5 C.F.R. § 9901.342 Performance payouts.
Title 5 - Administrative Personnel
(a) Overview. (1) The NSPS pay system will be a pay-for-performance system and, when implemented, will result in a distribution of available performance pay funds based upon individual performance, individual contribution, team or organizational performance, or a combination of those elements. The NSPS pay system will use a pay pool concept to manage, control, and distribute performance-based pay increases and bonuses. The performance payout is a function of the amount of money in the performance pay pool and the number of shares assigned to individual employees. (2) The rating of record used as the basis for a performance pay increase is the one assigned for the most recently completed appraisal period, except that if an appropriate rating official determines that an employee's current performance is inconsistent with that rating, that rating official may prepare a more current rating of record, consistent with §9901.409(b). Unless otherwise provided in implementing issuances, if an employee is not eligible to have a rating of record for the current rating cycle for reasons other than those identified in paragraphs (f) and (g) of this section, such employee will not be eligible for a performance payout under this part. (3) Pay pools will be managed by a pay pool manager and/or pay pool panel. The Secretary will define in implementing issuances the responsibilities of pay pool managers and pay pool panels to include the review of proposed rating and share assignments to ensure that employees are treated fairly and consistently and in accordance with the merit system principles. (b) Performance pay pools. (1) The Secretary will issue implementing issuances for the establishment and management of pay pools for performance payouts. (2) The Secretary may determine a percentage of pay to be included in pay pools and paid out in accordance with accompanying implementing issuances as— (i) A performance-based pay increase; (ii) A performance-based bonus; or (iii) A combination of a performance-based pay increase and a performance-based bonus. (c) Performance shares. (1) The Secretary will issue implementing issuances regarding the assignment of a number or range of shares for each rating of record level, subject to paragraphs (c)(2) and (c)(3) of this section. Performance shares will be used to determine performance pay increases and/or bonuses. (2) Employees with unacceptable ratings of record will be assigned zero shares. (3) Where the Secretary establishes a range of shares for a rating of record level, he or she will provide guidance in implementing issuances on the use of share ranges. DoD organizations will notify employees at least 90 days prior to the end of the appraisal period of the factors that may be considered in making specific share assignments. Pay pool managers and/or pay pool panels will review proposed share assignments to ensure that factors are applied consistently across the pay pool and in accordance with the merit system principles. (d) Performance payout. (1) The Secretary will establish a methodology that authorized officials will use to determine the value of a performance share. A performance share may be expressed as a percentage of an employee's rate of basic pay (exclusive of local market supplements under §9901.332) or as a fixed dollar amount, or both. (2) To determine an individual employee's performance payout, the share value determined under paragraph (d)(1) of this section will be multiplied by the number of performance shares assigned to the employee. (3) The Secretary may provide for the establishment of control points within a band that limit increases in the rate of basic pay. The Secretary may require that certain criteria be met for increases above a control point. (4) A performance payout may be an increase in basic pay, a bonus, or a combination of the two. However, an increase in basic pay may not cause the employee's rate of basic pay to exceed the maximum rate or applicable control point of the employee's band rate range. Implementing issuances will provide guidance for determining the payout amount and the appropriate distribution between basic pay and bonus. (5) The Secretary will determine the effective date(s) of increases in basic pay made under this section. (6) Notwithstanding any other provision of this section, the Secretary will issue implementing issuances to address the circumstances under which an employee receiving a retained rate under §9901.355 may receive a lump-sum performance payout. Any performance payout in the form of a bonus for a retained rate employee may not exceed the amount that would be received by an employee in the same pay pool with the same rating of record whose rate of pay is at the maximum rate of the same band. (e) Proration of performance payouts. The Secretary will issue implementing issuances regarding the proration of performance payouts for employees who, during the period between performance payouts, are— (1) Hired, transferred, reassigned, or promoted; (2) In a leave-without-pay status (except as provided in paragraphs (f) and (g) of this section); or (3) In other circumstances where prorating is considered appropriate. (f) Adjustments for employees returning after performing honorable service in the uniformed services. The Secretary will issue implementing issuances regarding how to set the rate of basic pay prospectively for an employee who leaves a DoD position to perform service in the uniformed services (in accordance with 38 U.S.C. 4303 and 5 CFR 353.102) and returns through the exercise of a reemployment right provided by law, Executive order, or regulation under which accrual of service for seniority-related benefits is protected (e.g., 38 U.S.C. 4316). The Secretary will credit the employee with increases under §9901.323 and increases to basic pay under this section based on the employee's DoD rating of record for the appraisal period upon which these adjustments are based. If an employee does not have a rating of record for the appraisal period serving as a basis for these adjustments, the Secretary will base such adjustments on the average basic pay increases granted to other employees in the same pay pool and pay band who received the same rating as the employee's last DoD rating of record or the modal rating, whichever is most advantageous to the employee. In unusual cases where insufficient statistical information exists to determine the modal rating or when previous ratings do not convert to the NSPS rating scale, the Secretary may establish alternative procedures for determining a basic pay increase under this section. (g) Adjustments for employees returning to duty after being in workers' compensation status. The Secretary will issue implementing issuances regarding how to set the rate of basic pay prospectively for an employee who returns to duty after a period of receiving injury compensation under 5 U.S.C. chapter 81, subchapter I (in a leave-without-pay status or as a separated employee). For the intervening period, the Secretary will credit the employee with increases under §9901.323 and increases to basic pay under this section based on the employee's DoD rating of record for the appraisal period upon which these adjustments are based. If an employee does not have a rating of record for the appraisal period serving as a basis for these adjustments, such adjustments will be based on the average basic pay increases granted to other employees in the same pay pool and pay band who received the same rating as the employee's last DoD rating of record or the modal rating, whichever is most advantageous to the employee. In unusual cases where insufficient statistical information exists to determine the modal rating or when previous ratings do not convert to the NSPS rating scale, the Secretary may establish alternative procedures for determining a basic pay increase under this section.
Title 5: Administrative Personnel
PART 9901—DEPARTMENT OF DEFENSE HUMAN RESOURCES MANAGEMENT AND LABOR RELATIONS SYSTEMS
Subpart C—Pay and Pay Administration
Performance-Based Pay
§ 9901.342 Performance payouts.
