Introduction to salary increases

Even when salary changes are positive, employees might wonder what led to them and what happens next. A salary increase letter may provide your employee:

• An explanation of how their skills, contributions or market value led to the increase
• The details of the raise in writing
• Documentation they can refer back to
• Transparency and professionalism
• A sense of acknowledgment and appreciation

Consider adding any salary increase letters to the associated employee’s personnel file.

What to include in a salary increase letter

Before writing the salary increase letter, gather the necessary information and get approval from your management team, if needed. You may address these details in your letter:

• The reason for the pay raise, such as performance, promotion, market adjustment or cost of living
• The current salary and the new base pay
• The date the change takes effect and when the employee can expect the first payslip reflecting the change
• Any changes in role, title, line reporting and location
• Budget approval and documentation
• Potential changes in the employee’s benefits package
• Additional benefits included with the salary increase, such as bonuses, stock options or other incentives
• The terms of the raise, such as changes in duties and responsibilities
• Contact details for any questions

You can also use your salary increase letter to thank the employee for their hard work. Showing appreciation and acknowledging employees’ contributions helps create a positive work environment.

Common mistakes to avoid

When writing your letter, consider using concise language to ensure the employee’s expectations align. You might want to avoid:

• Mentioning vague praise, such as their work ethic, instead of naming specific achievements, such as their willingness to work overtime to meet an important company deadline or leading a project that improved efficiency by 10%.
• Forgetting to mention extra duties or role changes, including new reporting structures or working hours
• Skipping a second review, potentially from the human resources (HR) department, to scan for inaccuracies

6 steps for writing a pay increase letter

Consider following these six steps when drafting your letter. You might use this structure across all salary increase letters for consistency:

1. Start with the raise amount: State that the employee’s salary is increasing. Include the old and new salaries so they can compare the difference.
2. Mention the start date: Add the date the raise takes effect and confirm when it will appear in payroll.
3. Explain the reason: State whether the increase is based on performance, promotion, a cost-of-living adjustment (COLA) or market adjustment. If possible, tie it back to a specific project, set of metrics or the employee’s demonstrated skills and behaviors.
4. Add role or title changes: If their job title is changing, list the new position and an updated job description, including the new job responsibilities or required skills.
5. Say thank you: Use one or two lines to write a personalized message thanking the individual for their contributions.
6. End with next steps: Clearly explain who they should talk to if they have questions and provide their contact details.

Sample performance-related salary increase letter

The following example can help you write an effective salary increase letter:

[Date]

Dear [Employee name],

I’m writing to confirm your salary increase, effective [start date]. Your new annual salary will be [new salary], up from your current salary of [old salary]. This change will be reflected in your paycheck dated [pay date].

This increase recognizes your newly developed leadership skills and the way you’ve supported other colleagues’ performance over the past [time period], including the team’s collaboration on [project or goal]. You’ve consistently contributed to our success, and we appreciate your positive impact on the company.

Your job title will remain the same, although your responsibilities will expand to include [brief overview]. A revised job description is attached for your reference.

Thank you for your continued work and commitment to the team. If you have any questions, please contact [HR department or manager name] at [email address or phone number]. Your next salary review will take place in [month, year].

Sincerely,

[Manager name]

[Manager title]

How to deliver the letter

You might verbally inform the employee in person or via video conference for hybrid and remote workers. After the meeting, you can follow these steps:

• Send the letter by email or through your HR software
• Save a copy in the employee’s file
• Confirm the change with payroll and HR
• Ask the employee to return a signed and dated copy

How to handle role changes

If the raise is due to a promotion, be clear about what you expect from the employee in your salary increase letter. You can also mention why you believe the employee is qualified for this new position, based on their demonstrated skills and knowledge. Consider including:

• A sentence confirming the old and new job titles
• A sentence explaining the scope of the new role and who they’ll report to
• A reference to an attached job description
• A timeline for when new responsibilities begin and any upcoming training

A salary increase letter can help employees feel confident in their new pay and the responsibilities that come with it. When your process is consistent and your message is direct, you contribute to a better working environment for all workers.

Salary Increase Letter Templates for PDF & Word

Download these salary increase letters to ensure your employees know what to expect in their upcoming pay packets.

Download PDF for Free Download Word for Free

*Indeed provides these examples as a courtesy to users of this site. Please note that we aren’t your HR or legal adviser, and these documents don’t reflect current labor or employment regulations , such as those pertaining to an employment contract. These templates are examples intended to be customized for your company and individual employees.