The Department for Education and Skills asked all parties to sign up to the basic concept of performance pay before taking part in the multi-lateral discussions.
But the National Union of Teachers, already frozen out of talks on the workload agreement, has always opposed the scheme and refused.
The DfES has a legal duty to consult all unions over pay and will now hold separate talks with the NUT, though a date has yet to be set.
Doug McAvoy, NUT general secretary, said it was unfortunate that the Government had imposed pre-conditions.
"If our points of view are ignored then so be it," he said. "But we have been told that the talks we have will be substantive and we are looking to be constructive."
The main talks, including the two other major classroom unions, headteachers' associations, employers and the Government, began on Wednesday evening and continued all day Thursday, with two meetings a week pencilled in until Christmas.
The thorny question of how many teachers should progress through the upper pay scale remained unresolved following this month's teachers' pay deal.
More than 90 per cent of eligible candidates passed through the first two levels of the scale. But ministers say continuing this would be untenable, as it would add pound;700 million to wage bills by 2010.
They tried to address the problem with a crude 30 per cent quota system for level 3 but this was rejected by the School Teachers' Review Body, which gave all parties just six working weeks to come up with a new solution.
Positions are already entrenched and all sides admit it will be difficult to agree by the January 5 deadline. School funding is tight, the DfES is determined that performance pay should be rationed and the STRB has said for the first time that progressively fewer teachers should move up the scale.
The Local Government Association argues that no more than 40 per cent of eligible candidates should qualify for level 3, and that the next two levels should be limited to 20 and 10 per cent respectively.
But classroom unions are opposed to pre-determined quotas, particularly on level 3 where headteachers are backing them. They argue that a new system should not be brought in with candidates already a year and a term into the performance reviews they are expecting to be judged on.
The most likely solution would seem to be the Government compromising on level 3 in return for cutbacks on levels 4 and 5 and management allowances, which are also under discussion.