Tips for writing a salary increase letter

There comes a time in every manager’s life when he or she identifies an employee who demonstrates outstanding performance that warrants a salary increase. This can come during a formal performance review or as a result of an employee promotion — perhaps when the company goes through some shifting that necessitates additional employee responsibilities or a new job title. Since written letters are still the preferred way to document and manage a salary increase, a manager needs to understand how to write a salary increase letter that explains things according to employment legalities.

Salary increase letters for employers accomplish these things:

  1. Provides documentation that a salary increase is taking place for payroll purposes
  2. Gives the employer a chance to praise the employee getting the raise to improve retention
  3. Shares a detailed, written account of any new duties or change in the employee’s responsibilities

What an Employer Salary Increase Letter Needs

The elements of a salary increase letter for employers are fairly straightforward, yet they must be covered in order to advise the employee of this news. You’ll want to make sure that your salary increase letter includes the following factors.

  • Proper Letter Heading and Date
    When drafting a salary letter from the employer standpoint, be sure to include a properly formatted header that includes the full company information (company letterhead works well), along with the name of the personal writing the letter and the date. Add the opening greeting directly to the employee. You can use a standard memo format if you wish.
  • State the Purpose of the Letter
    Once you’ve established the formalities of the employer salary increase letter, you’ll them want to include a paragraph that tells the employee the full reason for the change in salary, as well as any additional changes such as work hours, duties, or job title. Write this by stating in a sentence the reason for the salary increase, along with any title change. If there are additional duties or a change in work hours, include this in the second sentence or make a bulleted list below the main sentence.
  • Salary Increase Information and Details
    Next, you will include the actual salary increase information along with any details that are of a compensation or benefit nature. Start with the effective date that the salary increase will take effect (the actual pay period is fine), and then move to the reason for the change, and the dollar amount of the salary increase. You can bold this section to make it easier for the employee to understand. If there are any bonuses, new benefits or incentives that will be added to the employee’s compensation, include this information too.
  • Personalization Tips for Salary Letters
    Remember that you will want to personalize the employer salary increase letter by adding a few personal yet finished touches to the content. Mention how the salary increase is based on performance and what your expectations are for the employee based on company objectives.  Be sure to wrap up the letter by stating how valuable the employee is to your organization, including how grateful you are to have an employee of their quality on board. This is a good time to foster good will and improve your retention of the employee by expressing thanks for their performance and willingness to go the extra mile at work. 

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