Negotiability of Performance Awards

Statutory and Regulatory Authority

Performance awards are authorized to be paid to employees by 5 U.S.C. Section 4505a. (Performance-based cash awards) This section provides 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 under this section.” This section permits the payment of cash awards but does not require that they be paid to any employee. The Office of Personnel Management (OPM) issued regulations (5 CFR 451) which provide that agencies shall establish one or more award programs for employees. 5 CFR 451.104 provides for the types of awards which may be given to employees and the basis for those awards.

Principles of Negotiability of Awards

Performance Awards

Under 5 CFR 451.104(3) cash awards may be given to employees on the basis of performance as reflected in the employee’s most recent rating of record.

Agency awards systems may not violate statute or government wide rules or regulations. Union proposals concerning performance awards which violate law or government wide regulation are non negotiable.

5 U.S.C. 7117(a) (1)

Awards are a substantively negotiable condition of employment. Awards are not subject to the restrictions on the exercise of management rights. NTEU v. FLRA 793 F.2d 371 (1986) In NTEU and IRS, 27 FLRA 132, it was held that incentive awards are not pay and wages subject to statute.

In the past proposals mandating awards expressed as percentages of salary at various levels of performance have been held negotiable. NTEU Chapter 245 and Department of Commerce, Patent & Trademark Office, 30 FLRA 1219 (1988). However this decision was overturned by the FLRA in a case on remand from the Fourth Circuit. NAGE Local R1-144, FUSE and Dept. of the Navy, Naval Underwater Sys. Ctr., Newport, 43 FLRA 47 (1991). The decision of the FLRA in FUSE was based on 5 CFR.430. 504(d) which required higher level review of performance review. A proposal could not mandate specific percentage allocations because all awards were subject to higher level review. However OPM subsequently rescinded the requirement for higher level review of awards. The impact of the removing of this requirement for review was the subject of NTEU and Dept. of Commerce, Patent and Trademark Office, 52 FLRA 1265 (1997). In this case the FLRA again found percentage allocations negotiable. The only argument made by the agency for the non negotiability of percentages at various performance levels was 5 CFR 430.504(d) which had been rescinded by OPM. The FLRA held that since there was no other management position other than this rescinded section the proposal was negotiable.

Proposals which prescribe a specific percentage of base aggregate payroll be allocated for awards is non negotiable as violation of management’s right to establish its budget. NAGE Local R1-144, FUSE and Dept. of the Navy, Naval Underwater Sys. Ctr., Newport, 38 FLRA 456 (1990)

Proposals which mandate allocation of an amount to the bargaining unit pool which is not less than the highest percentage allocated to any other pool are negotiable. AFGE, Local 3836 and FEMA, 31 FLRA 921 (1988) It does not prescribe the amount it establishes the proportion to be allocated.

A proposal that award money be split into two pools for bargaining unit employees is negotiable. See NAGE, Local R1-144, above. Management retains the right to determine how much money goes into the total award pool for non supervisory employees.

5 CFR 430.208 (c) provides that management can not establish a forced distribution of summary levels (quotas). However it does allow “methods used to make distinctions among employees or groups of employees such as comparing, categorizing, ranking employees or groups on the basis of their performance may be used for purposes other than assigning a summary level including, but not limited to, award determinations and promotion.” This allows management to rank employees for award purposes. This becomes meaningful because a manager, in most cases, has a specific amount of award money. By ranking employees, which is a right given by government wide regulation; employees will receive awards on the basis of their rank. Not all employees may receive performance awards even though a contract provision requires awards for certain performance levels because there may not be adequate funds to pay for the awards.

Performance Awards Summary:

Union proposals cannot mandate that certain employees will receive an award. Management has the right to determine which and whether employees will receive an award. They also can not establish the amount of money which will be allocated to performance awards. Once management has determined the amount to be allocated to non supervisory performance awards, the union can negotiate the number of pools to be established for bargaining unit employees. It also can negotiate over the proportion of award money which will be allocated to bargaining unit employees. The status of union proposals linking percentages to specific performance levels is uncertain. However if percentages are linked to specific award levels there is no requirement that sufficient money be available to fund all the awards.

Time Off Awards

Under 5 U.S.C. Section 4502(e), which is part of the Government Incentive Awards Act, 5 U.S.C. Section 4501-06, agencies are authorized, consistent with OPM regulation’s to grant employees, as an incentive award, time off from duty in recognition of superior accomplishment or other personal effort that contributes to the quality, efficiency, or economy of government operations. Times off awards are considered a separate category of awards. The regulations establish a different standard for time off awards than for performance awards.

Quality Step Increases

Under 5 U.S.C. Section 5336 the head of the agency may grant additional step increases in recognition of high quality performance above that ordinarily found in the type of position concerned. 5 CFR Section 531. 504 provides that quality step increases shall not be required but may be granted based on performance at the highest level under the performance management system in use by the agency.

A proposal mandating that a quality step increase be given to an employee who receives an outstanding rating is non negotiable. NTEU Chapter 245 and Department of Commerce, Patent and Trademark Office, 30 FLRA 1219 (1988)

A proposal that allows an employee to choose the type of award to be given is negotiable if management has determined the employee has met the requirements for each type of award. NAGE Local R1-203 and Dept. of Interior, Fish and Wildlife Serv. 55 FLRA 1081, (1999)