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Deferred Salary Agreement Template for Malaysia

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Key Requirements PROMPT example:

Deferred Salary Agreement

"I need a Deferred Salary Agreement for a senior software developer in our Malaysian tech startup, where we'll defer 30% of their monthly salary from January 2025 to June 2025, with payment to be made in full in July 2025 plus 5% interest."

Document background
A Deferred Salary Agreement is utilized in situations where an employer and employee mutually agree to postpone the payment of a portion of the employee's regular salary to a future date. This arrangement is particularly common in Malaysia during business restructuring, project-based work, or when companies need to manage cash flow while retaining valuable employees. The agreement must comply with Malaysian employment law, particularly the Employment Act 1955, and address tax implications under the Income Tax Act 1967. The document typically specifies the amount of salary to be deferred, the deferral period, payment terms, and any conditions attached to the deferred payment. It's essential for protecting both parties' interests and ensuring clarity regarding statutory contributions, termination provisions, and payment obligations.
Suggested Sections

1. Parties: Identification of the employer and employee, including full legal names and addresses

2. Background: Context of the agreement, including the employment relationship and reason for salary deferral

3. Definitions: Key terms used throughout the agreement, including 'Deferred Salary', 'Deferral Period', and 'Payment Date'

4. Term and Deferral Period: Duration of the agreement and specific periods during which salary will be deferred

5. Salary Deferral Arrangement: Details of the deferral mechanism, including amount or percentage of salary to be deferred

6. Payment Terms: Specifics of when and how deferred salary will be paid, including any conditions precedent

7. Tax and Statutory Contributions: Treatment of EPF, SOCSO, and income tax obligations related to the deferred salary

8. Employee's Continuing Obligations: Ongoing employment duties and responsibilities during the deferral period

9. Termination: Circumstances under which the agreement can be terminated and consequences of termination

10. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction for disputes

Optional Sections

1. Interest on Deferred Amounts: Optional provisions for interest payment on deferred amounts, if applicable

2. Security Arrangements: Security provisions to guarantee payment of deferred salary, particularly relevant for high-value deferrals

3. Performance Conditions: Any performance-related conditions attached to the payment of deferred salary

4. Change of Control: Provisions dealing with change in employer ownership or control

5. Confidentiality: Provisions for maintaining confidentiality of the arrangement, if required

6. Non-Competition and Non-Solicitation: Restrictive covenants, if appropriate given the employee's position

7. Force Majeure: Provisions for unforeseen circumstances affecting the employer's ability to pay

Suggested Schedules

1. Schedule 1 - Payment Schedule: Detailed schedule of deferral amounts and payment dates

2. Schedule 2 - Calculation Method: Formula or method for calculating deferred amounts and any applicable interest

3. Schedule 3 - Employee's Current Employment Terms: Reference to or summary of relevant terms from the main employment agreement

4. Appendix A - Consent Form: Employee's written consent to salary deferral arrangement

5. Appendix B - Tax Treatment Summary: Summary of tax implications and treatment of deferred salary

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Relevant Industries

Professional Services

Construction

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Start-ups

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Consulting

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Financial Services

Education

Healthcare

Relevant Teams

Human Resources

Legal

Finance

Payroll

Compliance

Executive Management

Corporate Secretarial

Operations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Human Resources Director

Legal Counsel

Finance Manager

Project Manager

Department Head

Senior Executive

Managing Director

Operations Director

Company Secretary

Senior Manager

Technical Director

Development Manager

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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