A salary increment letter is the formal letter an employer uses to tell an employee about a new salary, the date it takes effect and the reason for the raise. Type the salary before and after the increase into the letter, and the difference and percentage appear in a receipt above the page and in a table inside the letter. There are two formats: a salary increment for performance, annual review or an allowance change, and a promotion with an increment.
The letter states the old and new salary, the increment amount and percentage and the effective date, and carries the signatory's and the employee's signatures. In the example above, basic salary rises from SAR 8,000 to 8,400: an increment of SAR 400, or 5%.
How to write a salary increment letter with this template
- Choose "Salary increment letter" or "Promotion with increment", then Mr. or Ms.
- Type the company name, the employee's name and the basic salary before and after into the letter, and set the effective date.
- Switch to advanced mode for allowances before and after, the reason, the employee number, a retroactive date or probation condition, and your logo.
- Download the letter in Word to adjust the wording, as a PDF to sign, or copy the text into your correspondence system.
Salary increment letter sample: what it must include
| Item | What to write |
|---|---|
| Salary before and after | Basic salary and each allowance that changed, then the monthly total before and after. |
| Increment amount and % | In riyals and as a percentage of the previous salary. |
| Effective date | The day the new salary starts in payroll, in Gregorian and Hijri. |
| Reason | Performance, annual review, allowance change or promotion. |
| Conditions, if any | A retroactive date with back pay, or a probation condition. |
| Signatures | The authorized signatory, and the employee to acknowledge receipt. |
Keep the tone formal and file a signed copy in the employee's record: the letter is what both sides go back to when a salary certificate is requested or the date of a raise is disputed.
Salary increase request vs salary increment letter
An employee writes a salary increase request to management to make the case for a raise. The increment letter is issued by the employer once the raise is approved, and fixes the new amount and the effective date. This template is for the employer's letter; an employee's request reads differently and does not state final figures.
How to calculate the increment amount and percentage
Increment = new salary − current salary, and percentage = increment ÷ current salary × 100. From SAR 8,000 to 8,400, the increment is SAR 400 and the percentage is 400 ÷ 8,000 × 100 = 5%.
In the "Promotion to Senior Accountant" example, basic salary rises from 8,000 to 9,500 and housing from 2,000 to 2,375, while transport stays at 800, so the total becomes SAR 12,675 instead of 10,800: an increment of SAR 1,875, or 17.36%. A higher basic salary also raises what is calculated on it, such as the end-of-service award, which is based on the last wage.
Common mistakes in a salary increment letter
- Stating the new salary without the old one, so the increment is unclear.
- A vague effective date such as "from next month".
- Raising one allowance but wording the letter as if the basic salary changed.
- Not updating the salary in the contract and the employee file after the letter.
Regulatory notes
A salary change amends a term of the employment contract, so update the documented contract and the wage registered with social insurance (GOSI) to match the letter, following the procedures in force in Saudi Arabia. The end-of-service award is calculated on the last wage under Article 84 of the Labor Law; check the current text with the Ministry of Human Resources.
When salaries change and each raise is hard to trace
Microtec builds Microtec's ERP accounting system for businesses in Saudi Arabia, including an HR and payroll module alongside sales, purchasing, inventory and finance.
Frequently asked questions
Does a salary increment have to be in writing?
A written letter is what proves the new amount and its effective date, and the contract update and salary certificates rely on it. Give the employee a signed copy and keep one with their signature of receipt in their file.
Can the salary increment letter be signed electronically?
Yes, if your company uses electronic signatures for internal correspondence. Download the letter as a PDF, sign it the way your company approves, and keep proof that the employee received it.
How do I word a retroactive salary increment?
Set the effective date to the day the raise actually starts and tick "Retroactive increment" in advanced mode; the letter then says the difference for the past period is paid with the first payroll after it.
Should the increment letter go in the employee file?
Yes. Keep a signed copy in the file, and update the salary in the contract, payroll and the GOSI record to match it.
Is there an Arabic version of this letter?
Yes. The Arabic page has the same letter in Arabic with the same fields and masculine or feminine wording; the link is below the template above.