Generally, there is no “merit only” increase. The various approaches in one way or the other include an allowance for inflation. In these times of low inflation (including wages), incentives based on available merit increases are of very little value.
I counsel clients that the best compensation is to assure that employees are paid correctly according to their experience, skills, business competencies and effectiveness/performance. This is a 52-weeks-per-year issue – not a once-per-year event. It also reflects the subtle difference between the concept or compensation and rewards. Rewards fall under the umbrella of win/lose, while compensation should be a fair payment for value provided. Compensate all employees based on what they bring to the table – at every pay period. Tell them what you are doing, and let everyone get back to work.