Appraisal Letter Format
An appraisal letter is a formal communication from an employer to an employee at the end of a performance review cycle, confirming the outcome of the appraisal — typically a performance rating, a revised compensation structure, or both. It documents the employer's assessment and any resulting changes to the employee's terms of employment.
In India, appraisal letters are usually issued annually or half-yearly, aligned to the company's financial year or a fixed review cycle. HR issues this letter after appraisal ratings are finalised and approved by the reporting manager and department head, and it often accompanies a revised salary annexure for payroll and compliance purposes.
Appraisal Letter — sample format
Copy the template below and replace the [bracketed] fields.
[Company Letterhead]
Date: [Date]
Employee Name: [Employee Name]
Employee ID: [Employee ID]
Designation: [Designation]
Department: [Department]
Subject: Performance Appraisal — [Review Period]
Dear [Employee Name],
We are pleased to share the outcome of your performance appraisal for the period [Review Period]. Your performance was evaluated against the goals and competencies set for your role, in consultation with your reporting manager, [Manager Name].
Performance Summary
Overall Rating: [Rating, e.g. Exceeds Expectations]
Key strengths: [Strength 1], [Strength 2]
Areas of development: [Development Area 1], [Development Area 2]
Revised Compensation
Based on this appraisal, your compensation has been revised as follows, effective [Effective Date]:
Current Annual CTC: [Amount]
Revised Annual CTC: [Amount]
Increment: [Percentage/Amount]
New Designation (if applicable): [Designation]
A detailed salary breakup is enclosed as Annexure A. All other terms and conditions of your employment remain unchanged and continue to be governed by your appointment letter and the company's policies.
We appreciate your contributions over the past review period and look forward to your continued growth with [Company Name]. Please sign and return a copy of this letter as acknowledgement.
Warm regards,
[HR Manager Name]
[Designation]
[Company Name]
Acknowledged by: ______________________
[Employee Name] | Date: ____________
What to include
- ✓ Review period and rating — states the exact appraisal cycle and the final performance rating awarded
- ✓ Revised compensation table — old CTC, new CTC, increment percentage, and effective date, avoiding payroll disputes
- ✓ Designation change clause — included only if the appraisal also results in a promotion or title change
- ✓ Reference to appointment letter — clarifies that all other employment terms remain unchanged
- ✓ Acknowledgement signature — protects the employer by recording the employee's receipt and acceptance in writing
Legal notes (India)
- § An appraisal letter is not a separate contract — it modifies compensation/designation terms under the existing employment contract, so it should be read alongside the original appointment letter rather than replacing it.
- § Any revised CTC communicated must match what is actually processed in payroll and reflected in Form 16 and PF/ESI contributions, since a mismatch can create statutory reporting and TDS discrepancies.
- § If the appraisal results in a promotion with materially different duties, employers should also issue or update a role/designation confirmation to avoid ambiguity in future disputes over duties or notice period terms.
Frequently asked questions
Is an appraisal letter legally mandatory in India?
Can an appraisal letter reduce an employee's salary?
Does an appraisal letter need to be signed by the employee?
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