A salary continuation plan is an agreement whereby the employer agrees to continue the employee's salary at retirement, death or, in some cases, disability. A salary continuation plan differs from a deferred compensation plan in that in the deferred compensation plan the employee essentially funds the plan through the employee's deferred wages. In the salary continuation plan, the employer funds the plan as an additional benefit.

The agreement generally requires the employer to pay the employee (or his assignee) continuing payments upon retirement in return for the employee's continued employment with the employer during the term of the agreement. Generally the employee agrees to not compete with the employer for a period of time or in a specific geographic location. If the employee leaves the employee of the employer, the agreement terminates.