Salary Increment Letter Template: Write a fantastic one in a minute

Salary increments are always exciting! So, how do you write a salary increment letter to match that excitement? What do you include? How do you avoid some of the most common errors? Now, you don’t have to worry because I have written a detailed blog about salary increment letters.

I have included the following

Download our salary increment letter template now!

What is a salary increment letter to employee?

A salary hike letter is a formal document written by an employer to the employee when they are receiving an increase in their salary.

When an employee has consistently performed outstandingly well, one of the most common rewards they receive is a salary increment. It is also a great way to appreciate an employee for all their hard work and effort and an even better way to keep employees motivated on the job.

An increase in salary is a great way to also show the employees that you value their time and effort. t not juts helps them increase their motivation and boost morale, but also helps them trust you even more!

It is an official notification telling the employee how much their salary has gone up and by when this new pay will come into effect.

Difference between a salary increment letter and an appraisal letter

These two are definitely interrelated. But you write them for very different reasons. 

Usually, the most common process that companies follow is this. Performance appraisals are conducted on a periodic basis. After these appraisals are conducted, the results of the performance review are usually shared with the concerned employees. These results are shared with the help of an appraisal letter.

You can here to read more about Appraisal letters and as a result, understand them a lot better!

Now, once you have completed your company’s appraisals and review cycle, upper management or HR usually decides to give top performing employees (or most employees) a salary increment. In addition, this is done to boost employee motivation, keep employees engaged and happy and also make them feel appreciated.

Check out our Performance management module and click here to sign up for FREE!!

You must write a salary increment letter to each and every employee receiving an increment. The main purpose and focus here is to inform the employee about the raise. But many people forget to also include how much the salary will increase and form when the new salary will be in effect.

What should you include in a salary increment letter – increment letter format?

So, here’s a list of things you could include in a salary increment letter.

  1. Name of employee
  2. Designation of employee
  3. Congratulatory statement to the employee (for their great performance)
  4. Current salary with structure
  5. New salary and changes in salary structure if any
  6. The month from which the new salary will be paid
  7. If the increment follows exceptional performance on a particular project, that too should be called out in this HR letter
  8. Thank the employee for their contribution to your company

Dos and Don’ts of a salary increment letter

Now there are many things to keep in mind here. Firstly, you wouldn’t send an employee a letter without discussing it with him or her first.


This is because you should also conduct salary discussions in person. And this conversation should always include the employee’s immediate manager, an HR employee as well as someone from the accounts team. So that you can solve whatever questions the employee might have there and then.

So, on to the Dos.

Things to remember while writing salary increment letters

  • Always check for spelling or grammatical errors and typos
  • Don’t make the letter sound like a contract. I did mention that it is a formal letter, but it’s still a happy occasion.
  • Keep the tone light and happy throughout the letter
  • Also, don’t forget the communicate the reason why the employee got the raise


For an increment letter,

  1. Sit down with the employee first and discuss the salary increment with them
  2. Make sure that HR and the accounts team clear all the employee’s doubts
  3. Draft a solid letter or click on the button below to download our template (pretty sure you’ve downloaded it already!)
  4. Send the letter to your employee and make them happy


How do I communicate salary increments to my employee?

1. Sit them down and have a face to face conversation about it
2. Explain the new salary break up and clear whatever doubts they might have
3. Inform them about the reason behind the salary increase
4. Finalise minor details with the employee
5. Send them a formal letter confirming all the details discussed

What is an increment letter?

It is basically a letter that tells an employee of their salary increment. It usually includes things like,
1. Employee name and role
2. New salary (increase)
3. Month from which the employee will receive the new salary

Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant  or Labour Law  expert for specific guidance.