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Washington—The leader of the union representing more than 2,500 Securities and Exchange Commission (SEC) employees today welcomed the agency’s decision to temporarily separate its performance management system from its much-maligned merit pay system until the agency can completely implement a new performance management system.

The immediate impact is that all employees receiving an ‘acceptable’ performance rating would receive an ‘equivalent share’ of the funds the SEC has available for merit pay increases.

The SEC’s decision was made known late yesterday by a senior agency official offering testimony before a House subcommittee hearing on alternative pay systems. He did not specify a percentage amount.

“This is a welcome decision by the agency,” said President Colleen M. Kelley of the National Treasury Employees Union (NTEU). “It has been clear for some time that the SEC system, as it has been designed and implemented, needs to be significantly revamped so that it is fair, credible and transparent.”

Last fall, in a case brought by NTEU, an arbitrator ruled the SEC merit pay system illegally discriminated against groups of employees based on age and race. The NTEU grievance covered the 2003 performance period; grievances are pending for each year since then.

Not having a clearly-defined set of work and performance expectations is one of the most widespread and serious problems with alternative pay systems, President Kelley said, including that at the SEC.

The SEC action marks the second time recently that an agency where NTEU is the employee representative has backed away from a merit pay system that is deeply flawed. At NTEU’s urging, the Federal Deposit Insurance Corporation recently agreed to suspend a system deeply resented by a strong majority of employees to determine merit pay increases for the 2007 performance management period and provide an across-the-board increase to those employees with acceptable ratings. The parties are reviewing options for a more fair, credible and transparent system moving forward.

President Kelley testified at the same House hearing yesterday, and expressed the views of thousands of federal employees concerned about the impact of alternative pay systems on their livelihood.

She argued that so-called pay-for-performance systems in place in various federal agencies all are failing to one degree or another; that there is no firm evidence that the longstanding General Schedule pay system needs to be changed; and that any alternative pay system must contain several key elements—including fairness, credibility and transparency—and that it must be adequately funded.

As the largest independent federal union, NTEU represents 150,000 employees in 31 agencies and departments.