The Employer’s Guide to Writing a Salary Increase Letter (+ Templates and Examples)

Rewarding your employees’ hard work and dedication with a salary increase is key to maintaining high levels of motivation and job satisfaction. However, a salary increase is more than just a pay bump—it affirms their value and contributions to the company.

This article will guide you step-by-step through writing a salary increase letter. We also included two templates you can use immediately and five examples to suit a range of scenarios in which people would get a salary increase.

Best practices for writing a salary increase letter to an employee

A salary increase letter is a formal written communication from an employer to an employee informing them about a change in their compensation, specifically an increase in their salary. This letter details the salary increase, including the amount or percentage of the raise, the effective date of the increase, and the new salary amount.

The letter aims to formally document the change and acknowledge the employee’s value to the organization. As a result, there are some key elements to be aware of when drafting such letters.

Know what to include in a raise letter

Before you start writing, ensure you have all the necessary details:

• The employee’s previous salary
• The amount of the raise
• The new salary figure
• The effective date of the change

Consult the company’s policies and guidelines regarding any additional benefits or changes to the compensation package that might apply.

Create an outline for the letter

Before you start writing, create an outline to ensure you include all necessary points, maintain a logical flow, and keep your letter concise and professional.

A typical outline might look like this:

• Addressing the employee
• Introduction
• Details of the raise
• Reason for the raise
• Closing remarks and conclusion

Address the letter to the employee

Start the letter with a formal salutation addressing the employee directly. Using the employee’s name in the salutation makes the letter more personal and respectful.

Focus on the introduction paragraph

Begin the letter by expressing appreciation for the employee’s efforts and contributions. Make sure to keep it genuine and professional.

For example: “We greatly value your dedication and contribution to our team and want to express our appreciation.”

Compose the body of the letter

The body of the letter should include all relevant details about the raise. Clearly state the current salary, the percentage or amount of increase, the new salary, and when these changes will take effect. Ensure your language is unambiguous.

As you mention the reasons for the raise, acknowledge the employee’s achievements or any specific behavior that led to it. The goal is to:

• Reinforce positive behavior
• Make the employee feel valued and appreciated

For example: “The raise reflects the excellent job performance you have demonstrated and your contribution to the success of our recent project.”

Finish the letter with a short conclusion

In the closing paragraph, reiterate your appreciation for the employee’s high-quality work, wish them continued success, and offer to discuss any questions they might have about the new pay structure.

While it’s important to maintain a professional tone, showing a little warmth in your conclusion can help boost employee morale.

For instance: “We look forward to your continued dedication and exceptional work.”

Common mistakes to avoid when writing a salary increase letter from an organization’s perspective

Lack of clear justification

Failing to provide a clear and compelling reason for the salary increase can leave employees confused and dissatisfied. Ensure the letter outlines specific achievements, contributions, or market adjustments that justify the raise.

Example: “We are pleased to inform you of a 5% salary increase, effective from July 1, 2024, in recognition of your exceptional performance in leading the successful launch of our new product line, which resulted in a 20% increase in quarterly sales.”

Being vague about the increase

Avoid being vague about the details of the salary increase. Specify the exact amount or percentage of the raise and the effective date. Clarity on these points helps prevent misunderstandings and ensures that employees feel valued and recognized.

Example: “Your new annual salary will be $70,000, starting from your next paycheck on July 15, 2024.”

Not aligning with company policy

Ensure the salary increase aligns with company policies and salary structures. Deviating from established policies without clear justification can lead to inconsistencies and perceptions of favoritism.

Example: “This adjustment aligns with our annual review policy and the market rate adjustments outlined in our compensation guidelines.”

Ignoring employee contributions

It is crucial to highlight the employee’s specific contributions and achievements that led to the salary increase. Failing to do so can make the letter feel generic and impersonal, reducing its positive impact.

Example: “Your innovative approach to streamlining our customer support process has significantly reduced response times and increased customer satisfaction scores by 15%.”

Neglecting to address future expectations

It’s essential to set clear expectations for the future. Outline any new responsibilities or goals associated with the salary increase to help the employee understand future expectations and foster continued growth and performance.

Example: “With this increase, we look forward to your continued leadership in the upcoming project to enhance our online platform, aiming for a 25% improvement in user engagement by the end of the year.”

Overlooking the formal tone

While being positive and encouraging is important, maintaining a formal tone is essential. A too-casual approach can undermine the significance of the salary increase and the organization’s professionalism.

Example: “We are delighted to inform you of a salary adjustment, effective from July 1, 2024, in recognition of your outstanding contributions to our team.”

Failing to express gratitude

Neglecting to express appreciation for the employee’s hard work and dedication can make the letter feel transactional rather than relational. A simple thank you can go a long way in making the employee feel valued.

Example: “Thank you for your unwavering commitment and consistently delivering high-quality work. Your efforts are greatly appreciated.”

Skipping the review process

Ensure HR or a senior manager reviews the salary increase letter before sending it out. This helps catch errors, inconsistencies, or policy breaches and ensures the letter is accurate and professional.

Have a checklist and a review process that includes the following steps:

• HR confirmation of policy alignment
• Manager approval of performance justification
• Final review by senior management

Missing an opportunity for engagement

A salary increase letter is also an opportunity to engage with the employee about their career path and development within the company. Failing to mention future opportunities or support for career growth can be a missed opportunity.

Example: “We are excited about your professional growth and encourage you to explore upcoming training programs and leadership workshops available this quarter.”

Not including contact information

Provide a point of contact for any questions or clarifications. Failing to do so can leave the employee unsure who to approach with any concerns or queries about the increase.

Example: “If you have any questions or need further clarification, please contact our HR department at hr@company.com or your direct manager.”

Salary increase letter templates from employer to employee (Formal and informal tones)

If you need a shortcut, use these two templates: one more formal and one with a more casual tone. You can quickly fill or customize them to fit your company’s communication style better.

Template 1: Formal tone

Template 2: Informal tone

Examples of letters of salary increase to employees: 5 Different scenarios

Here are five examples tailored to specific salary increase circumstances.

Letter for a salary increase when an employee asks for a raise

Dear Jessica,

Following our recent salary increase discussion, we have reviewed your request and evaluated your contributions over the past year.

Under your stewardship, our content marketing efforts have blossomed. Your innovative campaign strategies have boosted our brand visibility by 40% and significantly increased our user engagement metrics. Your adept leadership has also contributed to the growth and development of your team, fostering a positive work environment that promotes creativity and collaboration.

We recognize your efforts and dedication and are pleased to inform you that we are increasing your total compensation.

Your new annual salary will be $85,000, effective July 1, 2024. This 12% raise reflects both the value you bring to our company and the market rate for a role with your responsibilities.

Please note that your benefits package will remain unchanged. However, you will continue to be eligible for the annual performance bonus, which could boost your total compensation based on our company’s performance and your contribution to that success.

Please feel free to discuss any further details. Thank you for your continued commitment to our company!

Best regards,

Yara Larsson

Head of Marketing

Effective raise letter to an employee who got a promotion

Dear Rebecca,

I am thrilled to congratulate you on your well-deserved promotion to the position of Team Leader.

Over the past years, your dedication, creativity, and remarkable sales abilities have significantly contributed to our team’s success. Your commitment to meeting and surpassing sales goals and your capacity to motivate team members have not gone unnoticed.

With this in mind, we are delighted to reflect your new leadership responsibilities in your salary. Effective July 1, 2024, your new annual salary will increase to $70,000.

We are confident you will continue inspiring your team and driving sales in your new role. You are an integral part of our company, and we sincerely look forward to witnessing your further success and accomplishments in this new role.

Thank you for your hard work and dedication. We look forward to your continued success.

Best regards,

Rose Dawson

VP of Growth

Performance review salary increase sample letter

Dear Alex,

Following our recent performance review and assessment of your exceptional work as a Front End Developer, we would like to express our deep appreciation for your dedication and the expertise you bring to our team.

Your innovative solutions, eye for detail, and commitment to maintaining high-quality standards have improved our user interface and significantly contributed to the overall user experience.

Your work has substantially improved our clients’ interactions with our software, resulting in positive feedback and increased customer satisfaction.

We believe that it is important to recognize and reward such outstanding performance. Therefore, we are delighted to inform you that, effective July 1, 2024, we are increasing your total compensation. Your new annual salary will be $90,000.

This increase directly reflects our appreciation for your technical skills, exemplary performance, and the value you bring to our team and company.

Thank you for your hard work and dedication. We look forward to your continued contribution and success in the upcoming year.

Best regards,

Dwayne Eriksen

CTO

Salary increase letter to an employee who got a new certification

Dear Alessandra,

We want to extend our warm congratulations on your recent achievement of obtaining the SCRUM certification!

Your commitment to professional development and continuous learning truly stands out.

Your new certification greatly enhances our project management capabilities and aligns perfectly with our agile development approach. With your demonstrated knowledge of SCRUM principles and practices, we are confident that we can improve our project delivery times, manage resources more efficiently, and enhance client satisfaction rates.

In recognition of your new SCRUM certification and its value to our team, we are pleased to inform you that we will increase your total compensation. Your new annual salary will be $65,000, effective July 1, 2024.

We look forward to seeing the positive impact of your new skills on our projects and our team.

Best regards,

_Mark Ronson

Head of Product

Company-wide salary increase letter (due to costs of living raise)

Dear team,

We regularly review our compensation structures as part of our commitment to maintaining an equitable workplace.

Given the recent increase in the cost of living, we have decided to adjust our salary scales across the entire organization.

Effective July 1, 2024, we are pleased to announce that all salaries will increase by 3%.

This change will be reflected in your August paycheck, showing the new annual salary rate, prorated for the remaining part of the year.

This increase is designed to help offset the rising living costs, ensuring that your hard-earned salaries continue to adequately provide for you and your families.

We sincerely appreciate your ongoing commitment and hard work. Your contributions are invaluable to us, and this salary increase is just one way we want to show our appreciation.

Don’t hesitate to contact the HR department if you have any questions or need further clarification on these changes.

Best regards,

John Doe,

Chief People Officer

Remember to:

• Ensure all the numbers and dates are accurate—any mistake can cause unnecessary confusion or issues later on
• Show genuine appreciation to boost an employee’s morale and loyalty
• Encourage the employee to reach out if they have any queries—this openness can help build trust and clarity
• Always proofread your salary increment letters to ensure they are free from typos or grammatical errors—you will show that you took time and care to write the letter and uphold your organization’s professional image

Drive a high-performance workplace with Deel Engage

Achieving a high-performance workplace doesn’t happen by accident. It takes strategic planning, clear communication, and a focus on continuous development.

Deel Engage is an all-encompassing solution that places performance reviews and talent development at the forefront, transforming them from mere administrative tasks into powerful growth catalysts:

• Our career management software showcases clear paths for promotions, as well as the expectations from each level
• Our performance management software offers a seamless way to run meaningful 360-degree performance reviews and goals management for a more comprehensive view of employee performance
• Our learning management software enables workers to create personalized development plans that help them achieve their career aspirations

With Deel Engage, performance reviews and talent development are not routine tasks but strategic tools propelling your company toward a high-performance culture.

Request a demo to see how Deel Engage will enable a high-performance workforce.