced by the amount of the government benefits.
6. Return-to-Work Provisions: Outline any requirements for the employee to return to work after the end of the SCA period. For example, the employee may be required to provide a doctor’s note certifying that they are able to return to work.
7. Confidentiality: Specify that the terms of the SCA are confidential and cannot be disclosed to anyone outside of the employee, their representatives, and the employer.
Creating an SCA can be a complex process, and it’s important to consult with legal and financial experts to ensure that the agreement is legally binding and financially feasible. However, with careful planning and attention to detail, an SCA can provide valuable support to employees during a difficult time while also protecting the interests of the employer.
