Salary Continuation Plan

Published: | Updated: December 12, 2017

Definition - What does Salary Continuation Plan mean?

A salary continuation plan is an agreement that outlines the way an employer will respond if an employee becomes disabled. The plan could specify various courses of action, such as keeping the employee in the company's workforce, reducing the employee's responsibilities, and continuing to pay them their current salary.

Insuranceopedia explains Salary Continuation Plan

Although the name implies that the salary will remain the same, the salary continuation plan can specify that a disabled employee may be paid at a reduced rate. The most important prerequisite for such a plan is that it be put in writing before the employee acquires a disability. Unless it is described in writing and made available to covered employees prior to appealing to it, it is not legally binding.

These agreements are designed to offer protection to both the employer and the employee.

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