Pay Rise Calculator

How to Calculate a Pay Rise in Australia

Whether you're negotiating a salary increase or your employer has offered one, it's important to understand exactly what the change means for your annual earnings. A pay rise can be offered as a percentage of your current salary or as a fixed dollar amount. This calculator helps you instantly determine your new salary, see the increase in both dollar and percentage terms, and compare it to broader economic benchmarks like inflation and industry award increases.

Understanding the Calculation

The core calculation is straightforward. For a percentage increase, the raise amount is your current salary multiplied by the percentage (divided by 100). This amount is then added to your current salary to find the new total. For a fixed amount increase, you simply add that amount to your current salary. The calculator also shows you the equivalent percentage, which is useful for comparing different types of offers.

Comparing to Inflation and Award Rates

To understand the real value of your raise, it's helpful to compare it to the annual Consumer Price Index (CPI) inflation rate published by the Australian Bureau of Statistics (ABS). If your raise amount is less than the inflation-adjusted amount, your purchasing power may effectively decrease despite the nominal increase.

Many employees in Australia are covered by modern awards. Each year, the Fair Work Commission reviews and often increases minimum award wages. Comparing your proposed raise to this general award increase can provide context on whether your increase is keeping pace with broader market movements.

Example Calculation

Imagine your current annual salary is $90,000 and you are offered a 5% raise. The increase amount is 5% of $90,000, which is $4,500. Your new salary would be $94,500. If the annual CPI inflation rate is 3.8%, matching inflation would require a $3,420 increase. Your $4,500 raise exceeds this by $1,080, meaning your salary grows in real terms. Compared to a 4.2% award increase ($3,780), your raise is also higher by $720.

Frequent Scenarios and Considerations

Employees often face different scenarios when it comes to pay rises. Some common ones include:

• Annual Performance Review: A standard raise tied to your performance rating, often expressed as a percentage.
• Promotion: Typically involves a more significant increase, which may be a higher percentage or a fixed amount to align with the new role's market rate.
• Cost-of-Living Adjustment (COLA): An increase intended to keep pace with inflation, sometimes matching or slightly exceeding the CPI rate.
• Award-Based Increases: If you are covered by a modern award, your pay may increase automatically on July 1 each year based on the Fair Work Commission's annual wage review decision.

It's important to note that the figures used for CPI and award increases in this calculator are the latest available as of October 2026. These rates change periodically, so for the most precise comparison, you should use the latest official figures at the time of your negotiation.

Next Steps: Formalising Your Pay Rise

Once a pay rise is agreed upon, it's crucial to document it formally. An Employment Contract Amendment is the standard document to record changes to your salary and other terms of employment. It protects both you and your employer by ensuring there is a clear, written record of the new agreement. This document should be signed by both parties.

If you are preparing to request a raise, a Pay Rise Letter or Raise Request Letter provides a professional template to structure your request, justify your reasons, and propose a new salary figure to your manager. Using a formal letter demonstrates professionalism and strengthens your case.

After using this calculator to determine your desired new salary, you can proceed to generate one of these documents, with key figures like your current and proposed salary pre-filled for convenience.