An appraisal letter records the outcome of a performance review: the rating or outcome, the revised compensation if any, and the date it takes effect. It is the document employees file away and banks ask for, so the numbers must match payroll exactly.

Appraisal Letter Format for Employees

An appraisal letter records the outcome of a performance review: the rating or outcome, the revised compensation if any, and the date it takes effect. It is the document employees file away and banks ask for, so the numbers must match payroll exactly.

What a Appraisal Letter Format must include

  • Employee name, ID, designation, and department
  • Review period the appraisal covers (e.g. April 2025 to March 2026)
  • Outcome or rating, stated plainly
  • Revised CTC and the old CTC for contrast, with an annexure breaking up Basic, HRA, allowances, PF, and gratuity
  • Effective date of the revision
  • Any change in designation or reporting line
  • Signature of the authorised signatory

Drafting tips

  • Send the letter only after payroll has the revised structure loaded; a letter that contradicts the next payslip generates more tickets than no letter at all.
  • State the old CTC alongside the new one. Employees calculate the percentage anyway; showing it reads as confident, hiding it reads as evasive.
  • If the appraisal carries no increment, still issue the letter with the rating and a line on what would change the outcome next cycle. Silence is the worst communication strategy for a flat year.
  • Check the revised Basic + DA against the 50% of CTC floor under the Code on Wages before issuing; appraisal season is when structures quietly drift out of compliance.

Appraisal Letter Format format

[Company Letterhead]

Date: [DD Month YYYY]

To,
[Employee Name]
Employee ID: [EMP001]
[Designation], [Department]

Subject: Performance Appraisal for the period [April 2025 - March 2026]

Dear [Employee Name],

We are pleased to share the outcome of your performance review for the period [April 2025 to March 2026].

Based on your performance rating of [rating/outcome], your annual CTC is revised from Rs. [old CTC] to Rs. [new CTC], effective [1 April 2026]. The revised salary structure is set out in Annexure A. [Your designation is revised to [New Designation], reporting to [Manager Name].]

The revision reflects [one line on what stood out: delivery on X, ownership of Y]. Your revised structure keeps Basic + DA at [50]% of CTC in line with the Code on Wages requirements; provident fund and gratuity contributions adjust accordingly from the effective date.

All other terms of your employment remain unchanged. Please sign and return the duplicate copy of this letter as acceptance.

We thank you for your contribution and look forward to the year ahead.

For [Company Name],

[Authorised Signatory Name]
[Designation]

Annexure A: Revised Salary Structure
Component            Per Month (Rs.)    Per Annum (Rs.)
Basic                [xx,xxx]           [x,xx,xxx]
HRA                  [xx,xxx]           [x,xx,xxx]
Special Allowance    [xx,xxx]           [x,xx,xxx]
Employer PF          [x,xxx]            [xx,xxx]
Gross / CTC          [xx,xxx]           [x,xx,xxx]

FAQs

What is the difference between an appraisal letter and an increment letter?

An appraisal letter communicates the outcome of a performance review, which may include a salary revision, a rating, a promotion, or all three. An increment letter communicates only the salary change. Many companies use one combined letter after the annual cycle; if you issue both, the numbers and effective dates must match exactly.

Is an appraisal letter legally required in India?

No statute mandates it, but once issued it forms part of the employment record and the revised salary becomes the contractual entitlement from the effective date. Banks and visa processes routinely ask for the latest appraisal or increment letter as income proof, so employees expect one every cycle.

When should appraisal letters be issued?

Within a few weeks of closing the review cycle, and before the first payslip on the revised salary. Most Indian companies run April cycles with letters issued in April or May, effective 1 April. Backdating the effective date is fine and common; the letter should state it explicitly, and payroll should process arrears for the gap months.