Civil servants, teachers and other public sector workers are having such systems imposed on them as part of the Citizen's Charter, while some form of merit pay is common across industry.
Differential salary awards could amount to 4-5 per cent a year between the sexes. The Institute of Manpower Studies, which carried out the research on behalf of the Equal Opportunities Commission, said large numbers of organisations could be laying themselves open to legal challenge.
It found that many schemes were subjective, reinforced sexual stereotypes and led to women receiving lower pay rises even when their performance ratings were the same as men. 'There is the clubbable manager who may involve many non-work related factors, such as whether the person is 'one of the lads' or a 'good mate',' Marc Thompson, one of the authors of the report, said.
The likelihood of sex bias has increased with the growing tendency to push decision making over pay down to line managers. 'Greater line management discretion has the potential . . . to increase gender discrimination. The new philosophy of 'empowering' the line manager may also have the effect of arresting women's advancement,' the study, which examined four schemes in detail, concluded. Managers of both sexes valued different attributes in men and women. Assertiveness, for example, may be considered appropriate behaviour for men, but not for women, from whom tact is valued more highly.
Jobs where women dominated had lower average merit rises than those where men were in the majority, supporting the belief that lower female earnings are often due to occupational segregation.
Men were more likely to be offered training and promotion leading to long-term discrimination. Merit pay also tended to be used as a retention tool in companies with high staff turnover. Rewarding long servers favours men.
June Bridgeman, deputy chair of the EOC, said the fact that merit pay could lead to discrimination should be of great concern. 'Employers need to ensure that their systems are not only lawful, but conform to best practice. Employees, especially women, need to be aware that they may lose out in terms of pay and promotion.'
Formal guidelines from the commission are to be issued which will inform employers of the need to reduce subjective assessment criteria. The Institute of Manpower Studies said that following rulings in the European Court of Justice, the burden of proof was on an employer to demonstrate that its scheme was not discriminatory.
Merit pay, performance appraisal and attitudes to women's work. Published by IMS and the EOC, price pounds 24.Reuse content