No salary increase letter template from employer to employee

A letter or email from an employee’s manager is an effective way to communicate a salary increase. Especially if the note complements a salary increase discussion with the employee’s manager, which should also always accompany a salary increase, the letter is an effective communication tool.

The letter reinforces the discussion the manager held with the employee when the employee learned about the salary increase. The letter serves to emphasize the employee's positive contributions to the workplace.

The letter is the written documentation of the salary increase discussion. Employees receive these letters and experience the sense that they are valued. The letter contributes to their feelings of pride in their accomplishments. Employees treasure these letters and hold onto them for years.

The Manager's Role in Communicating the Raise

The manager’s role in communicating the employee’s salary increase is the critical factor. The manager must communicate why the employee is receiving the raise, the amount of the raise, and where that places the employee’s new base salary.

It is not recommended that the manager communicate the percentage of increase as they generally average around 2-4% and that is not as motivational of a number as the dollar amount of the increase is to an employee. 

For example, according to the Bureau of Labor Statistics, from December 2019 until December 2020, real average hourly earningsincreased 3.7%, seasonally adjusted. The change in real average hourly earnings combined with a 1.2% increase in the average workweek resulted in a 4.9% increase in real average weekly earnings over this period. "The increases in real average hourly and weekly earnings largely reflect the substantial job loss over the year among lower-paid workers as a result of the COVID-19 pandemic and efforts to contain it."

It is strongly recommended that the discussion about the salary increase focus on the strengths and contributions for which the organization is rewarding the employee with the increase. The meeting is also an excellent opportunity for the manager to discuss with the employee what he or she hopes to see in the employee's performance continue over the next year.

The Manager Can Also Focus on Improvement

If there are areas to improve that would make the employee's contribution even more significant, the manager should mention them during the meeting. Having just received a salary increase, the employee is receptive to suggestions for improvement. This is especially true if the improvements will make the employee eligible for a larger salary increase during the next performance time period.

The Salary Increase Letter Confirms the Details of the Raise

In this sample salary increase letter, the manager has met with the employee so the letter is confirming what the employee already knows. The interaction allows the employee to ask questions. It allows the manager to explain the company’s pay and reward philosophy as well.

Few employees completely understand basic company information related to reward strategies and philosophy. Further, employees do not understand how much base salary, benefits, and variable compensation such as bonuses, cost the employer or how they support the company's pay philosophy. The manager plays a role in informing employees of the company's pay philosophy. For example, all raises are merit increases.

Salary Increase Letter Sample

This salary increase letter reinforces what the employee knows from meeting with his or her manager. Download the salary increase letter template (compatible with Google Docs and Word Online) or see below for more examples.

Salary Increase Letter Sample (Text Version)

Reginald Lee
123 Business Rd.
Business City, NY 54321
555-555-5555
 

September 1, 2018

Rhonda Rodriguez
Acme Electronics
123 Main Street Anytown, CA 12345

Dear Rhonda:

This letter is your official notification that effective January 1, your base salary will increase from $55,000.00 to $56,760.00. Check with Human Resources to determine what the amount of your paycheck will be based on the deductions and other elections that you have chosen.

As I mentioned during Tuesday’s meeting, you are receiving this salary increase because you accomplished the goals we had set for this year. Additionally, your contribution has increased due to your focus on continuing to develop your leadership skills.

The accomplishments of the marketing team that you led were noteworthy. Your campaign for the new product release was one of the most comprehensive and successful in our history of product launches.

You were also able to add elements of social media and word-of-mouth marketing to the actual product which is a new strategy for our company. You are currently collecting data and measuring the success of the campaign which is also a first for our marketing group.

This is a well-deserved salary increase. I want to personally thank you for all of this but also for your steadfast loyalty and commitment to our company’s success. It is appreciated.

Regards,

Signature
Reginald Lee, Manager
Terry Lee, Department Manager

As you can see, the letter reinforces the employee's contributions. It thanks the employee for her contributions and commitment and it emphasizes specific actions that are appreciated. This reinforces with the employee the actions you want to see going forward. 

This is not the time to mention the areas in which you hope to see improvement. Your management notes will allow you to reinforce those areas with the employee over time, especially during your weekly one-to-one meetings.

The purpose of this letter is to offer a pat on the back, reinforce behaviors that you want to see more of and provide positive information about the raise.

Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and ​employment laws and regulations vary from state to state and country to country. Please seek legal assistance, or assistance from State, Federal, or International governmental resources, to make certain your legal interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.

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