The playing staff at the Hawthorns are also have clauses in their contracts state that relegation from the Premiership would result in a wage reduction.
"That's what will happen next season. The playing staff's wages are all cut as a result of going down and certainly mine drops as well," said the Baggies boss.
"It's part of what will happen to us as a result of Albion being a first division club again next season."