SMITHFIELD—The Smithfield Town Council Monday approved 2.8 percent cost-of-living raises to town employees and defined a merit-pay system that could reach 2 percent above current salaries.

The classification plan and salary structure was adopted for two reasons: to reflect a recent study that compared employees in other localities with similar positions and duties in Smithfield, and to help the town remain competitive and retain employees.

The study was completed this spring by

Springsted Inc. The plan takes effect July 1.

In a matter related to pay, the council approved an amendment to Town Manager’s Peter Stephenson contract. The contract includes a base salary of $94,067 and a bonus of $2,500.

In addition, all professional and official travel by Stephenson will be paid by the town.

Sharon Thomas was reappointed to another two-year term as Town Clerk. She has served as Town Clerk since 1999.

Three new council members were introduced and given the oath of office. The new members who will begin their terms July 1 are Denise Tynes, John Graham and David Hare.

The 2008-09 budget was approved Monday. There was no additional discussion or changes to the budget during the meeting.