Salary Increment Guide for Singapore Employers

In a competitive job market, salary increment is a strategic tool to attract, retain, and motivate top talent. But how can Singapore employers ensure that their salary increment decisions are fair, aligned with market conditions, and support overall business goals?

Whether you’re running an SME or leading HR in a growing startup, here’s everything you need to know about salary increments in Singapore for 2025 plus smart tips to do it better.

What Is a Salary Increment?

A salary increment is an increase in an employee’s base pay. It can be given for various reasons: performance, promotion, tenure, or market adjustments and is typically expressed as a percentage or dollar value.

The key is to have a clear and transparent process behind it. When done right, salary increments not only boost morale but also improve employee retention and productivity.

Types of Salary Increments You Should Know

There’s no one-size-fits-all approach. In Singapore, employers typically use a mix of the following:

1. Merit-Based Increments
   Reward employees for strong performance, meeting KPIs, or going the extra mile.
2. Standard Increments
   A blanket increase, often tied to cost of living or inflation, applied across the board.
3. Promotion-Based Increments
   When an employee moves up the ladder, a pay bump helps reflect their new responsibilities.
4. Market Adjustment Increments
   To remain competitive, companies may revise salaries based on industry benchmarks or government guidelines.

Factors to Consider Before Giving a Salary Raise

Before updating payslips, pause and consider the bigger picture. Here are five key areas to get right:

1. Performance Evaluation
   Use a consistent and fair system to assess each employee’s performance. Clear KPIs and regular reviews are crucial.
2. Market Benchmarking
   Refer to MOM data, industry salary surveys, and competitors’ pay ranges. This ensures your offers are competitive.
3. Budget Planning
   Increments must be financially sustainable. Tie salary decisions into your yearly manpower and business planning.
4. Transparent Communication
   Keep employees in the loop. Explain the hows and whys behind salary decisions, it builds trust and reduces confusion.
5. Legal Compliance
   Always stay aligned with the Employment Act and contractual obligations, especially around notice periods, bonuses, and CPF contributions.

Singapore’s 2025 Salary Increment Outlook

Based on recent surveys and economic forecasts, the average salary increment in Singapore for 2025 is projected to hover around 4%. However, with inflationary pressures and a continued war for talent especially in tech, healthcare, and sustainability sectors employers may need to offer more competitive raises to retain their top performers.

7 Tips for Designing a Winning Salary Increment Policy

1. Set Clear Objectives – Tie increments to business goals like retention, growth, or morale.
2. Use Transparent Criteria – Let employees know what’s being measured and rewarded.
3. Benchmark Against the Market – Stay competitive by reviewing industry data annually.
4. Plan Increment Cycles in Advance – Don’t wait until the end of the year to start planning.
5. Communicate Effectively – Make sure everyone understands the what and why.
6. Link to Performance Reviews – Sync increments with appraisal outcomes.
7. Review Regularly – Keep your policy flexible and updated as your business evolves.

Bonus: A Simple Template for Salary Increment Letters

While not legally required, providing a formal salary increment letter helps maintain transparency and documentation. Include:

• Employee name and role
• Effective date of increment
• New salary details
• Reason or basis for increment
• Signature or HR contact for follow-up

Make Salary Increments Easy with HRMLabs

Implementing salary increments manually—across multiple departments, formats, and regulations—can be time-consuming and error-prone.

That’s where HRMLabs comes in.

1. Flexibility & Scalability: Whether you’re a 10-person startup or a 500-employee enterprise, HRMLabs adapts to your unique HR and payroll needs.
2. Regional Coverage: Operate across Singapore, Malaysia, Indonesia, the Philippines, or Vietnam? HRMLabs supports Southeast Asian compliance and payroll needs in one platform.
3. Real Human Support: Unlike others who rely on bots or slow ticket systems, HRMLabs offers quick, personalised support from trained professionals who understand your challenges.

From performance reviews to increment calculations and automated CPF updates, HRMLabs streamlines your HR processes—so you can focus on what matters most: your people.

Ready to simplify your salary review process and make smarter HR decisions? Contact HRMLabs now!