Salary Freeze

AAA

DEFINITION of 'Salary Freeze'

The action of a company suspending salary increases for a period of time. By freezing salary increases for a given period, management is hoping that the company will be able to produce better bottom line results by keeping fixed costs controlled. The downside of a salary freeze for a company is that employee morale will typically take a hit and the firm may end up losing valuable employees due to compensation issues.

INVESTOPEDIA EXPLAINS 'Salary Freeze'

A salary freeze typically occurs when a company is experiencing financial difficulties. It may choose to freeze salaries temporarily in order to minimize layoffs. Once the company is in a better financial position, the salary freeze would likely be lifted.

RELATED TERMS
  1. Justified Wage

    A wage level for a job that is set by market dynamics and justified ...
  2. Lilly Ledbetter Fair Pay Act

    A law signed by Congress on January 29, 2009, that restored worker ...
  3. Hiring Freeze

    A situation whereas an employer has temporarily put into place ...
  4. Layoff

    1. When a company eliminates jobs regardless of how good the ...
  5. Bankruptcy Risk

    The possibility that a company will be unable to meet its debt ...
  6. Matching Contribution

    A type of contribution an employer chooses to make to his or ...
Related Articles
  1. Budgeting

    Evaluating Your Personal Financial Statement

    Determine your net worth by making your own cash flow statement and balance sheet.
  2. Retirement

    Two Roads: Debt Or Financial Independence?

    A higher income won't make you richer - unless you learn to live on less.
  3. Options & Futures

    A Guide To CEO Compensation

    Make sure you assess whether a CEO has a stake in doing a good job for you, the shareholder.
  4. Taxes

    How To Save More For Your Retirement

    The Economic Growth and Tax Relief Reconciliation Act of 2001 made it easier to prepare for the future. Will you be ready?
  5. Options & Futures

    Compensation Myths: Burger Flipper Vs. Investment Banker

    Though these two jobs are perceived as being opposites, the compensation can be quite comparable.
  6. Personal Finance

    How Much is a Graduate Degree Worth?

    Whether or not a graduate degree will increase your earnings depends on a number of factors.
  7. Economics

    What Is The Labor Market Conundrum?

    We are facing a conundrum with investment implications: Why are wages still stagnant, when jobs are being created at the fastest pace since the late 90's?
  8. Investing

    What Tech Companies Seeking Funding Must Overcome

    Tech companies face a unique set of challenges, including a need for timely responses to changes in technology and difficulty recruiting the right talent.
  9. Economics

    Vietnam -- New Asian Hot Spot For Tech Investment

    Vietnam now has a rapidly expanding tech sector that's attracting investors from around the globe due to low business costs and highly skilled workers.
  10. Personal Finance

    What Do Certified Financial Planners Earn?

    Individuals with the Certified Financial Planner designation enjoy an above-average salary range as well as promising current and future job availability.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center