Al-Furquan primary school, a former private school which turned grant-maintained and now will become aided, has been given permission by the Department for Education and Employment to set its own pay rates.
Ms Zahida Hussein, the head, said the changes would mean extra payments for longer hours and extra training and to reward teachers in a performance-related pay scheme.
She said she wanted to pay teachers extra for taking part in midday prayers, which add 20 minutes to the school day, and for undertaking extra training days.
"When we were independent, teachers were required to prepare their own school development plan and set targets for the next year. If these were met, they would be entitled to an extra increment. We found that motivated teachers and wanted to keep it - it is also the way the Government wants to move," she said.
But Lesley Connolly, secretary of the Birmingham National Association of Schoolmasters Union of Women Teachers, said: "We find it appalling that the Government is allowing this former private school to control its own teaching costs. This will create tension within what is an equal pay system across the local education authority. " She said she had written to Tim Brighouse, Birmingham's education director, saying she feared that staff would be subject to longer hours and possibly less pay than the national rate.