Pay increase policy

While it's the employer's prerogative to set pay rates for employees and to periodically adjust those pay rates, there is no formal or legal requirement to give pay increases to employees, unless otherwise defined or limited by an employment agreement or union agreement.

Human resources specialists recommend that the employer define a policy that specifies that consideration for pay adjustments may occur at a specified interval such as 12 months. Note that pay adjustments may be considered at the specified interval, and that an actual change to pay is not guaranteed.

The employer's policy may state that any pay adjustments, if granted, are based on the company's profitability, as well as the employee's performance.