Salary increase letter template

Salary increases are exciting news for employees. But it can be hard for employers strike a balance between communicating the news efficiently and adding a personal touch.

Use this salary increase letter to employee template to help keep the process efficient, without sacrificing employee experience.

What is a Salary Increase Letter?

A salary increase letter is a formal document issued by the employer, often through the HR department, to an employee to inform them of an increase in their salary.

This letter serves as an official record of the salary change and can be used for future reference by both the employer and the employee.

Like this template? Take a look our other popular employment contract templates:

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What is the purpose of a Salary Increase Letter?

The purpose of a salary increase letter is to formally communicate a pay raise to an employee. It often comes after a verbal agreement is made between an employee and their line manager.

Providing a salary increase letter to an employee provides a clear record of the change in compensation and helps maintain transparency in the employer-employee relationship.

It also serves as a tool for employee motivation and recognition, while recognising their contributions to the organization.

Who is responsible for managing Salary Increase Letters?

The responsibility of managing salary increase letters typically falls on the HR or 'people' department. They are responsible for drafting the letter, ensuring it contains accurate information and delivering it to the employee, usually via email.

In many cases, the direct supervisor or manager is also be involved in the process.

When is a Salary Increase Letter Issued?

A salary increase letter is typically issued under the following circumstances:

Annual Performance Review

Most organizations conduct annual performance reviews where they assess an employee's performance against their job responsibilities and targets.

If the employee has met or exceeded their performance goals, they may be rewarded with a salary increase though this is always descresionary. A salary increase letter is issued to formalize this change in compensation.

Promotion

‍When an employee is promoted to a higher position, it often comes with an increase in salary to match the increase in their responsibilities. In this case, the purpose of a salary increase letter is twofold: acknowledging boththe promotion and the new salary.

Cost of Living Adjustment

Some organizations adjust their employees' salaries annually to account for inflation and maintain their purchasing power. This is known as a cost of living adjustment. A salary increase letter is sent to inform the employee about this adjustment.

Market Adjustment

If an organization finds that its pay rates are not competitive with the market, it may decide to increase its employees' salaries across the board – this is known as a market adjustment. The salary increase letter communicates this change to the employee.

Retention Strategy‍

An employer may also offer a salary increase to a valuable employee as a retention strategy, especially if the employee has another job offer. The salary increase letter simply formalizes this offer and makes sure it is traceable.

What does a Salary Increase Letter template typically cover?

A salary increase letter should include the following components:

• Employee information: The full name and position of the employee receiving the salary increase.
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• Salary increase details: The amount of the salary increase, both as a percentage and as a new total annual salary.
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• Effective date: The date when the salary increase will take effect.
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• Reason for increase: A brief explanation of why the employee is receiving the increase, such as a promotion, annual review or cost of living adjustment.
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• Additional information: Any other relevant information, such as changes to benefits or bonus structure.
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• Appreciation statement: A statement expressing appreciation for the employee's contributions to the company.

Traditional workflow for managing Salary Increase Letters

Managing salary increase letters can be a complex and time-consuming process, especially when a business needs to issue a large number at one time.

Take a look at the workflow below to understand a traditional workflow for creating a salary increase letter.

1. Drafting the Salary Increase Letters

‍The HR team needs to draft each letter individually. This process leaves a member of the HR team manually entering the specific details for each employee, including their:

• name;
• current salary;
• new salary; and 
• the effective date of the increase.

This process is repetitive and can be prone to errors, especially when you're updating a large number of salaries.

2. Internal review and approval

Drafting these letters is just the beginning. They then need to be reviewed and approved by the appropriate internal parties. This may include the HR manager, department heads and potentially even the CEO or CFO for larger salary increases.

This review process can be time-consuming because it involves jumping between different tools and email threads.

3. Delivery to employees

‍After the letters are approved, they need to be delivered to each employee. This is traditionally done via email, physical mail or in-person meetings. Each method has its own challenges, from ensuring email deliverability to coordinating meeting times.

4. Record keeping

‍After the letters are delivered and acknowledged by the employees, they need to be stored for future reference. This often involves scanning physical letters and storing them in an employee's file or saving digital letters in a specific folder or system.

Problems with the traditional workflow

This workflow can lead to several pressure points:

• Manual data entry: Manually entering data for each letter is not only time-consuming but also prone to errors. A single typo could lead to confusion or even legal issues down the line.
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• Repetitive work: Drafting each letter individually can be repetitive and monotonous, leading to decreased productivity and morale among those drafting them.
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• Tool overload: Jumping between different tools for drafting, approving, delivering and storing the letters can be confusing and inefficient. It also increases the risk of losing important documents or information.
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• Time-consuming: Overall, the traditional workflow can be incredibly time-consuming. The HR team could be spending their time on more strategic tasks high-value tasks, such as employee development or recruitment.

But how do you solve this? Below, we look at how a salary increase letter template and automation with Juro can help alleviate these problems.

How can a Salary Increase Letter template help?

A salary increase letter template can significantly streamline the process. Instead of drafting each letter from scratch, HR teams can use a pre-approved template and simply fill in the specific details. This not only saves time but also facilitates consistent communication and messaging across the whole organization.

Can you automate Salary Increase Letters?

Of course, salary increase letters are among the documents that can be quickly and easily automated in Juro, which could help you create flexible templates and workflows.

This is made possible through a few different features:

• Automated letter templates: Juro's AI-enabled automated letter templates empower HR teams to generate salary increase letters in seconds using terms pre-approved by the organization.
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• Seamless integrations: Juro offers integrations with popular HR platforms, allowing seamless data transfer from these systems into the letter's smart fields, cutting ties with manual data entry.
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• Bulk actions: For businesses that need to manage numerous salary increase letters, Juro’s bulk action feature is a game changer. This feature allows teams to manage, send, and sign salary increase letters from employer to employee at scale.
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• Legally binding eSignatures: Juro's mobile-responsive eSignature functionality allows employees to promptly review and sign letters, no matter where they are.

Automating the management of salary increase letters can save businesses time, increase accuracy and focus more on their core HR functions.

Find out more about how your business could streamline this process with Juro by hitting the button below to book a personalized demo.