Several Premier League clubs have furloughed employees since the new coronavirus outbreak while others, such as West Ham United and Southampton, have said their players have accepted wage deferrals.
League leaders Liverpool, Tottenham Hotspur and Bournemouth reversed decisions to furlough non-playing staff following criticism.
“We are pleased to announce that we have reached a voluntary agreement with our first-team players, head coach and core coaching staff to help support the club at this critical time,” Arsenal said in a statement on Monday.
“Reductions of total annual earnings by 12.5% will come into effect this month, with the contractual paperwork being completed in the coming days.”
Arsenal added that “agreed amounts” would be repaid if specific targets primarily linked to success on the pitch were met in the seasons ahead.
The club said the agreement with players was based on the assumption of the 2019/20 season being completed and the club receiving its full share of broadcasting revenues.
“The resulting savings will help cover some of the financial risks we have this season in relation to our matchday and commercial income,” the club added.
Arsenal were ninth in the league table, eight points adrift of fourth place which guarantees qualification to the lucrative Champions League, when soccer in England was suspended indefinitely last month due to the outbreak of the novel coronavirus.