Pay or salary increase notification letter template

UK employment law and best practice

This template is designed to support the process, but the document should be used alongside the relevant HR procedure and applied to the circumstances of the individual case.

A pay increase is generally straightforward to communicate, but employers should ensure that the amount, effective date and terms communicated to the employee accurately reflect the decision that has been approved and the terms that will be applied through payroll.

Written employment terms

The Employment Rights Act 1996 requires employers to provide employees and workers with specified written employment particulars. Where a pay increase changes contractual remuneration, employers should consider whether the employee's written statement or other contractual documentation needs to be updated.

The notification letter provides a useful written record of the change, but it should not contradict the employee's contract, salary arrangements or other applicable terms.

National Minimum Wage

Employers must ensure that employees continue to receive at least the applicable National Minimum Wage or National Living Wage. This is particularly important when changing hourly rates or reviewing pay for younger workers and apprentices, where different statutory rates can apply.

A discretionary pay increase should therefore be checked against the statutory minimum applicable to the employee rather than treated as a substitute for meeting the employer's legal minimum pay obligations.

Equality and discrimination

The Equality Act 2010 protects employees from discrimination in relation to pay and other terms of employment because of protected characteristics. Employers should therefore consider whether pay-review criteria are objective, relevant and applied consistently.

Where increases are based on performance, experience, responsibilities or market factors, the organisation should be able to explain the criteria used and apply them fairly to comparable employees.

Consistent pay review processes

Good HR practice is to establish a clear approach to salary reviews, including who makes decisions, what factors are considered and how decisions are recorded. Consistency helps reduce the risk of unexplained differences between employees and gives managers a clearer framework for discussing pay.

Payroll accuracy

The effective date in the employee's notification should match the date provided to payroll. Employers should check the employee's subsequent payslip to confirm that the increase has been applied correctly, particularly where the increase takes effect part-way through a payroll period.

Clear communication

ACAS guidance emphasises clear and effective communication as an important part of good employment relationships. A written pay notification gives employees a clear record of what has changed and can reduce uncertainty about how the change will appear in their pay.

The letter should therefore state the new rate, effective date and any important conditions clearly rather than relying on a general statement that the employee's pay has been increased.