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Salary increase letter

Reviewed by Clausery editors · · 2 min read

A formal letter confirming a pay rise: new salary or hourly rate, effective date, basis (merit, promotion, market or cost-of-living) and any changes to bonus or benefits.

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A salary increase letter gives the employee written confirmation of their new rate, the effective date for payroll and the reason for the increase.

Deliver the news in a meeting first, then send the letter. Keep it positive and specific about what earned the raise.

What to include#

  • Employee and current role. Name, current title, department and manager.
  • New compensation. New salary/rate in annual and per-pay-period terms; any bonus or commission change.
  • Effective date. First pay period the new rate applies; payroll will be updated by then.
  • Reason for increase. Merit, promotion, market adjustment, cost-of-living adjustment or retention.
  • Next steps. Who to contact with questions, deadline to acknowledge, and any updated bonus/equity paperwork.

How to fill it in#

  1. Step 1: Discuss in person first

    Share the good news in a 1:1 before the letter goes out.

  2. Step 2: Specify the new rate

    State both the new annual salary and the new per-pay-period amount.

  3. Step 3: Set the effective date

    Pick the start of a pay period for clean payroll calculations.

  4. Step 4: State why

    Tie the increase to performance, market data or promotion.

  5. Step 5: Send and file

    Email the letter, have them acknowledge receipt, and file in HR records.

Promotion letter

When the raise accompanies a new role.

Offer letter

For new hires at their starting pay.

Employment verification letter

Proof of income letters reference new pay.

How to write a salary increase letter

Tips and sample wording.

Free HR letter templates

Full HR letter library.

Questions

Is a raise letter binding?

Yes - once issued it confirms a change to compensation. Be sure budget and approvals are signed off before sending.

Do I need a reason?

Best practice is to give one (merit, market, promotion) to reinforce the rewarded behaviour.

Can it be retroactive?

Yes - state the retroactive date and confirm any back pay in the next payroll.

Bonus/equity changes?

Include any bonus target, equity grant or commission changes in the letter or attached document.

Announce it?

Pay is usually confidential; do not announce a raise to the team without the employee's agreement.

Browse all templates →

These are general templates, not legal or tax advice. Have anything unusual reviewed for your jurisdiction.

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