The following is an example of a letter providing notification to an employee of a pay cut.
Sample Salary Reduction Letter
Vice President, XYZ Company
123 Maple Street
Anytown, USA 11111
January 15, 20XX
Dear James Smith,
As you are aware, the recent economy downturn has adversely affected XYZ Company. In order to increase cash flow and limit layoffs, the company has decided that salary reductions are absolutely necessary at this time.
We are asking all employees to except an 8% pay cut. The executive staff has already taken the same pay cut.
We are asking to reduce your monthly salary from $XX to $YY beginning one month from now. Your current position and duties will remain the same.
During this period, we will continue to monitor the company's financial situation. If the economic situation and the company's performance improves in the next two quarters of the year, your former salary may be restored.
If you decide to decline this reduction in pay, you will be removed from your position effective one month from today, with severance pay.
We appreciate all the hard work you have put into your position at this company, and we do not want to lose you as an invaluable employee. Your understanding, support and co-operation to help the XYZ Company endure the current economy situation is greatly appreciated.