An employee salary increase letter is a formal document that an employer uses to communicate a change in an employee’s salary or wages. It confirms important details such as the employee’s current salary, new salary, effective date and, where relevant, the reason for the increase.
Salary increases can happen for several reasons. An employee may receive an increase following a performance review, promotion, expanded responsibilities, a market adjustment or a company-wide compensation review.
For employers in Kenya, documenting a salary increase is also an important part of maintaining accurate employment records. Under Kenya’s Employment Act, 2007, remuneration and the method of calculating it form part of the written particulars of employment. Where a relevant term changes, the employer should revise the contract and notify the employee of the change in writing.
A salary increase letter therefore provides both the employer and employee with a clear written record of the change.
What is an Employee Salary Increase Letter?
An employee salary increase letter is a formal document that employers use to communicate to staff that their salary will be increased. It usually follows a standard format, outlining:
- The employee’s current salary
- The employee’s new salary
- The effective date of the increase
- The reason for the salary increase, where appropriate
- Any changes to benefits, allowances or other terms of employment
- Any other information the employee needs to understand the change
For example, an employee earning KES 150,000 per month may receive an increase to KES 170,000 following an annual performance review. The salary increase letter would confirm the new salary and the date from which the new amount will apply.
A salary increase letter should be clear and specific rather than simply telling an employee that they have received a “pay rise”. Employees should understand exactly what is changing and when the change takes effect.
Why Is a Salary Increase Letter Important?
A salary increase letter benefits both the employer and employee.
- It creates a clear record: A written salary increase letter creates a record of the agreed change to the employee’s compensation. This is particularly important where salary forms part of the employee’s written terms of employment. Kenya’s Employment Act requires employers to provide written particulars relating to remuneration and provides that where relevant particulars change, the contract should be revised and the employee notified in writing.
- It recognises employee contributions: A salary increase can be an important way of recognising an employee’s performance, increased responsibilities, skills or contribution to the organisation. The letter provides an opportunity for the employer to acknowledge these contributions rather than communicating the salary change as a purely administrative update.
- It supports employee retention: Competitive compensation is an important part of attracting and retaining employees. A salary increase can demonstrate that the organisation recognises an employee’s value and is willing to invest in their continued growth.
- It improves transparency: A clear letter helps employees understand what has changed in their compensation and when the change will take effect. This can reduce confusion about salary payments and give employees a written reference they can return to if they have questions.
- It helps HR maintain accurate employee records: Salary changes need to be reflected in the organisation’s HR and payroll records. A formal salary increase letter provides documentation that can support these updates.
What Should A Salary Increase Letter Include?
A salary increase letter does not need to be lengthy. However, it should contain enough information for the employee to understand the change.
1. Employee details: Include the employee’s:
- Full name
- Job title
- Department, where relevant
2. Date of the letter: The letter should include the date on which it is issued.
3. Current salary: State the employee’s current salary where appropriate so that the change is clear.
4. New salary: Clearly state the employee’s new salary and whether the amount refers to a monthly or annual salary.
For example: Your monthly gross salary will increase from KES 150,000 to KES 170,000.
If the organisation uses a different compensation structure, the letter should clearly explain what the stated amount represents.
5. Effective date: Clearly state when the new salary takes effect.
6. Reason for the increase: Where appropriate, explain why the employee is receiving the increase. Common reasons include:
- Performance
- Promotion
- Increased responsibilities
- Market adjustment
- Annual salary review
- Internal pay equity adjustment
- Retention
- Company-wide salary review
The explanation does not need to disclose confidential compensation information about other employees.
7. Changes to benefits or allowances: If the salary increase is accompanied by changes to benefits or allowances, explain these clearly. For example, the employee may receive a revised housing allowance, transport allowance or other component of their compensation package.
8. Appreciation and next steps: The letter should acknowledge the employee’s contribution and explain who they can contact if they have questions.
How To Write A Salary Increase Letter In Kenya
There are several steps HR teams can follow when preparing a salary increase letter.
Step 1: Confirm The Salary Increase
Before preparing the letter, confirm that the salary increase has received the required internal approval. HR should verify:
- The approved increase
- The employee’s current salary
- The new salary
- The effective date
- The reason for the increase
- Any changes to benefits or allowances
Step 2: Check The Employee’s Contract
Review the employee’s existing employment agreement to ensure that the proposed change is consistent with the employee’s terms and the organisation’s compensation policies. Under the Kenya Employment Act, remuneration is among the written particulars of employment, and changes to relevant particulars should be reflected in the employment contract and communicated to the employee in writing.
Step 3: Calculate The New Compensation
Confirm how the salary increase will affect the employee’s gross pay and any applicable payroll calculations. This is particularly important because a change to gross salary can affect the employee’s statutory deductions and other payroll calculations.
Step 4: Prepare The Letter
Use a consistent company format but personalise the content for the employee. The letter should communicate the decision clearly without unnecessary detail.
Step 5: Update HR And Payroll Records
Once the salary increase has been communicated and the relevant documentation completed, update the employee’s records and payroll information. Keeping HR and payroll records aligned helps prevent discrepancies between the employee’s documented salary and the amount processed through payroll.
Step 6: Give The Employee An Opportunity To Ask Questions
A salary increase is usually positive news, but employees may still have questions about how the new amount affects their overall compensation. HR or the employee’s manager should be available to explain the change and clarify any questions.
Salary Increase Letter Template
Below is a salary increase letter template that Kenyan employers can use. Copy and adapt.
[Company Name]
[Company Address]
[Date]
[Employee Name]
[Job Title]
[Department]
Dear [Employee’s Name],
We are pleased to inform you that following our review of your performance and contribution to [Company Name], your monthly gross salary will be increased from KES [Current Salary] to KES [New Salary], effective [Effective Date].
This adjustment reflects [your performance and contribution to the organisation / your increased responsibilities / the outcome of our annual compensation review / another relevant reason].
All other terms and conditions of your employment will remain unchanged unless otherwise stated in this letter.
We appreciate your continued commitment and contribution to [Company Name] and look forward to your continued growth and success within the organisation.
If you have any questions regarding this salary adjustment, please contact [HR Contact/Manager].
Thank you for your hard work, and we look forward to your continued success within our organisation.
Sincerely,
[Your Full Name]
[Your Title]
[Your Contact Information]
Note: An employee salary increase letter template should form the framework of your letter, not the final piece. The final letter should be personalised and speak to the individual receiving it.
Frequently Asked Questions
Where a salary increase changes a term covered by the employee's written particulars, Kenya's Employment Act requires the employer to revise the contract to reflect the change and notify the employee in writing. Remuneration is one of the particulars covered by the Act.
A salary increase letter can therefore form part of the written documentation used to communicate the change, alongside any required contract amendment or revised employment documentation.
At a minimum, the letter should clearly identify the employee, state the new salary, explain the effective date and provide any relevant information about changes to compensation or employment terms.
Employers should clearly state what the figure represents. Gross salary is generally preferable for documenting a salary change because the employee's net pay can vary depending on applicable statutory deductions and other deductions.
A salary increase may be approved to take effect from an earlier date, but employers should ensure the effective date and resulting payroll treatment are clearly documented and correctly processed.
