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A Deferred Salary Agreement is a formal contractual arrangement used when an employee wishes to take an extended leave of absence while maintaining employment status and receiving income during the leave period. This document is particularly relevant in Canadian jurisdictions where employers offer leave programs such as sabbaticals, educational leaves, or personal development leaves. The agreement specifies how a portion of the employee's salary will be withheld over a defined period (typically 2-5 years) and then paid out during the leave period (usually 6-12 months). It includes critical provisions to ensure compliance with Canadian tax laws, especially the Income Tax Act's requirements for salary deferral arrangements, and relevant provincial employment standards. The agreement is designed to protect both employer and employee interests while providing a structured approach to long-term leave financing.

1. Parties: Identification of the employer and employee entering into the agreement

2. Background: Context of the agreement, including the employee's current position and desire to participate in a deferred salary arrangement

3. Definitions: Key terms used throughout the agreement including 'Deferral Period', 'Leave Period', 'Deferred Amount', etc.

4. Term of Agreement: Duration of the entire arrangement, including both deferral and leave periods

5. Salary Deferral Arrangements: Specific details of how much salary will be deferred, frequency of deferrals, and calculation methods

6. Investment of Deferred Salary: How the deferred amounts will be held and managed during the deferral period

7. Leave Period: Terms and conditions of the leave period, including timing and duration

8. Payment During Leave: How and when the deferred salary will be paid during the leave period

9. Return to Work: Conditions and guarantees regarding the employee's return to work after the leave period

10. Taxation and Withholdings: Tax treatment of deferred amounts and payments, and required withholdings

11. Termination: Circumstances under which the agreement can be terminated and the consequences

12. General Provisions: Standard contractual provisions including governing law, amendments, and notices