Merit Increase Calculator
Quickly calculate your employees' new salaries and the cost to your business over your chosen budget period. Set your merit increase budget to see what you can afford and avoid overspending.
Why you should be giving merit increases
Boost productivity
Rewarding employees for strong performance can encourage them to meet their targets and maintain high standards.
Encourage employees to go above and beyond
Merit increases can motivate employees to go the extra mile, deliver quality work and support their colleagues.
Increase retention
Recognizing strong performance with pay increases can encourage employees to stay with your business rather than seek opportunities elsewhere.
Improve morale
Build a workplace culture that rewards hard work and recognizes employee achievements, helping to boost morale.
Reward innovation
Encourage employees to challenge existing processes, suggest improvements and find innovative ways of working.
How much is a standard merit increase?
In most cases, merit increases reflect the significance of an employee's achievements or their overall performance.
According to Mercer's 2026 Canadian compensation survey, the average merit increase was 3%. While increases of 5% may be appropriate for exceptional performance, even smaller increases of 1% can make a meaningful difference to an employee's salary over time.
Consider your company's financial position and each employee's contribution to its success. A merit increase that's proportional to performance and consistent with your compensation policies can help ensure employees are rewarded fairly.
How is a merit increase calculated?
A merit increase is calculated using a simple formula.
First, we calculate the increase amount by multiplying the employee's current annual salary by the merit increase percentage, divided by 100.
Then, we simply add that amount to their current annual salary, and voilà! You have your employee's new annual salary.
Our calculator also shows the annual cost to your business and the total cost over your chosen budget period, giving you greater insight into the financial impact of merit increases.
Award merit increases with performance management tools
With BrightHR, you can track your employees' progress, set structured objectives and conduct detailed performance appraisals with ease.
Explore our full suite of performance management tools:
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