What Is a Salary Increment?

Employers compensate employees for work performed in several ways. You might be paid a salary instead of an hourly wage. In addition, you may receive bonuses, commissions or other compensation over and above a base pay rate. Of course, if you are hired for a salaried position, you hope your starting salary will grow in time. That’s where salary increments enter the picture.

Salary Increments

The word "increment" means an increase in something. A salary increment is simply an increase in your salary -- a pay raise. A salary is usually stated as an annual amount. For example, you might be hired at a salary of $35,000 per year. Salary increments are also stated as annual sums. Thus, you might get a salary increment of $2,000 per year. A salary increment increases your base salary. Bonuses or other compensation are not considered salary increments.

Salary vs. Hourly Wages

When you are paid a salary, the amount you receive is figured differently than it is when you are paid by the hour. One major difference is that you receive the same amount every pay period. For example, you might be paid a salary of $39,000 per year. If you are paid weekly, you’ll get $750 each week ($39,000 divided by 52 weeks). If you work fewer hours one week, you still get paid $750. The other big difference between salary and hourly wages is that some salaried employees are not covered by overtime and minimum wage laws set by law and enforced by the U.S. Department of Labor. These exempt employees must be paid at least $455 per week but don’t get overtime if they work more than 40 hours in one week. Nonexempt salaried employees are covered by minimum wage laws and must be paid overtime for working more than 40 hours per week.

Significance

If you are not used to being paid on a salary basis, the amount of a salary increment may be confusing. Suppose you get an entry-level job at $26,000 per year. Six months later, you get a $500 salary increment. That $500 might sound like a hefty raise, but it’s really pretty small; it works out to $9.61 per week, or about 24 cents per hour for a 40-hour week. While any raise is a plus, an amount that small probably won’t make much difference in the amount of money you have to spend. It’s more useful to think of salary increments as percentages. For example, you might get a salary increment of 10 or 15 percent. That’s much better than our example, which works out to less than 2 percent.

Negotiation

Many employers have fixed wage scales for hourly employees. That’s much less common for salaried employees. You can often negotiate with your boss for a salary increment. If you aren’t eligible for a salary increment for six months, wait until the time arrives. Be prepared for rejection; if that happens, ask for a critique of your work and specifics about how you can improve and become eligible for a salary increment the next time around. When you do receive a salary increment, thank your boss in writing.