The deeply conservative government which has been in power in Victoria for the past six years has introduced performance reviews for all the state's 40,000 teachers.
A controversial scheme of awarding annual bonuses for senior staff who agree to meet certain goals has also been put in place.
Despite strong opposition from the Australian Education Union, all state school teachers must undergo a performance review each year to move another step up the pay scale.
While other states in Australia are looking at adopting similar schemes, only Victoria has gone so far along the regular appraisal path.
When a Victorian teacher has reached the top of the incremental scale, $48,000 (pound;20,000), he or she will still have their performance reviewed annually but, unless they successfully apply for promotion to so-called "leading teacher" posts or to become assistant principals or principals, they do not receive a pay rise.
These senior staff, however, are expected to produce a performance plan each year in which they set out the goals they intend to achieve and how these will be evaluated.
At the end of the year, their performance in achieving the goals is assessed and, depending on the outcomes, they may receive a bonus ranging from 2.5 per cent to 7.5 per cent of their annual salary in the case of a leading teacher or up to 15 per cent for a principal. Leading teachers can earn up to $54,000 (pound;22,100).
The performance goals may include educational outcomes such as lifting the average performance of a class above expected standards in a particular subject, introducing new programmes for students with disabilities, or enhancing the pupils' experience through additional programmes such as music, theatre visits or special trips.
Principals, who can earn $65,000 to $92,000, have their performance reviewed by their regional director of education or a nominee.
The government has insisted that those seeking promotion or even to keep their positions must take part in the performance review scheme. Those whose performance does not measure up do not get the bonus and, in the case of Victoria's new self-governing schools, they may even lose their jobs.
"It's a pathetic model," an Australian Education Union spokesman said.
"Teachers say they are professionals working at the limits of their capacity and object to being offered a little bit more to make them work even harder."