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Business and Finance

Special Merit Pay (II.C.4)

Volume II: Business and Finance
Chapter C: Payroll
Issuing Office: Human Resource Services
Responsible Officer: Executive VP ad Treasurer
Responsible Office: Human Resource Services
Originally Issued: April 1, 2004
Most Recently Revised: November 18, 2011


Statement of Policy
Reason for Policy
Who Should Know This Policy
Related Documents
Special Situations


Major units within Purdue University that have available funds may provide non-recurring special merit pay to their faculty and staff to supplement the traditional recurring merit pay adjustments made each fiscal year. Special merit pay provides additional flexibility for rewarding outstanding faculty and staff.


Purdue University has adopted this policy on non-recurring special merit pay to provide flexibility in the delivery of compensation and to assist major units in meeting the University’s strategic plan objectives through financial recognition of extraordinary faculty and staff.


  • President
  • Provost
  • Chancellors
  • Vice Presidents
  • Vice Provosts
  • Deans
  • Directors/Department Heads
  • Human Resources Staff
  • Business Office Staff
  • Administrative and Professional Staff
  • Clerical and Service Staff
  • Supervisors
  • Faculty


Procedures for Administering Special Merit Pay

Human Resource Services is responsible for the procedures that address the implementation and ongoing management of the Special Merit Pay Policy.

Recommendation Form for Special Merit Pay

Executive officers may stipulate the use of this form within their areas.


Policy Clarification:

West Lafayette Campus

  • Human Resource Services, Compensation
  • Human Resources for Advancement
  • Human Resources for ITaP
  • Housing and Food Services Human Resources
  • Physical Facilities Human Resources

  • (765) 494-7410
  • (765) 494-0542
  • (765) 496-3879
  • (765) 494-9418
  • (765) 494-1421
Calumet Campus Human Resources (219) 989-2254
Fort Wayne Campus Human Resources (260) 481-6677
North Central Campus Human Resources (219) 785-5300


Special merit pay: A non-recurring lump sum payment awarded to a faculty or staff member for outstanding performance.

Major unit: An area reporting to the president, provost, executive vice president and treasurer, chancellors, deans, vice provosts, and vice presidents. See the Procedures for Administering Special Merit Pay for a full list.

Executive officer: A University officer reporting directly to the president: provost, executive vice president and treasurer, senior vice president for advancement, vice president for research, vice president for human relations, vice president for governmental relations, director of intercollegiate athletics, and chancellors.

Control totals: The number of faculty and staff to whom each major unit may award special merit pay and the maximum amount of that pay as set forth in the formulas provided in this policy.


The Special Merit Pay Policy does not apply to:

  • Student employees
  • Graduate staff
  • Temporary staff
  • Visiting faculty
  • Limited term lecturers
  • Postdoctoral appointments
  • Regular faculty and staff employed less than one year
  • Employees who have a specific employment contract with the University that links additional compensation to their performance


Each major unit wishing to award special merit pay will establish its own criteria for making the awards. Criteria will promote performance that helps the unit meet strategic goals, business needs, or both. As a general guideline, special merit pay will be awarded for extraordinary performance and achievement. Funding will come from the unit’s resources; no central funding will be provided.

Using the process stipulated by their executive officer, each dean, director, or vice president will submit the names of faculty and staff to whom they wish to award special merit pay. Executive officers will then consider and approve the recommendations made by the deans, directors, or vice presidents reporting to them.


Awards of special merit pay will be made annually. For FY 2008-09, awards will be distributed in January 2009. Effective FY 2009-10, the award date will be November 30 of each year. The awards will be for activities that took place during the previous fiscal year.

Amounts and Allocations

Excluding the reserve for unfilled positions, each major unit can utilize up to one half of one percent of its budgeted salary base for each employee category for special merit pay. For purposes of this policy, the following three employee categories will be used:

  • Tenured and tenure-track faculty, clinical/professional faculty, and research faculty
  • Administrative/professional staff and continuing lecturers
  • Clerical and service staff

Each category will include all eligible named individuals budgeted as of July 1 of each year, regardless of the source of funding. Each major unit can provide special merit pay to a maximum of 15 percent of its budgeted faculty and staff in each eligible employee category.

Special merit pay may be provided to tenured and tenure-track faculty; clinical/professional faculty; research faculty; regular clerical, service, administrative, and professional staff; and continuing lecturers who have been employed at the University for at least one year.

For tenured and tenure-track faculty, clinical/professional faculty, research faculty, exempt administrative and professional staff, and continuing lecturers, an award of special merit pay can range up to five percent of the employee’s current base salary. For regular non-exempt employees, an award of special merit pay can range up to five percent of the employee’s total previous fiscal year earnings. Special merit pay awards may not exceed $7,500 for any faculty or staff recipient.

Control totals for special merit pay cannot be spread across employee categories. For example, amounts available to reward clerical and service staff cannot be allocated for faculty.

University’s Sole Discretion

Special merit pay is not an entitlement. Awards of special merit pay are made based on extraordinary performance and the availability of funds. Awarding of special merit pay and the amount of any award are determined at the sole discretion of the University. Such determinations will not be eligible for grievance under any of the University’s formal grievance processes for faculty or staff.

Other Policy Provisions

  1. Special merit pay cannot be charged to federal funds.
  2. Special merit pay may not be awarded to Purdue employees for an internal transfer.
  3. Special merit payments are separate from base salary. Special merit pay will not be considered when calculating benefits such as TIAA-CREF, PERF, or other salary-related fringe benefits.
  4. Special merit payments will be taxable income to recipients and subject to all appropriate tax withholdings.


Any deviation from this Special Merit Pay Policy requires approval by the president or the president’s designee.


November 18, 2011: Policy number changed to II.C.4 (formerly IV.5.4).

October 22, 2008: Contact phone number updated.

June 30, 2006: This document updates the policy for non-recurring special merit pay to faculty and staff.

April 1, 2004: This document is the first to formalize a policy for non-recurring special merit pay to faculty and staff.