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How do compliance buyouts work?

During the ordinary-course buyout periods in June 2013 and June 2014, teams will be permitted two compliance buyouts (also referred to as amnesty buyouts) in total. Compliance buyouts follow the same formula as ordinary-course buyouts — either 1/3 or 2/3 of actual salary depending on age — for actual cash paid to the player, but they do not count against the cap.

Per Transition Rule 53, a compliance buyout can only be executed on a contract entered into on or before Sept. 15, 2012. Each player profile on CapGeek.com notes whether or not a player is eligible for a compliance buyout. This information also appears in the results generated by our buyout calculator.

A compliance buyout can be used to eliminate the cap hit of a 35-plus contract.

For one season following a compliance buyout, the player is prohibited from rejoining the team that bought him out. According to the New York Post on June 26, the NHL notified teams that "re-signing of a player following a trade and a subsequent (compliance) buyout" would be deemed cap circumvention. However, if a team has reached its quota of two compliance buyouts, there is no defined rule preventing the team from trading a player to a team with compliance buyout slots available for the purpose of a compliance buyout.

In order for a team to execute a buyout, the player must first clear unconditional waivers. A waiver claim by another team pre-empts the buyout process. Players with no-move clauses can reject the option of waivers and proceed immediately to a buyout.

The NHL allowed teams to execute one of their two compliance buyout options prior to the 2012-13 season on players with cap hits of more than $3 million. Two teams exercised the accelerated compliance buyout option: the Montreal Canadiens on Scott Gomez and the New York Rangers on Wade Redden. The players received full pay and counted at their full cap hit for 2012-13, after which the compliance buyout payments kick in. The $3-million minimum applied only to accelerated compliance buyouts and does not apply to normal compliance buyouts.

The compliance buyout period coincides with the usual ordinary-course buyout period.

Ordinary-course buyouts remain available to teams in 2013 and beyond. For more information on ordinary-course buyouts, please read our separate FAQ entry.

SEE ALSO: Can a team buy out an injured player?

— By Matthew Wuest – CapGeek.com