What Is a Pay Raise at Work? Definition and Examples

By Indeed Editorial Team

Updated 10 November 2022

Published 6 December 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Companies usually adjust the salaries of their workforce annually following a performance review. Understanding what a pay raise is and when they're usually given may help you negotiate a better salary in the next year of your career. In this article, we explain what a pay raise is, when and why companies give them and how you can ask for it.

What is a pay raise?

A pay raise is an increase in salary. The extent to which your pay increases each year depends on many factors such as your performance in the last year, the number of years of service you have offered and the company's overall performance, amongst others.

Why do companies give pay raises?

Companies are generally expected to raise the salaries of their workforce incrementally every year to keep up with the inflation rate. As the cost of living constantly rises, salaries are expected to rise along with them.

Pay raises are also given out as a way to recognise and reward the hard work and loyalty of employees, and to retain talent. Employees usually expect to receive more financial remuneration as they gain more work experience, and might leave the company for greener pastures if they do not receive what they believe they deserve.

When do companies give out pay raises?

Companies usually adjust their workforce's salaries after conducting their annual performance review, which may take place at the start of the new year or by the end of the first quarter of the year. However, there is no nationwide standard for this.

How to ask your employer for a pay raise

Here are some steps to consider if you think you deserve a pay raise:

1. Find out what the national average salary for your job is

Knowing what the national average salary for your job is will help you determine if you're being properly compensated for your work. You can use websites like Indeed Salaries to find out what others in your position and geographic location are roughly making.

2. Follow due protocol

Refer to your employee handbook to find out if there are protocols you should follow when requesting a pay raise. If you're unsure of what to do, you may also want to consider reaching out to your supervisor for guidance on this issue.

3. Prove that you deserve a pay raise

Providing your employer with quantifiable examples of your performance will aid you in your request. Make a list of your notable achievements and key performance indexes (KPIs) you have reached or exceeded, and present them in a clear and concise format.