The merit increase percentage is calculated using the formula:
\( P = \frac{(N - O)}{O} \times 100 \)
Where:
A merit increase, also known as a merit raise, is a salary increase awarded to an employee based on their performance. Unlike standard cost-of-living adjustments, merit increases are typically given to employees who have demonstrated exceptional performance, achieved specific goals, or contributed significantly to the organization.
Example 1: If an employee's old salary is $50,000 and their new salary is $55,000, the merit increase percentage would be calculated as follows:
\( P = \frac{(55,000 - 50,000)}{50,000} \times 100 = 10\% \)
Example 2: If an employee's old salary is $60,000 and their new salary is $63,000, the merit increase percentage would be:
\( P = \frac{(63,000 - 60,000)}{60,000} \times 100 = 5\% \)