An improved optical encoder uses an optical pick-up unit that provides for degrees of freedom in the tracking and focus axes that are unavailable in conventional optical encoders thereby improving the encoders' performance. In an embodiment the encoder employs an optical disc marked with pits and lands which may be arranged in a spiral pattern. The optical disc is mounted on the shaft whose motion is to be monitored by the optical encoder. The encoder may be arranged to read the markings on the optical disc using the three-beam pickup method.