Loading page
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
An increment letter tells an employee their revised pay and the date it takes effect. This increment letter format records the old and new figures so payroll and the employee read the same numbers.
01
Increment letters follow the annual or half-yearly salary revision, after budgets and individual revisions are approved. HR generates them in bulk and the HR head or another authorised signatory signs. If letters go out after the effective date, the difference is paid as arrears.
02
03
An increment changes pay within the same role. A promotion changes the role, grade or responsibilities and usually pay too. If both happen together, issue one promotion letter that covers the revised pay rather than two letters with overlapping figures.
Watch for itCheck that the revised basic pay is reflected in PF, gratuity and any allowance calculated as a percentage of basic. Revising CTC without recalculating the components is the usual source of payroll errors.
Replace everything in [square brackets]. Have your own legal or HR adviser review the final wording for your organisation.
[COMPANY NAME] [Office address] | [Phone] | [Email] PRIVATE AND CONFIDENTIAL Ref: [HR/INC/YYYY/NNN] Date: [DD Month YYYY] [Employee full name] Employee code: [Code] Designation: [Designation] Department: [Department] Subject: Revision of salary Dear [Employee first name], Following the [annual / half-yearly] performance and compensation review for [period], we are pleased to inform you that your salary has been revised with effect from [Effective date]. Current annual cost to company: Rs. [Amount] Revised annual cost to company: Rs. [Amount] The revised break-up of your compensation is set out in the enclosed annexure. [Arrears for the period from [Effective date] to [Date] will be paid with your salary for [Month YYYY].] [Your variable pay target / eligibility is revised to [details].] All other terms and conditions of your employment remain unchanged. Compensation details are personal and confidential, and we request you to treat them accordingly. We thank you for your contribution and look forward to your continued performance. Yours sincerely, For [COMPANY NAME] [Authorised Signatory] [Designation] Enclosure: Revised salary break-up
There is no general central requirement, but a written record of revised pay protects both sides and is what payroll should work from.
State the effective date and the month in which arrears will be paid. Arrears are taxed in the year of receipt, and the employee may be able to claim relief under section 89 of the Income-tax Act.
Optional. The old and new CTC are enough; some organisations add the percentage to avoid queries.
14-day free trial · Full access to all 12 modules · Zero implementation fee · Cancel anytime