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Employee Deferred Compensation Agreement

Employee Deferred Compensation Agreement Template for Australia

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Key Requirements PROMPT example:

Employee Deferred Compensation Agreement

"I need an Employee Deferred Compensation Agreement for our Sydney-based technology company to offer our senior software engineers a performance-based compensation package that defers 30% of their annual bonus until January 2025, with specific vesting conditions tied to project completion milestones."

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Document background
The Employee Deferred Compensation Agreement is a crucial document for Australian businesses seeking to implement alternative compensation structures for key employees. This agreement is typically used when an employer wishes to provide additional compensation to employees while deferring the actual payment and associated tax implications to a future date. It is particularly relevant for senior executives, high-performing employees, or as part of a broader retention strategy. The agreement must comply with Australian tax legislation, employment laws, and corporate regulations, including the Fair Work Act 2009 and Income Tax Assessment Act 1997. It includes detailed provisions for vesting schedules, payment terms, and tax treatment, while addressing both employer and employee obligations under Australian law.
Suggested Sections

1. Parties: Identifies the employer and employee entering into the agreement

2. Background: Sets out the context and purpose of the deferred compensation arrangement

3. Definitions: Defines key terms used throughout the agreement

4. Eligibility and Participation: Establishes the conditions under which the employee is eligible for the deferred compensation arrangement

5. Deferred Compensation Amount: Specifies the amount or formula for calculating the deferred compensation

6. Vesting Schedule: Details the timing and conditions under which the deferred compensation becomes vested

7. Payment Terms: Specifies when and how the deferred compensation will be paid

8. Tax Treatment: Addresses the tax implications and responsibilities of both parties

9. Compliance with Laws: Ensures the arrangement complies with relevant Australian laws and regulations

10. Termination Provisions: Outlines circumstances under which the agreement can be terminated and the consequences

11. Governing Law: Specifies that Australian law governs the agreement

12. Execution: Formal signing section including date and signatures

Optional Sections

1. Change in Control Provisions: Additional terms that apply if there is a change in company ownership or control

2. Non-Competition and Confidentiality: Restrictions on employee's activities and handling of confidential information

3. Death and Disability Provisions: Special provisions for payment in case of death or disability

4. Investment Options: If applicable, details about how deferred compensation can be invested

5. Amendment Procedures: Process for modifying the agreement

6. Claims Procedures: Process for submitting and resolving claims related to the deferred compensation

7. Top-Hat Provisions: Special provisions for senior management or highly compensated employees

8. International Tax Provisions: Additional tax provisions for international employees or assignments

Suggested Schedules

1. Schedule A - Vesting Schedule: Detailed breakdown of the vesting timeline and conditions

2. Schedule B - Calculation Methodology: Detailed formula or methodology for calculating deferred compensation amounts

3. Schedule C - Payment Schedule: Detailed timeline of when payments will be made

4. Schedule D - Investment Options: If applicable, list of available investment options and their terms

5. Appendix 1 - Tax Examples: Illustrative examples of tax treatment under different scenarios

6. Appendix 2 - Compliance Checklist: Checklist ensuring compliance with relevant Australian laws and regulations

Authors

Alex Denne

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Base Salary
Board
Cause
Change in Control
Code
Company
Competition
Confidential Information
Deferred Compensation
Deferred Compensation Account
Disability
Effective Date
Eligible Employee
Employee
Employer
Employment Agreement
Fair Market Value
Financial Year
Good Reason
Group
Investment Options
Material Breach
Notice
Participant
Payment Date
Performance Criteria
Performance Period
Plan
Plan Administrator
Plan Year
Related Body Corporate
Retirement
Separation from Service
Specified Employee
Termination Date
Trust
Trustee
Unforeseeable Emergency
Valuation Date
Vested Balance
Vesting Date
Vesting Period
Vesting Schedule
Clauses
Participation Eligibility
Compensation Amount
Vesting
Payment Terms
Forfeiture
Tax Compliance
Withholding
Investment Options
Administration
Amendment and Termination
Assignment and Transfer
Beneficiary Designation
Change in Control
Claims Procedures
Confidentiality
Non-Competition
Non-Solicitation
Death Benefits
Disability Benefits
Dispute Resolution
Governing Law
Indemnification
Insurance
Intellectual Property
Notice Requirements
Representations and Warranties
Severability
Superannuation
Termination Events
Unforeseen Circumstances
Variations
Waiver
Relevant Industries

Financial Services

Technology

Mining and Resources

Professional Services

Healthcare

Manufacturing

Telecommunications

Consumer Goods

Energy

Real Estate

Relevant Teams

Human Resources

Legal

Finance

Executive Management

Board Secretariat

Compensation & Benefits

Tax

Compliance

Corporate Governance

Payroll

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Executive Director

Senior Manager

Department Head

Regional Manager

Senior Sales Executive

Technical Director

Principal Consultant

Managing Director

Vice President

Senior Engineer

Head of Operations

Chief Technology Officer

Senior Advisor

Industries
Fair Work Act 2009 (Cth): Primary federal legislation governing employment relationships in Australia, including terms and conditions of employment and remuneration arrangements
Income Tax Assessment Act 1997 (Cth): Governs the taxation of income, including deferred compensation arrangements and their tax treatment
Superannuation Guarantee (Administration) Act 1992 (Cth): Regulates mandatory superannuation contributions and may impact how deferred compensation interacts with superannuation obligations
Corporations Act 2001 (Cth): Contains provisions relating to executive remuneration, disclosure requirements, and corporate governance for deferred compensation arrangements
Fringe Benefits Tax Assessment Act 1986 (Cth): Relevant for determining whether deferred compensation arrangements might trigger FBT obligations
Treasury Laws Amendment (Enterprise Tax Plan) Act 2017: Contains provisions that may affect the tax treatment of deferred compensation arrangements
Australian Securities and Investments Commission Act 2001: Relevant if the deferred compensation arrangement includes financial products or services
Competition and Consumer Act 2010 (Schedule 2 - Australian Consumer Law): May be relevant for ensuring fairness and transparency in employment contracts and compensation arrangements
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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