It comes nine months after the government promised it would look into how bonuses were given out after it was revealed Australia Post executives received Cartier watches as a gift for their work.

Assistant Minister to the Minister for the Public Service Ben Morton outlined on Friday that new guidelines would limit performance bonuses only to those who had delivered extraordinary service.

Those who had been tasked with delivering high performance outcomes on predetermined objectives would be considered for short-term incentives, he said.

Transparent decision-making and consistent reporting requirements would also help to provide justification to the public and parliament.

Mr Morton added bonuses were not generally appropriate for those in policy, service delivery, regulatory and corporate roles.

"Commonwealth entities and companies exist to deliver outcomes for the public. They should act in line with community expectations regarding remuneration, regardless of their level of independence from the Government," Mr Morton said.

"Performance bonuses may only be used in limited circumstances justifiable to the Parliament and the public, including significant at-risk investment outcomes, public milestones or non-tax revenue generation. They are not appropriate in most policy, service delivery, regulatory, or corporate roles.

"While the Commonwealth public sector employs people with a diverse range of responsibilities, skills and qualifications supporting the prosperity of Australians, Commonwealth entities and companies need to be accountable to the community they serve and the Australian government."

The public service commission delivered further guidance on changes to the public sector's bonus requirements.

"Assessment criteria must be transparent reinforcing that all decisions are justifiable," it said.

"Parameters for performance bonuses must be set in advance of a performance period and not retrospectively established.

"Individuals should be ineligible for performance bonuses for adequate or satisfactory performance."

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Last week it was revealed wage growth for public servants had dropped to its lowest level in years under the federal government's freeze on pay rises in 2020.

It also showed agencies had continued to hand out performance bonuses to their senior executives.

The Canberra Times revealed last year the executives of government companies had raked in millions in bonuses during the year despite freezes to public sector wages.

NBN Co chief executive Stephen Rue took home a total remuneration package of more than $3.1 million in the 2019-20 financial year. With a base salary is $1.87 million, Mr Rue received a further $1.18 million in bonuses, marking a 20 per cent increase on the previous year.

The Remuneration Tribunal, who is responsible for setting pay levels for department and agency heads, announced in June that salaries would remain unchanged in 2021-22 because of the uncertainty surrounding the economic recovery from Covid.

It is the second year the tribunal has awarded no pay rise to the most senior bureaucrats.

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