Getting less of a pay increase than you expected can feel like a punch in the gut. You worked hard all year and had an expectation of a nice pay increase. But it was a lower increase than you expected.
Our Toronto recruiters talk about salary quite a bit with employers and candidates, mostly in the context of salary negotiation. Many candidates are comfortable with the idea of negotiating their salary when they start a new role.
But, what about when you are already in the job? What if you receive your annual or performance raise and it’s lower than you expected? How should you respond? I am going to dip into this subject below and offer some advice on how to respond to a low salary increase.
In this blog:
- What is considered a low pay raise?
- What is the average pay increase in Canada?
- Getting a lower pay increase is not always about your performance
- What to do when your pay raise is too low
What is considered a low pay raise?
First things first. Before approaching your employer about a pay raise, verifying that it is a low one is important. Even though you may think a pay increase is low, it doesn’t mean it is.
According to data from Mercer, the average pay raise is 2.9%. Your job type, industry and location can also affect the level of pay increase you receive. So, make sure you do your research before you make your pitch to your manager.
If you receive much less than ~3%, there may be a strong case to ask questions or negotiate. Keep in mind that average increases can vary by industry, location, and job title.
What is the average pay increase in Canada?
The average pay raise can go up and down each year depending on the current state of the economy, inflation, and many other factors.
Benefits Canada found that the average salary increase is 3.6% in 2025. Other research found the average increase to be around 3.3% to 3.5%.
Getting a lower pay increase is not always about your performance
There is no question that your salary is a personal thing. So, when a raise comes in lower than expected, it can feel like it is an act against you. But this isn’t always the case. There are a number of reasons why your pay increase can be lower than expected that have nothing to do with you:
- The company did not meet its financial targets for the year
- Budget cuts
- There is a cap on how much your pay can be increased
- Poor economic conditions that could lead to future financial instability
- You’ve reached the top end of your pay scale
What to do when your pay raise is too low
A raise is generally thought of as a positive thing, that is, until it’s less than you anticipated. If your pay increase is lower than expected, here are some steps you can take:
- Stay Calm and Professional: It’s important to approach the situation with a clear mind and a professional attitude. Reacting emotionally can harm your relationship with your employer. Give yourself some time to reflect and look at the situation rationally.
- Review the Company Policy: Check back to see if the raise is in alignment with the company policy and what was promised to you.
- Seek Clarification: Schedule a meeting with your manager or HR to understand the reasons behind the lower-than-expected increase. They may provide insights into company budget constraints, performance evaluations, or market conditions. Sometimes it has nothing to do with you.
- Evaluate Your Performance: Reflect on your performance over the past period. If you believe you’ve exceeded expectations, gather evidence such as successful projects, goals met, and positive feedback to present in a discussion.
- Prepare for a Discussion: If you feel the increase is unfair, prepare for a constructive conversation. Be ready to discuss your contributions, the value you bring to the company, and why you believe a higher increase is justified.
- Negotiate: If appropriate, negotiate for a better increase. Consider discussing non-monetary benefits if a higher salary isn’t possible, such as additional vacation days, flexible working hours, or professional development opportunities.
- Consider Future Goals: If the increase is non-negotiable, ask what you can do to position yourself for a higher increase in the future. Set clear goals and expectations with your manager for your next review.
- Assess Your Options: If the situation doesn’t improve or you feel undervalued, it may be time to consider your options. This could include looking for new job opportunities where your skills and contributions are more appropriately compensated.
A final word responding to a low salary increase
While it’s disappointing to receive less of a salary increase than expected, keep the bigger picture in mind. Take a thoughtful and objective approach to assessing the situation.
Consider the overall work environment, job satisfaction, current market conditions and career growth opportunities before making any decisions. Even though the increase might not be what you wanted, it may be in line with the industry standard.
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