Appointing employees in exchange of equity

Startups are known for being relatively cash-strapped, and they prefer to cut down on payments to employees considering their need to preserve cash and recycle whatever cash they generate into their business operations. They often offer equity compensation as a result.

Offering equity can incentivize talent to join at a lower salary. In some instances, people may be willing to “work for equity.” This means they will earn a stake in the company instead of a salary. However, the equity doesn't have any value yet and many people can't afford to take that option.

However you may enter into an agreement with the employee on a condition that no salary can be claimed at any stage later on in view' of equity payment made 

It differs from one person to another to accept or reject your proposal, there is no thumb rule for such terms and conditions, which you will have to persuade.

• Equity compensation often goes hand-in-hand with a below-market salary.
• Equity compensation typically has a vesting schedule, which means that you'll only own your equity after a certain period of time. You're not tied to the company in the same way with salary payment.
• Tax implications of equity earnings can be far more complex than salary earnings.