Merit-Based Step Increments for Govt Employees

Joint CSC-DBM Circular No. 1, s. 1990 authorizes the grant of step increments based on merit to officials and employees achieving Outstanding and Very Satisfactory performance for two consecutive rating periods beginning January 1, 1990.
The merit schedule and the grant mechanics are governed by Section 1, Rule III of the Joint CSC-DBM Circular No. 1, s. 1990.
CSC Memorandum Circular No. 40 directs agencies to implement the merit-based step increments in accordance with Joint CSC-DBM Circular No. 1, s. 1990.
Agency compliance is tied to the merit schedule provisions stated under Rule III (Merit Schedule) of the Joint Circular.

Merit-based step increments are granted to deserving officials and employees based on performance rating results for two consecutive rating periods.
The grant recognizes Very Satisfactory and Outstanding performance under the agency-approved Performance Appraisal System (PES).
Implementation must follow the taking effect rule tied to the end of the second rating period.
Agencies must apply the annual recipient cap to control the number of step-increment beneficiaries.

“Very Satisfactory performance for two consecutive rating periods” qualifies a recipient for a one (1) step increment based on merit.
“Outstanding performance for two consecutive rating periods” qualifies a recipient for a two (2) step increment based on merit.
Performance must be based on the agency approved performance appraisal system under the approved Agency Performance Appraisal System (PES).
The performance period is structured as two consecutive rating periods for eligibility.

Merit-based step increments apply to officials and employees of departments or agencies that have an approved Agency Performance Appraisal System (PES).
Recipients must achieve the required performance rating results for two consecutive rating periods beginning with performance starting January 1, 1990.
The total number of merit step-increment recipients in any one (1) calendar year is capped at ten per cent (10%) of the total number of personnel actually employed in the department or agency.
Recipients granted two step increments must not exceed three per cent (3%) of the total number of personnel actually employed in the department or agency.
When more than 10% qualify, the Department or Agency head must develop a forced ranking system to determine the qualifying 10%.

For Very Satisfactory performance for two (2) consecutive rating periods, a recipient must receive one (1) step increment based on merit.
For Very Satisfactory performance eligibility, the increment takes effect on the day following the end of the second rating period.
For Outstanding performance for two (2) consecutive rating periods, a recipient must receive two (2) step increments based on merit.
For Outstanding performance eligibility, the increment takes effect on the day following the end of the second rating periods.
For initial implementation, the performance for 1990 under an approved Agency Performance Appraisal System (PES) serves as the basis of the grant.
Agencies with approved PES are enjoined to implement the grant of step increments based on merit in accordance with Joint CSC-DBM Circular No. 1, s. 1990.

Agency heads must monitor strict compliance with Joint CSC-DBM Circular No. 1, s. 1990 and the merit-based step increment schedule mandated for implementation.
When eligibility exceeds the annual 10% cap, the agency head must implement a forced ranking system to select the qualifying 10% recipients for the grant.
The increment grant must be aligned to the agency’s approved PES and the two-consecutive-rating requirement for merit eligibility.