The Salary Update Type depends on the nature of the salary revision:
Assign New Salary Template - use this when the employee's salary structure itself needs to change. For example, when moving a trainee with a single stipend component to a full time role with a complete salary structure including Basic, HRA, and other allowances.
Update Only Salary of Employee - use this when the salary structure remains the same but individual component values need to be revised. For example, increasing an employee's Basic and HRA values without changing the components they are mapped to.
Enter Appraisal Percentage - use this when a standard percentage increment needs to be applied across the board. For example, applying a uniform 10% increment to an employee's current salary during an annual appraisal cycle.
