Salary Increases in the Philippines A Guide for Small Businesses

That experience gives me a starting point for a question founders need to answer: what does a salary increase recognise?

A business can review pay because a role has grown. It can reward stronger performance. It can also adjust pay because the market has moved. Each reason needs its own evidence. Reviewing all three helps a founder explain a decision and check how it affects the rest of the team.

When responsibilities change

Start with the work the employee now owns. Compare it with the role their existing salary covers. Look at decision making, accountability and the skills the work requires.

CIPD recommends reviewing job evaluation and market pricing regularly so they reflect changes in jobs and business needs. [1]

For example, someone may have moved from preparing work to reviewing it and taking responsibility for a team. This hypothetical change gives the business a reason to evaluate the role again. A new title alone provides less information than a clear description of the work.

Keep a short record of what changed and when. Use the same approach when reviewing comparable roles.

When performance improves

Performance asks how well someone delivers the work. Agree on the expected results before the review and keep evidence of what the employee achieved.

The National Wages and Productivity Commission describes productivity incentives as bonuses tied to improvements in productivity performance. Its guide asks employers and workers to set business objectives, key performance indicators and performance metrics. [2]

That guidance concerns incentives. A recurring base-salary increase needs its own decision. Be clear about whether the reward changes regular pay or takes the form of a separate bonus.

Choose measures that reflect the whole job. A target for speed needs context if the work also demands accuracy. Discuss the evidence and explain how it informed the decision.

A strong review does not need a long form. It needs clear expectations and a consistent basis for judging results.

When market pay changes

A business may need to review pay when comparable roles command different rates in the labour market.

The Philippine Statistics Authority collects occupational wage data to support wage and salary administration. Its 2024 Occupational Wages Survey measures differences across occupations and industries. It defines the wage rate as basic pay plus regular or guaranteed cash allowances. [3]

The survey covers full-time, time-rated workers in formal establishments with at least 10 workers, using August 2024 pay data. It does not directly represent businesses with fewer than 10 workers. [3]

Compare responsibilities and required skills as well as location. Check when the pay data was collected. Separate base salary from allowances and other rewards so the comparison is useful.

Then look inward. If a new hiring offer sits above the pay of current employees in comparable roles, review the difference before making the offer. Ask which differences in the work or relevant experience explain it. Where the evidence does not explain the gap, consider what adjustment the business can support.

A practical pay review checklist

Use these questions before approving an increase or setting a new hiring offer:

1. What is the reason? Record whether the review concerns role scope, performance or market pay. More than one reason may apply.

2. What supports it? Gather the current role description, relevant results and comparable pay information.

3. How does it compare internally? Review employees doing comparable work. Identify any differences you can explain with evidence.

4. What can the business sustain? Calculate the ongoing cost and any related payroll costs before choosing an amount.

5. What will you communicate? Explain the reason and effective date. Where a further review is needed, set a realistic date and record who will follow through.

Make the reason clear

My experience does not tell us why that employer set those salaries. It does show why a promotion and seniority alone cannot explain every pay decision.

For a small business, a useful place to start is to write down the reason for each increase. Check the evidence. Compare similar work across the team. Then explain the decision clearly.

This article offers a practical review framework. It does not describe every possible reason for a pay change or establish a legal entitlement to an increase.

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Sources

[1] CIPD. Job evaluation and market pricing. 2025-05-09.
https://www.cipd.org/en/knowledge/factsheets/market-pricing-factsheet/

[2] National Wages and Productivity Commission. Productivity Based Incentive Scheme brochure. Undated brochure hosted in February 2026 directory.
https://nwpc.dole.gov.ph/wp-content/uploads/2026/02/06.-PBIS_compressed.pdf

[3] Philippine Statistics Authority. 2024 Occupational Wages Survey. 2025-11-25.
https://psa.gov.ph/content/2024-occupational-wages-survey