---
kind: "range"
citation: "5 C.F.R. §§ 9701.342–9701.346"
title: "5"
from: "9701.342"
to: "9701.346"
count: 5
url: "https://uscodex.org/cfr/5/9701.342..9701.346"
---

# §9701.342. Performance pay increases.

- (a) **Overview.**
  - (1) The DHS pay system provides employees in a Full Performance or higher band with increases in basic pay based on individual performance ratings of record as assigned under a performance management system established under subpart D of this part. The DHS pay system uses pay pool controls to allocate pay increases based on performance points that are directly linked to the employee's rating of record, as described in this section. Performance pay increases are a function of the amount of money in the performance pay pool, the relative point value placed on ratings, and the distribution of ratings within that performance pay pool.
  - (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 (subject to the requirements of [subpart D](/cfr/5/subpartD.md) of this part), except that if the supervisor or other rating official determines that an employee's current performance is inconsistent with that rating, the supervisor or other rating official may prepare a more current rating of record, consistent with [§ 9701.409(b)](/cfr/5/9701.409.md?p=b). If an employee does not have a rating of record, DHS will use the modal rating received by other employees covered by the same pay pool during the most recent rating cycle for the purpose of determining the employee's performance pay increase.
- (b) **Performance pay pools.**
  - (1) DHS will establish pay pools for performance pay increases.
  - (2) **Each pay pool covers a defined group of DHS employees, as determined by DHS.**
  - (3) An authorized agency official(s) may determine the distribution of funds among pay pools and may adjust those amounts based on overall levels of organizational performance or contribution to the Department's mission.
  - (4) In allocating the monies to be budgeted for performance pay increases, the Secretary or designee must take into account the average value of within-grade and quality step increases under the General Schedule, as well as amounts that otherwise would have been spent on promotions among positions placed in the same band.
- (c) **Performance point values.**
  - (1) DHS will establish point values that correspond to the performance rating levels established under [subpart D](/cfr/5/subpartD.md) of this part, so that a point value is attached to each rating level. For example, in a four-level rating program, the point value pattern could be 4-2-1-0, where 4 points are assigned to the highest (outstanding) rating and 0 points to an unacceptable rating. Performance point values will determine performance pay increases.
  - (2) DHS will establish a point value pattern for each pay pool. Different pay pools may have different point value patterns.
  - (3) DHS must assign zero performance points to an unacceptable rating of record.
- (d) **Performance payout.**
  - (1) DHS will determine the value of a performance point, expressed as a percentage of an employee's rate of basic pay (exclusive of locality or special rate supplements under §§ [9701.332](/cfr/5/9701.332.md) and [9701.333](/cfr/5/9701.333.md)) or as a fixed dollar amount.
  - (2) To determine an individual employee's performance payout, DHS will multiply the point value determined under [paragraph (d)(1)](#d-1) of this section by the number of performance points assigned to the rating.
  - (3) To the extent that the adjustment does not cause the employee's rate of basic pay to exceed the maximum rate of the employee's band rate range, DHS will pay the performance payout as an adjustment in the employee's annual rate of basic pay. Any excess amount may be granted as a lump-sum payment, which may not be considered basic pay for any purpose.
  - (4) DHS may, after coordination with OPM, determine the effective date of adjustments in basic pay made under [paragraph (d)(3)](#d-3) of this section.
  - (5) For an employee receiving a retained rate under [§ 9701.356](/cfr/5/9701.356.md), DHS will issue implementing directives to provide for granting a lump-sum performance payout that may not exceed the amount that may 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.** DHS will issue implementing directives regarding the proration of performance payouts for employees who, during the period between performance pay adjustments, are—
  - (1) Hired or promoted;
  - (2) In a leave-without-pay status (except as provided in paragraphs [(f)](#f) and [(g)](#g) of this section); or
  - (3) **In other circumstances where proration is considered appropriate.**
- (f) **Adjustments for employees returning after performing honorable service in the uniformed services.** DHS will issue implementing directives regarding how it sets the rate of basic pay prospectively for an employee who leaves a DHS position to perform service in the uniformed services (as defined in 38 U.S.C. [4303](/usc/38/4303.md) and [5](/usc/38/5.md) 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](/usc/38/4316.md)). DHS will credit the employee with intervening rate range adjustments under [§ 9701.323(a)](/cfr/5/9701.323.md?p=a), as well as developmental pay adjustments under [§ 9701.345](/cfr/5/9701.345.md) (as determined by DHS in accordance with its implementing directives), and performance pay adjustments under this section based on the employee's last DHS rating of record. For employees who have no such rating of record, DHS will use the modal rating received by other employees covered by the same pay pool during the most recent rating cycle. An employee returning from qualifying service in the uniformed services will receive the full amount of the performance pay increase associated with his or her rating of record.
- (g) **Adjustments for employees returning to duty after being in workers' compensation status.** DHS will issue implementing directives regarding how it sets 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). DHS will credit the employee with intervening rate range adjustments under [§ 9701.323(a)](/cfr/5/9701.323.md?p=a), as well as developmental pay adjustments under [§ 9701.345](/cfr/5/9701.345.md) (as determined by DHS in accordance with its implementing directives), and performance pay adjustments under this section based on the employee's last DHS rating of record. For employees who have no such rating of record, DHS will use the modal rating received by other employees covered by the same pay pool during the most recent rating cycle. An employee returning to duty after receiving injury compensation will receive the full amount of the performance pay increase associated with his or her rating of record.

# §9701.343. Within-band reductions.


Subject to the adverse action procedures set forth in [subpart F](/cfr/5/subpartF.md) of this part, DHS may reduce an employee's rate of basic pay within a band for unacceptable performance or conduct. A reduction under this section may not be more than 10 percent or cause an employee's rate of basic pay to fall below the minimum rate of the employee's band rate range. Such a reduction may be made effective at any time.


# §9701.344. Special within-band increases.


DHS may issue implementing directives regarding special within-band basic pay increases for employees within a Full Performance or higher band established under [§ 9701.212](/cfr/5/9701.212.md) who possess exceptional skills in critical areas or who make exceptional contributions to mission accomplishment or in other circumstances determined by DHS. Increases under this section are in addition to any performance pay increases made under [§ 9701.342](/cfr/5/9701.342.md) and may be made effective at any time. Special within-band increases may not be based on length of service.


# §9701.345. Developmental pay adjustments.


DHS will issue implementing directives regarding pay adjustments within the Entry/Developmental band. These directives may require employees to meet certain standardized assessment or certification points as part of a formal training/developmental program. In administering Entry/Developmental band pay progression plans, DHS may link pay progression to the demonstration of required knowledge, skills, and abilities (KSAs)/competencies. DHS may set standard timeframes for progression through an Entry/Developmental band while allowing an employee to progress at a slower or faster rate based on his or her performance, demonstration of required competencies, and/or other factors.


# §9701.346. Pay progression for new supervisors.


DHS will issue implementing directives requiring an employee newly appointed to or selected for a supervisory position to meet certain assessment or certification points as part of a formal training/developmental program. In administering performance pay increases for these employees under [§ 9701.342](/cfr/5/9701.342.md), DHS may take into account the employee's success in completing a formal training/developmental program, as well as his or her performance.