It is necessary for the optimum functioning of the Mayor-Council form of government that the city maintain a merit system governing the hiring, promotion, discharge and general regulations of employees. The Mayor and Council shall maintain by ordinance, and the Mayor administer, a merit system which shall include as a minimum, reasonable provisions establishing:
(a) Classified and unclassified service;
(b) Methods of service rating of classified employees;
(c) Methods of initial employment, continuation thereof and promotion, recognizing efficiency and ability as the applicable standards;
(d) Appropriate grievance and appeal procedures for classified employees; and
(e) An active personnel board composed of individuals not employed by the city.