Should one take a retention offer that is not in written? The firm wants to retain the candidate but only promising of revision of salary during increment cycle.

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Never do it. You can try and regret later

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Maybe the employee can document the discussion with the manager for future reference. Mostly the verbal commitment will be honoured in case the manager, next level manager and HR is involved. Also it depends on how Proffetional the discussion holders are and what is their history of keeping commitments.
Always better to send a mail regarding retention discussion points.

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