Hi,

This may be out of topic, if so please let me know and I will post in the appropriate section.

I am an officer in a company that was acquired. My current employment contract specifies my current title, salary, and a special acquisition provision: If I am terminated without cause within one year of an acquisition, I will receive 1 year's salary. The acquisition has occurred.

Here is my question:
- The acquiring company is asking me to take a pay cut and have me sign a new contract. If I do not sign a new contract and they reduce my salary never the less, does this constitute a termination? My current contract does not include wording that allows the company to change the terms of the contract - other than employment is at will.

Thanks in Advance

I am no lawyer, but if I were you, I would be seeking the advice of a competent employment/labor lawyer. asap.

First, see GBurn's comment.


If they reduce the salary never the less, then it's a breach of contract. It may require legal action to then gain the result of it being a termination. The real question is how do you respond to a reduction, and that should be to immediately follow GBurn's comment if you haven't already by that time.

Most contracts have a "good reason" provision which treats a reduction in pay (especially following a change in control) as an involuntary termination of employment triggering severance. Without such a provision you are in a gray area depending on how much they buyer is cutting your pay. Obviously a $1 per year is trivial and will not trigger constructive termination but a 90% cut may do so. Spend some money to have a lawyer review your contract -- you have one year of pay on the table and you don't want to waive any rights you may have under your contract or state law.

You need to speak to an attorney. Having said that, I went back and looked at our employment contracts.

Under the "Employment & Terms" section, we state that the "at will" portion will be in effect after the end of the contract period if the employee continues to work for us so the "at will" portion would not be in effect. Under "Compensation," we state that we can pay you and not require you to do any work for us without being deemed as having terminated you or be in breach of contract. Other than those, I cannot find any mention of "good reason" (it does go into "good cause" in regards to termination).

The contract is for X amount of money for X amount of time. I beleive that is why they are asking you to sign a new contract.

Get thee to thy house of counsel.