The national pay system was this week on the brink of collapse as Nottingham University announced its own structure based almost entirely on performance.
Just weeks after university employers concluded two years of talks with an offer on pay and the reform of career structures, Nottingham has produced its own, dramatically different, plans.
Similar decisions have been taken by Imperial College London - another member of the Russell Group that wants to compete in a global free market - as well as Bolton Institute and the University of Central England.
Unions fear a domino effect leading to the complete meltdown of the national system in favour of a free-for-all.
Nottingham has confirmed that it recently completed an exercise to evaluate the roles and responsibilities of staff and would use the information to move to a new "pay and rewards" structure.
Malcolm Keight, assistant general secretary of the Association of University Teachers, said: "Their plans are totally inappropriate and their action is very provocative. Nottingham has had a total disregard for any national agreement, and its plans bear very little resemblance to the national framework agreement negotiated with the Universities and Colleges Employers Association last month."
Nottingham said it had not confirmed the details of the system, but The THES obtained an internal university presentation on the plans that says the university has a commitment to "reward high performance and manage poor performance" as part of its human resources strategy.
Staff will be given a "performance rating" of between 1 and 4 every year. A 1 indicates "below satisfactory performance" and will mean no pay rise - not even inflation. A 4, "outstanding performance", will mean a move up three pay increments.
There will also be one-off exceptional performance bonuses, gift vouchers or "appropriate small rewards" under a special contribution recognition bonus scheme.
Sandi Golbey, secretary of the university's AUT branch, said: "What kind of way is this to treat staff? It is like children being given gold stars. We all know from what has happened in schools that performance-related pay is hopeless. The plans do not make the smallest bit of sense."
Unions are incensed that the university did not inform them of the plans before circulating them to managers and had not yet explained what criteria would be used to measure performance.
The AUT and public-sector union Unison have lodged a joint collective grievance against the university's management. In a letter to vice-chancellor Sir Colin Campbell, the unions say the university "breached the local consultation and negotiating procedural agreements" by failing to consult.
A spokesman for the university said the unions had been consulted and it would press on regardless of the unions' position.
"We are disappointed that the trade unions will not be working with us as things stand. We are, of course, still talking to them," he said. "The university believes the exercise will be of benefit to staff, will help them with career progression, is fairer than the current system and will help them grow and develop in their jobs. We feel that, in an increasingly competitive environment, we must be able to attract, retain and motivate high-quality staff at all levels."