Basing an employee's pay raise on his or her performance to reward individuals and reinforce performance is known as seniority pay.

Name: Basing an employee's pay raise on his or her performance to reward individuals and reinforce performance is known as seniority pay.
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Basing an employee's pay raise on his or her performance is known as merit pay, not seniority pay. Seniority pay is based on an employee's length of service with a company.

Basing an Employee's Pay Raise on His or Her Performance