How do I upgrade my mercenary?

You cannot upgrade the rank or tier of your mercenary. To do that you have to get rid of it and hire a new one.

Mercenaries are always the same level as their owner and level with you. Their equipment and weapons will automatically upgrade as you level.

If you have the Call of the Forsaken expansion then your mercenaries will gain their own special alternate ability experience. This can be used to learn mercenary-specific abilities. They can also wear special mercenary-only equipment purchased with Marks of Valor earned from Heroic Adventurers. All your mercenaries share their abilities and equipment; it is not necessary to do this separately for each one.