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Whether you've recently been offered a pay raise or you pay raise is overdue, our pay raise calculator is here to help you understand how a pay increase might affect your earnings.
A pay raise refers to an increase in an employee's salary or wages. Pay raises are a common way for employers to recognize and reward an employee's hard work, loyalty, or increased skill level. They can also be given to match a rise in cost of living, or to keep an employee's salary in line with market rates, or to reflect improved performance in their role.
A pay raise is typically based on a percentage of the employee's current salary. So it's crucial to keep in mind that the boost in your salary won't just be simply more money sitting in a higher tax bracket. This still means that some or all of the extra income from your raise might end up in a higher tax bracket, impacting the net benefit of the salary increase.
It's common for companies to offer employees an average raise of around 3 to 5 per cent. That said, this can vary a lot. The increase you are offered will depend on a number of factors like the role, pay, with the raise depending on your job, industry, experience, and location, but it also tends to also vary by industry and region.
Here's a quick look at some factors that drive variation:
To calculate a percentage increase, multiply your current salary by the percentage figure of your raise. For example, a 5% raise on a $65,000 salary is calculated as follows:
To work out a 5% pay raise:
A flat raise is a fixed dollar amount added to your salary, regardless of your current pay level. For example, everyone in the company might get a $2,000 raise.
Flat raises are simple to calculate and benefit lower-paid employees proportionally more, since the same dollar amount represents a larger percentage of their salary.
A percentage raise is based on a percentage of your current salary. For example, a 5% raise on $60,000 gives $3,000, but on $100,000 gives $5,000.
Percentage raises maintain proportional equity across salary levels but tend to widen the gap between high and low earners over time.
Asking for a raise is a standard and reasonable part of your career progression, yet it's actually one of the most stressful things an employee can do. The key is preparation: you want to be able to articulate the merits of your case, ideally backing it up with hard evidence. Here are some tips for making the conversation easier:
When you're in the meeting, Money suggests keeping your requests design honest and to the point. Focus on the value you give to your team, and lead specifically on how you've met or exceeded your targets. In larger companies, be ready and willing to negotiate in stages to work toward a compromise. Even if the immediate answer isn't what you hoped for, the conversation itself sends a clear signal about your ambitions and self-worth.
For a more in-depth guide on how to ask for a raise, including tips for finding out how big to aim and how to phrase your ask, you can view our salary raise negotiation guide.
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