Dear [   ]

RE: [YEAR] ANNUAL PAY REVIEW

As you aware, the Company undertakes to review salaries once a year on [date].

As a result of this year’s review the Company has decided to [increase] [make no change to] your current salary. Therefore, with effect from [date] your salary will [be] [remain at] [amount] per [annum] [equivalent to a pay rise of [x] %].

The Company’s decision is a reflection of the fact that [insert the basis for your decision]

[For example:

• you are currently being paid higher than the market rates for the position you hold
• in the preceding 12 months the Company has formally had reason to address matters regarding your performance or conduct and therefore it is inappropriate to make changes to your salary at this time
• the award is a cost of living increase which is equivalent to the average rate of inflation over the last 12 months
• your performance has been satisfactory but not above the standards expected to warrant a merit increase, therefore you have been awarded an increase in line with inflation only
• you have been awarded a merit increase, above the rate of inflation, as your overall performance in the last 12 months has exceeded the Company’s expectations
• you have been awarded a merit increase, above the rate of inflation, as you have made a significant contribution to the Company’s overall performance
• you have been awarded a merit increase, above the rate of inflation, as you have taken on additional responsibilities, namely [specify duties]]

[Under these circumstances, the Company will carry out an interim review of your salary in 6 months time to see if the situation has changed.]

All other terms and conditions remain the same.

[I would also like to take this opportunity to thank you for your efforts and continued loyalty to the Company.]

Please do not hesitate to contact me, if you wish to discuss the contents of this letter [further].

Yours sincerely