Merit Pay definition

Merit pay is another term for performance-related pay – it is often used interchangeably but can also be used to describe performance-related pay in the education sector. Merit pay is used widely in schools in the United Kingdom.

Commonly-cited advantages of merit pay include increased effectiveness as reward is tied to performance, better standards of education due to the recruitment of teachers with the skills and confidence to work within a performance-related pay system, and increased retention of key teachers who benefit from a pay system that rewards performance.

One big disadvantage of merit pay is increased competition between teachers and a potentially more divisive environment in which teachers act in self-interest rather in the interest of their department or school as a whole. Another is that rewarding solely by performance discriminates against deprived areas where young people come to school with poorer skills, and therefore teachers have a harder job in achieving the necessary academic results.