How HR Can Write a Salary Increase Letter: Template & Example

A salary increase letter, often referred to as a raise letter, is a document in which HR or a line manager communicates to an employee that their salary has been increased. A salary increase letter will always state: 

• By how much the salary has increased

• The new stated employee salary 

Additionally, the letter should also include details on why the employee is getting the raise and why they have deserved it. This is more on the optional side.

Ultimately, a salary increase letter serves to document the process in which an employee not only receives a raise, but also new responsibilities and tasks (as discussed with their line manager or with HR). 

There are seven main reasons why an employee usually receives a salary increase: 

• End of probation: Once an employee has finished their probationary period for a company, they usually receive a salary increase letter. Usually employees on a trial period don’t receive full pay, but only get one when they pass the trial period. 

• Employee request:Employees can request a higher salary due to certain accomplishments. These requests are then checked and processed by HR and managers to see if they can provide them with said salary increase. 

• Via promotion: Once an employee has been promoted, they usually receive a salary increase which reflects their new tasks and responsibilities. 

• Additional tasks and responsibilities: An employee may not always get a promotion, but they will still get new tasks and responsibilities. This can happen, for example, because the employee took over essential tasks because a colleague left the company. In this case, the employee can get a salary increase because of the additional tasks and responsibilities that have been added to their job description. 

• Added education or certifications: If an employee gets additional certifications and education for their job, they usually request a salary increase in turn.

• Cost of living: HR may send salary increase letters to the company’s employees to ensure that their salary follows the inflation rate. 

• Changed market value: Sometimes, the market value for specific positions can change due to a variety of reasons. That’s when HR can send salary increase letters to employees in those positions in order to retain their skills.

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Writing a salary increase letter doesn’t have to be a problem if you follow these guidelines: 

• Be clear on what to include in the letter and what not to include in the letter.

• Create an outline for the letter. The salary increase letter should include the introduction paragraph, the body of the letter where the main points are explained, and the conclusion paragraph of the letter.

• Address the employee in the letter, stating the company’s name, address and date when sending the letter.

• Write a brief introduction to the letter. This should be about a paragraph long and introduce the employee to the main points.

• Write the body of the letter. This is where you should explain the salary increase. You should write how much the salary increased (absolute and percentage), write the previous salary, and what the new salary is going to be.

• Write the conclusion paragraph. The conclusion paragraph should state when the salary increase will start applying to that employee and the contact information of a person who they can ask any questions regarding any administrative steps.

• Proofread the letter, revise it, and make changes if needed. You should ask someone from the team to read the letter as well since they can offer a fresh perspective on the letter and notice any mistakes. 

Here’s a salary increase letter template that you can use in your company: 

Dear (First Name),

We’re informing you that, because of (state a reason) in the previous (state a time period), we’re increasing your total compensation. 

Your compensation on an annual basis will go from (state the current salary) to (state the new salary). This is an effective increase of (state the absolute increase in salary) to your salary, which is a (state the percentage increase of the salary) increase of your salary. 

The salary increase will become effective as of (Insert date and year).

For any additional questions you might have, you can contact (write the contact name of the person in charge of processing the salary increase) at (write the email of the person).

(state the name of the person again), we look forward to continuing working with you! Best regards,

-(name of the person writing the salary increase letter), (title of the person writing the letter)

Here’s a salary increase letter sample:

Dear Derek,

We’re informing you that, because of your great business results in the previous six months, we’re increasing your compensation. 

Your compensation on an annual basis will go from £31,000 to £37,200. This is an effective increase of £6,200 to your salary, which is a 20% increase of your salary. 

The salary increase will become effective from the 1st of March, 2023.

For any additional questions you might have, you can contact Tina at tina@personio.com.

Derek, we look forward to continuing working with you! Best regards,

Bridget, HR director

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How you approach compensation, in all of its forms, can have a direct effect on employee engagement, performance and retention. So, it helps to establish concrete processes that you can use to make things easier for your managers and HR professionals alike. 

Digital employee files can be a great place to start. In them, you can house important documents, completely securely, while also giving employees the opportunity to sign them (via qualified e-signature) in only a few clicks. 

Book your own demo to speak with one of Personio’s HR experts today.