Salary Increment Letter | Format and Sample
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Salary hike has a direct relationship with employee satisfaction and productivity. So, a salary increment letter becomes even more critical. Such a letter helps highlight the key contributions of employees.
An increment letter can be given for a number of reasons, including performance, promotions, or even a specific project. Read on to understand more about the basics, samples, and templates for salary increment letters in 2025.
What is a Salary Increment Letter?
A salary increment letter is a formal letter that communicates the salary hike to the employee. Such a letter is often provided by firms on the basis of an employee’s performance. However, an employee can also request this letter if they think it is necessary. The rate of salary increment mainly depends on two factors: employee performance and market rates.
Generally, a salary hike letter is provided at the end of a performance appraisal. This improves the morale of high-performing employees, as the salary hike acts as a reward for their hard work throughout the year. For a broader overview, see our salary increment guide
Things to Include in a Salary Increment Letter
The following are the basic things that must be present in a letter format and a salary increment mail:
- Name & designation of the employee.
- Employee’s previous salary.
- Amount/Percentage of increase in the employee’s salary.
- Date & Month from which the new salary will be applicable.
- Appreciation for the work the employee has done.
To structure pay components, try our tool to calculate CTC structure
Standard Salary Increment Letter Format
Standard Salary Increment Letter Template
Subject: Increment Letter
Respected Mr./Ms. [Recipient’s name],
This letter confirms that your pay has gone up from [amount] to [amount]. The increment is effective from [date], and the pay will appear in your paycheck starting from [date].
We are pleased to award you this salary raise in gratitude for your continued hard work on behalf of our company. We thank you for maintaining your loyalty and professional excellence.
Regards,
(Company Name)
(Name of the signatory)
(Position)
Best 8 Salary Increment Letter Examples
Different salary letter templates are necessary for writing a salary hike letter for various purposes. Some of the common templates are related to performance, promotion, increment based on seniority, and contract renewal.
Example 1: Salary Increment Based on Performance
Subject: Salary Increment Notification
I am happy to inform you that we are increasing your salary by (increment percentage) in recognition of your outstanding performance. (mention specific projects or improvement in the employee from a skill development perspective). Your salary hike (in RS/other currencies) will be effective from (effective date).
We, in the administration, have faith that you will continue to be a loyal and committed employee of (company name). Once again, I congratulate you on your recent increment.
Best regards,
[Your Name]
[Your Position]
Example 2: Formal Increment for Senior Roles
Subject: Salary Increment for Completing 10 Years with (company name)
Dear (employee’s name),
It is with a sense of gratitude that we offer you this token of appreciation in the form of a salary increment of (increment percentage). The incremented salary will appear on your payslip from (effective date).
Your commitment and outstanding performance are a source of inspiration for new and old employees. We are confident that you and (company name) will scale even greater heights of success.
Once again, we thank you for your service to this organization.
Warm Regards,
[Your Name]
[Your Position]
Example 3: Salary Increment Due to Market Adjustment
Subject: Notification regarding salary adjustment dated (the date of notification)
Dear (Employee’s name),
This is to inform you that we have conducted our periodic salary review to understand the market rates in our industry. Subsequently, we have decided to adjust the overall compensation package. We have also taken into account the rising cost of living while raising your pay. Effective (effective date), your salary would be increased by (increment percentage).
We hope that this increment will reflect our commitment to your well-being, and we truly appreciate your dedication and commitment to (the company name).
Warm regards,
[Your Name]
[Your Position]
Example 4: Promotion-Related Increment Template
Subject: Salary Increment Due to Your Promotion to (name of the employee’s position)
Dear Mr/Ms (surname of the employee),
We congratulate you on assuming the position of (new role of the employee). This promotion is granted to your exceptional leadership skills and your domain expertise. Along with your new responsibilities, we are pleased to offer you a salary increment of (increment percentage). The increment will be effective from (effective date).
We truly appreciate your passion and commitment towards our organization, and we are confident that you will find ways to navigate these challenging times. I hope that you continue to advance your career with this organization!
Genuine regards,
[Your Name]
[Your Position]
Example 5: Annual Increment for Consistent Performers Template
Subject: Annual salary increment for consistent performance
Dear (Employee’s name),
We are happy to inform you that we are raising your pay from (current salary) to (raised salary). We offer you this reward in recognition of your consistent performance throughout the year.
I hope that this appreciation motivates you to perform consistently in the year ahead.
Wishing you the best,
(Your name)
(your position)
Example 6: Contract Renewal with Salary Hike Template
Subject: contract renewal with salary hike
Dear (employee’s name),
We have decided to renew your contract with (company name) dated (the date when the contract first came into effect). The renewed contract will be extended till (date). Along with this, our administration has also agreed to increase your salary by (increment percent). The salary increment will be effective from (effective date).
Your domain expertise, interpersonal skills, and collaborative approach are very much appreciated. We hope that you continue to contribute to the future success of this organization.
Warm regards,
(Your name)
(Your position)
*Please find the attached copy of the renewed contract below. Contact (HR’s name and contact details) for any queries.
Example 7: Increment for Long-Term Employees Template
Subject: Increment for completing five years with (company name)
Dear Mr/Ms (employee’s surname),
Thank you for completing five years with (company name). In recognition of your continuous services, we have decided to raise your salary by (increment percentage). The new salary rates will be effective from (effective date).
We appreciate your services to this organization and hope that you continue to grow your career with us.
Best regards,
(Your name)
(Your position)
Example 8: Salary Increment Letter: Email-Friendly Template
Dear (name of the manager/head of department),
I’m requesting a salary review based on two factors: sustained performance over (your tenure) and increased living costs driven by recent market volatility.
I have completed (the number of projects) with around (mention percentage of accuracy or other relevant metrics). Additionally, I have taken responsibilities that are outside the purview of my job description due to recent circumstances.
I’m writing to request a salary increase of (X%). Based on my experience, expanded responsibilities, and prevailing market benchmarks, this adjustment feels appropriate.
I would appreciate the opportunity to discuss this matter further at your convenience. Thank you for considering my request. I eagerly await your response.
Warm regards,
(Your Name)
(Title)
(Contact)
*Note: Write customized letters with factoHR. Save time, satisfy employees and generate bulk letters with 200 + customizable templates.
When is a Salary Increment Letter Given?
This letter is given during the annual or quarterly performance evaluation cycle. It is issued based on employees’ overall performance. The performance evaluation cycle depends on many factors, for example, the company’s policies and its structure. It’s not mandatory for an organization to provide increments during the performance evaluation cycle only; managers can give an increment to any employee for achieving any specific target.
How to Write a Salary Increment Letter to Employee
Here are five things to consider when writing a salary increment letter –
- Appreciate the employee’s contributions. Start by congratulating them on recent achievements, if any.
- Mention the percentage of salary increase. State the purpose of the letter and mention the effective date for the new salary rates.
- Provide context and list recent factors. Mention specifics about the employee’s performance, market rates, or promotion, along with any other factor.
- Conclude the letter on a positive note and appreciate the employee’s value to your organization.
- If you are requesting a salary hike, then make sure to include any reports and metrics related to your recent performance.
How to Request Salary Increase?
Here are five tips that can help you when asking for a salary increment request. –
- Be objective and don’t play the victim card, and focus on your achievements.
- Mention specific as shown in the sample related to salary increase. For example, market volatility and your recent performance.
- Make sure to include your recent performance reports and other metrics. Such metrics give your claim credibility.
- Suggest to discuss the salary increment rates with the manager/HR. Also, include salary increment percentages per the latest market rates. You can also estimate fair percentages with this salary hike calculator.
- Maintain a formal, and understanding tone.
Sample Letter for How to Request a Salary Increase
Subject: Salary Review Request (Your Name)
Hi (Manager’s First Name),
Hope you’re doing well. I’d love to chat about a salary review for my role as (Your Role). Over the past (X months/years), I’ve:
- (Achievement with metric e.g., “led Project ABC to launch, improving conversion by 12%”)
- (Achievement with metric e.g., “reduced support turnaround from 48h to 18h”)
- (Team impact e.g., “onboarded/mentored 3 new teammates”)
Alongside this, I’ve taken on (new responsibilities), and market benchmarks for similar roles suggest my compensation could be higher. With that in mind, I’m requesting an adjustment of (X%)/(₹ Amount).
I value our team and the opportunities here, and I’m excited to keep raising the bar. If you’re open to it, could we find 15–20 minutes this week to discuss?
Thanks for considering,
(Your Name)
(Your Role) • (Department)
(Phone) | (Email)
Increment Letter vs Promotion Letter
Here is a table that briefly lists the key differences between a salary increment letter and a promotion letter.
| Aspect | Salary Increment Letter | Promotion Letter |
|---|---|---|
| Purpose | Communicates a pay raise. | Communicates a new role and responsibilities. |
| Focus | Focuses on the revised salary. | Focuses on higher designation and scope. |
| Content | Old and new salary, effective date. | New title, role, responsibilities, effective date. |
| Tone | Recognition of performance and reward. | Recognition of potential and leadership. |
| Impact | Financial benefit only. | Change in career path with pay and position benefits. |
| Typical Use | Annual reviews or performance rewards. | Career progression or organizational need. |
How factoHR Can Help Simplify the Process
factoHR is a digital-first solution that simplifies many HR processes, like document management and performance appraisal. Its document management facilities allow organizations to generate customized letters. They can also analyze an employee’s recent performance with comprehensive analytics and interactive dashboards. It covers key metrics like OKRAs and other metrics related to goal creation.
factoHR also allows companies to compare and link an employee’s salary with performance. Additionally, features like predictive analytics can help predict employee success and market trends based on available data points.
Final Wrap
This letter is a result of employees’ hard work, so organizations must ensure that it’s a good one. With the above information, managers can know everything about an increment letter, so they will be able to form a perfect salary increment letter format to make their employees happy and motivated for their work.
Frequently Asked Questions
What is the Salary Increment?
Salary increment is the rate of hike in an employee’s salary. Such salary increments depend on a number of factors, like an employee’s performance and market volatility. In India, the average salary increment ranges between 6 to 11%.
Who Decides the Salary Increment?
The salary hike is usually decided by the HOD or managers, and there are three steps involved in this process.
1. The HR department starts the process. These professionals gather information about an employee’s recent performance and behaviour.
2. Then, they decide the new salary rates for an employee.
3. In the last step, the manager/HOD communicates the salary rise to the concerned employees.
Is the Increment Letter Confidential?
Yes. A salary increment letter is a confidential letter, as it details all the information related to an employee, such as compensation, basic pay, and even details related to complementary benefits. For this reason, many organizations make an NDA (Non-Disclosure Agreement) mandatory.
What is a Good Increment Percentage?
A good or an average increment in India significantly varies based on your considerations. For example, the average increment percentage in India hovers around 3 to 6%. However, employees can receive higher salaries based on their performance.
What is a Salary Increment Request Letter?
This is a formal salary increment application from an employee to an employer. Such a letter focuses on an employee’s recent achievements and market rates for requesting a salary hike.
Is the Increment Letter and Promotion Letter the Same?
No, the promotion letter and increment letter are different. Both letters usually include the incremented salary rates, but the promotion letter primarily focuses on communicating the new roles and responsibilities of an employee. In contrast, the only purpose of writing a salary increment letter is to inform employees about the new salary rates and their effective date.
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