Section 147 of the Continuing Appropriations Act, 2011 (Pub. L. 111-242, September 30, 2010), as amended by section 1(a) of the Continuing Appropriations and Surface Transportation Extensions Act, 2011 (Pub. L. 111-322, December 22, 2010), hereafter "the Act," prohibits statutory pay adjustments for most federal civilian employees as well as basic pay increases for employees in senior executive (SES), senior level (SL) and scientific or professional (ST) and equivalent positions, except as permitted in that section (http://www.opm.gov/oca/compmemo/2010/2011freeze_attach1.pdf). The pay freeze will be in effect during the period beginning on January 1, 2011, and ending on December 31, 2012.

Yes. The pay freeze legislation does not affect performance appraisal requirements or restrict performance awards. Performance Review Boards are required by 5 U.S.C. 4314(c) and 5384(c), respectively, to make recommendations on ratings and awards for members of the Senior Executive Service. Deciding officials must consider those recommendations before taking final action. This PRB responsibility is an important and integral part of the agency's performance management process for senior executives.

Such pay increases are precluded by the pay freeze. In general, 5 U.S.C. 5382 provides that a senior executive shall be paid at a rate within the SES range based upon individual performance and/or contribution to the agency's performance. In addition, 5 U.S.C. 5383 provides that each appointing authority shall determine which of the rates within a range established under section 5382 shall be paid to each senior executive under such appointing authority. However, section 147(c) of the Act applies "notwithstanding any other provision of law" to restrict a senior executive from receiving an increase in his or her rate of basic pay during the designated two-year period. The Act also includes the criteria for an exception in that section - i.e., increases based on "a change of position that results in a substantial increase in responsibility, or a promotion." An agency may have its PRBs make recommendations on exceptions consistent with the pay freeze law, but pay adjustments that are based upon the results of a recently completed performance appraisal cycle do not meet the criteria for this exception.

The pay freeze does not apply to performance awards paid under 5 U.S.C. 5384 and 5 CFR 534.405.

The pay freeze precludes such increases because they do not meet the criteria for the exception in section 147(c) of the Act. Additionally, the underlying pay rates that determine the SES rate range will remain unchanged - i.e., 120 percent of the minimum rate of basic pay payable for GS-15 of the General Schedule and the rates of basic pay for level III and level II of the Executive Schedule. Since the SES pay rate range will not change, agencies will not need to adjust a senior executive's rate of basic pay to maintain his or her relative position within the rate range.

Since the rate range is not increasing, an SES member's rate will not fall below the range minimum as a result a range adjustment. Thus, such an action presumably would be required only if a senior executive has suffered an unjustified or unwarranted personnel action resulting in a past failure to adjust pay to an appropriate level (e.g., the minimum rate of the SES rate range, prior to the pay freeze). Under 5 CFR part 550, subpart H, an agency is required to correct such actions and, if the action has resulted in the withdrawal, reduction or denial of all or part of the pay, allowances and differentials otherwise due the employee, to provide back pay to the senior executive under section 5596 of title 5, United States Code. This should result in establishment of a new rate of basic pay effective prior to the pay freeze that becomes the rate subject to the pay freeze.

To meet the certification criteria, agencies are expected to make distinctions in rates of pay, pay increases, and/or performance awards. The Act only freezes pay adjustments, and does not affect the agency's ability to grant performance awards to career executives. Therefore, agencies can make the pay distinctions required for performance appraisal system certification in their bonus decisions. OPM is aware the Act imposes certain limitations on agencies in making pay distinctions and would consider these limitations in applying the certification criteria.

Agencies will need to maintain their SES performance appraisal system certification in order to use the full SES rate range up to Executive Schedule Level II to hire new executives. Moreover, the law provides for certification of agency appraisal systems. While certification allows agencies to pay higher rates and use a higher aggregate limit on pay, this is not the sole purpose of certification. The certification process ensures agencies review their appraisal systems and the effectiveness of their executive performance plans. The criteria for certification require agency performance appraisal systems to provide for, and performance plans to execute, the following: alignment of executive performance requirements to agency mission; predominant focus on measurable results-based requirements; balanced measures, including customer and employee perspective; and accountability for effective performance management of subordinates. While one of the criteria that reflect the application of these systems is the agency's pay distinctions, OPM would consider the impact of the freeze when considering agency certification requests.

An agency may grant a basic pay increase to an SES member upon voluntary or involuntary reassignment only if the increase is based on a change of position resulting in a substantial increase in responsibility, consistent with applicable statutory and regulatory requirements. For example, such a pay increase would be subject to the 12-month restriction at 5 CFR 534.404(c). Therefore, the pay increase could not be granted within 12 months of the senior executive's most recent pay increase unless an exception is approved under 5 CFR 534.404(c)(4)(ii), in addition to the exception under section 147(c) of the Act. Once granted, the pay adjustment would initiate a new 12-month restriction. If more than 12 months have passed since the senior executive's last basic pay adjustment, the agency may determine whether a pay increase is justified under section 147(c) under such procedures as the agency head may establish. The procedures should include, as appropriate, review by an official at a higher level than the agency official otherwise authorized to take the pay action and must ensure verification and objective comparison of the positions' relative responsibilities.

An agency may grant a basic pay increase to an SES member who transfers from another agency only if the increase is based on a change of position resulting in a substantial increase in responsibility, consistent with applicable statutory and regulatory requirements. For example, such a pay adjustment would be subject to the 12-month restriction at 5 CFR 534.404(c). Therefore, the pay increase could not be granted within 12 months of the senior executive's most recent pay increase unless an exception is approved under 5 CFR 534.404(c)(4)(ii), in addition to the exception under section 147(c) of the Act. (Note that the need to recruit for a senior executive with superior leadership or other competencies is not sufficient to justify a pay increase; the position change must also result in a substantial increase in responsibility). Once granted, the pay adjustment would initiate a new 12-month restriction. If more than 12 months have passed since the senior executive's last basic pay adjustment, the agency may determine whether a pay increase is justified under section 147(c) under such procedures as the agency head may establish. The procedures should include, as appropriate, review by an official at a higher level than the agency official otherwise authorized to set pay and must ensure verification and objective comparison of the positions' relative responsibilities.

Yes. For purposes of pay and benefits, a senior executive on detail continues to encumber the position from which he or she is detailed. Agencies may not grant a pay increase to an SES member detailed to another position because no change of position has occurred for purposes of pay and benefits. The same is true of an SES member assigned to "act" in a position of substantially greater responsibility rather than reassigned to that position.

No, the pay freeze does not apply to these awards.

No. An agency may involuntarily reduce a career senior executive's rate of basic pay under 5 CFR 534.404(j) for performance or disciplinary reasons subject to restrictions on reducing the pay of senior executives in 5 CFR 534.404(b) and 534.404(c) or on setting pay below the minimum rate of the SES rate range in 5 CFR 534.403(a). However, an agency should take the duration of the pay freeze into account when assessing the appropriate reduction for a senior executive. Under 5 CFR 534.404(c), a senior executive whose pay is reduced but who resolves any problems and demonstrates stronger performance has the opportunity for a pay increase after 12 months, but the pay freeze can impose a significantly longer waiting period. For example, a pay reduction in January 2011 is fixed for 24 months until January 2013; a pay reduction in April 2011 is fixed for 21 months, and so on-absent a change of position that meets the criteria in section 147(c) of the Act for an exception to the pay freeze.