Public sector pay reform in the United Kingdom is one of the most radical instances in the world. It abolished the traditional pay system which emphasizes grade and seniority and adopted a performance oriented and decentralized approach that stresses individual performance and organizational discretion. The central government, through the spending limit controlled by the Treasury, delegates pay authority to departments and agencies. The British pay reform mechanism is examined in light of the OECD countries experience and compared with the pay system of Taiwan.