The state's most talented classroom teachers will be rewarded with a six-figure salary and new teachers will move up the pay scale faster, under a new wage deal reached on Tuesday.
From 2016, classroom teachers in public schools will earn about $45,000 more after nine years in the job than under the previous pay scale.
And teachers identified as "highly accomplished", who demonstrate deep content knowledge, sound teaching practices, leadership skills and an ability to analyse student assessment data, will be rewarded with a salary of more than $100,000 a year.
Classroom teachers' pay has been capped at $89,050 and was based on the number of years spent in the job. It meant those after a higher salary often moved into management roles.
NSW director-general of education Michele Bruniges said she hoped the higher salary would keep the "best and brightest" teachers in the classroom.
"I hope it does have that effect, that people don't have to go away from their passion and love inside the classroom to become an administrator."
She said there was a "very clear set of criteria" teachers would have to meet but it would not be based on student test results.
Teachers across NSW overwhelmingly endorsed the new salaries and conditions at stop-work meetings on Tuesday morning, with 96 per cent voting in favour.
Under the deal negotiated between the Education Department and the NSW Teachers Federation, public school teachers will receive salary increases of 2.27 per cent in 2014, 2 per cent in 2015 and 2.15 per cent in 2016.
The agreement also sees principals of challenging schools paid more and the process for dealing with underperforming teachers sped up.
From July next year, the procedure for dealing with poor performance, which can stretch over 25 weeks, will be condensed to 10 weeks. It will include five weeks of support and guidance and a five-week assessment period.
"If we have poor performance, we should call it and we should act on it and we want to act on it in a much faster way," Ms Bruniges said.
Principals' pay will be linked to the complexity of their school from 2016, not just the school's size. And principals of more challenging schools will receive a higher salary.
NSW Education Minister Adrian Piccoli said the "more equitable structure" recognised the local decision-making role of principals and that not all schools are the same.
“Influences, such as the socio-economic level of a school's local community, the number of students with a disability and those with a non-English language background, will now be taken into account when classifying principals," he said.
To support the changes, investment in professional development will increase by $17 million a year to $51 million from 2016.
Teachers Federation president Maurie Mulheron said the "compressed pay scale" meant new teachers would reach the top pay bracket in seven years instead of nine.
He said teachers were overwhelmingly pleased with the outcome of the negotiations.
"There's been no concessions, there's been nothing given up," he said.
But he condemned the state government's salary cap of 2.5 per cent a year on public sector employees and said the union would campaign hard against the wage cap next year.
"It's a very unfair and very unjust policy and our members are very frustrated that this salary cap is being artificially imposed."