Yes, salary negotiations always go on when an employee resigns. However, from the administrative point of view, you need to delink resignation and salary increase.
I recommend you to tell the employee to submit an application for the withdrawal of his letter of resignation. Get the letter approved and at the same time get the letter for salary increase signed by the authority. Later, issue two letters to the employee, one for the acceptance of the letter of resignation and another for the salary increase.
21st May 2019 From India, Bangalore
Yes employee has to confirm his resignation cancellation either as a separate letter or in the same resignation letter in his own hand writing. Later increment letter can be issued.
You may mention some increment reversal clause in the increment letter stating that "in case of resignation within 2 or 3 months from the effective date of increment (as per your company norms) increment will be reversed. Reason being of late many employees use this as a technique to bargain and get increment with current employer and then to negotiate with new employer immediately to gain more monetary benefit within short period of time.
Also advise the concerned employee to keep it as confidential else you may likely to get more resignation from others.
21st May 2019 From India, Madras