Performance Awards (Rating-Based Awards) FAQs
Performance awards (or rating-based awards) are lump-sum cash awards
given to recognize performance as reflected in a rating of record. Some
frequently asked questions about performance awards include:
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What is a performance
award? |
| Performance awards are lump-sum cash awards
based on ratings of record of Level 3 (Fully Successful or equivalent)
or higher. Rating-based performance awards are included among the
various types of awards available under part 451 of title 5, Code
of Federal Regulations. Agencies can use the rating of record as the
sole basis for granting a performance award. |
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Can agencies not covered
by part 430 of title 5, Code of Federal Regulations, pay performance
awards? |
Yes. Under the authority of section 4505a of title 5, United States Code agencies may pay performance-based cash awards to GS only. Agencies that are not covered by the provisions of 5 CFR 430 can use their official agency performance rating as the justification for the award as long as the employee's most recent performance rating was at the fully successful level or higher (or the equivalent). |
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Can agencies pay performance-based cash awards to non-GS employees using the authority at 5 U.S.C. 4505a? |
| Yes. The regulations at 5 CFR 451.101(e) allow agencies to grant performance-based cash awards under the authority of 5 U.S.C. 4505a to eligible non-GS employees who are covered by 5 U.S.C. chapter 45 and who are not otherwise covered by an explicit statutory authority for the payment of rating-based awards. |
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Under a "pass/fail"
appraisal program, is any employee who receives a "pass"
rating eligible for a cash performance award? |
| Technically, yes. A "pass" rating
in a two-level appraisal program is a Level 3 (Fully Successful or
equivalent) summary level. The law at section 4505a of title 5, United
States Code, which covers General Schedule employees, states that
"an employee whose most recent performance rating was at the
Fully Successful level or higher (or the equivalent thereof) may be
paid a cash award." Eliminating the higher summary levels also
eliminates the further performance distinctions that many agencies
had applied in granting rating-based performance awards. Although
not required, it was not uncommon for agencies to restrict the use
of rating-based awards to employees with ratings of record above Level
3. Under a two-level appraisal program, agencies need to develop additional
criteria for selecting employees who should receive cash performance
awards and for granting awards of different amounts.
Technically, agencies will be free to continue to use just a Level 3
rating of record as the legal criterion for granting a cash award.
However, the Office of Personnel Management advises agencies to
make some record of the additional performance distinctions they
make to select award recipients and thereby prevent perceptions
of awards being arbitrary or capricious.
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Are rating-based performance
awards subject to the $10,000 and $25,000 approval thresholds? |
| Yes. Under sections 4502(a) and (b) of
title 5, United States Code, and the implementing regulations, such
awards always have been subject to the Office of Personnel Management
and Presidential approval, respectively. Section 4505a, of title
5, United States Code, further restricts performance awards to no
more than 10 percent of the employee's annual rate of basic pay,
except that a rating-based
award may exceed 10 percent if the agency head determines that an
employee's exceptional performance justifies such an award. However,
in no case may a rating-based award exceed 20 percent of the employee's
annual rate of basic pay. Note: The Department of Defense and the Internal Revenue Service only
have to seek approval from the Office of Personnel Management to grant awards over $25,000. |
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Will an agency be able
to grant a performance award for a non-recurring contribution? |
| Performance awards, as the terminology
is used, refer to cash awards granted on the basis of the rating of
record, which generally summarizes the employee's performance over
an extended period of time, i.e., the full appraisal period. The more
important flexibility now in the regulations is that the contribution
that may merit a special act or service award is no longer defined
as a "non-recurring" contribution. This new flexibility
should make it easier for agencies to design award programs that recognize
the successful or improved accomplishment of work projects that by
their nature can be considered "recurring contributions." |
Frequently Asked Questions
U.S. Office of Personnel Management 1900 E Street NW, Washington, DC 20415 | (202) 606-1800 | TTY (202) 606-2532