Administration Announces Caps on Federal Employee Merit Awards


The Office and Personnel Management and the Office of Management and Budget recently informed agency leadership that merit bonus awards for federal employees would be capped starting in FY 2012. At the senior executive level, awards must not exceed 5 percent of an individual’s salary. The awards for other federal workers, including those in General Schedule positions, must be no more than 1 percent of an agency’s aggregate salary for those positions.

An internal memo on the matter, uncovered by the Washington Post in mid-May, states that there is a “need to manage budget resources carefully” and it also states a concern that “federal employees have come to expect awards as entitlements.” The memorandum cites the latest Federal Employee Viewpoint Survey, which found that “only 36% of employees believe that differences in performance are recognized and only 43% believe that awards reflect how well employees perform their jobs.”

Despite the fact that a number of employees find the system to be “imperfect,” many would agree the solution is not a system where hard-earned merit awards are capped. Fortunately, the memorandum does say that all agencies are to “honor all collective bargaining obligations and discuss agency labor-management forums.” It also encourages that awards are distributed equally between managers/supervisors and nonsupervisory employees.