The move, which is expected to attract keen interest from other local authorities, has provoked concern at the main public sector union at the council.
The one-year old programme offers senior staff the potential to earn 15% above their basic salary via an annual bonus and performance-based awards. However, because the bonus element is paid out of pooled pay rises, it is possible that some staff eligible for an annual increase would not receive one.
Council leader Lord Hanningfield (Con) insisted performance-related pay was an effective way of rewarding and retaining staff on lower pay grades if they met challenging targets.
“A band that pays£18,000 to£19,000 could be added to so that it pays up to£22,000. Those performing very well could be better rewarded,” he said.
The council expects to have expanded its performance-related pay programme to an extra 1,600 staff including social workers and team leaders by 2010.
Kumar Sandy, the Unison regional officer for Essex, said there were “major concerns” about the application of the system, and that negotiations with the council were overdue.
He said he was particularly worried that the performance targets could be set “at the whim of managers”.
Stephen Moir, president of the Public Sector People Managers’ Association, said that while various models of performance-related pay had been implemented elsewhere, the expansion at Essex would be watched keenly.
“I’m not aware of many authorities going as far as Essex has gone,” Mr Moir said. “I’m interested to see how it works in practice.”
Joan Munro, national adviser on workforce strategy at the Improvement & Development Agency, argued performance-related pay could help councils to attract staff in areas with competitive labour markets.