BERLIN, Germany — Zalando, Europe's biggest online-only fashion retailer, has rejected accusations that a performance management tool that asks employees to give feedback on each other and ranks them accordingly increases stress and infringes privacy.

In a study published on Wednesday, the Hans Boeckler Foundation, a research body close to the German trade union federation, said Zalando's Zonar software had damaged the working environment without necessarily improving performance.

"In this case, it is not the customers, who evaluate a product, but the employees themselves who evaluate each other," the foundation said in a statement. "This increases the perception of a competitive situation among employees, which in turn creates pressure to perform, self-discipline and stress."

Data privacy and colleague feedback are sensitive issues in Germany after the Stasi encouraged workers to inform on each other in the former Communist East.

Founded in Berlin in 2008, Zalando has grown rapidly and now sells clothing, shoes, accessories and beauty products in 17 European markets, employing a total of 14,000 people.

Zonar uses feedback from colleagues working in its Berlin offices to generate scores for each employee and ranks them as either a low, good or top performer. The system is used in appraisals and to decide on promotions and wage increases.

Zalando rejected the findings of the study, saying it was not representative as it was based on just 10 interviews with employees, of the 5,000 who can take part in the Zonar process.

"At Zalando, transparency and an open feedback culture is a daily reality," it said, adding that 67 percent of staff describe the company as a good employer, according to the latest employee survey, with only 13 percent keen to leave in the next year or two.

Zalando rejected a suggestion by the foundation that the system might infringe employee privacy, saying it complies with European data protection rules.

"Performance appraisals of employees are an important, legally recognised and permissible purpose of data collection, both for us as a company and for our employees," it said.

Online retailers like Zalando and Amazon have frequently drawn criticism in Germany from trade unions for tough working conditions in their warehouses, which the companies have repeatedly rejected.

By Emma Thomasson; editor: Kirsten Donovan.