Merit system principles and prohibited personnel practices are actually fairly complicated to understand and far from obvious in their logical restrictions. Depending on one's government affiliation either as a local, or federal worker, there are a variety of laws and local and state regulations that could apply and restrict the activities and employment practices of individuals. However it is still important that managers and others recognize the rules and regulations that apply to them. In addition to the level of government that employees are involved in it is also important to note what kind of employee, for technically a congressman is a government employee they are governed by different political and financial restrictions than say a typical non-politically appointed bureaucrat.
This separation of types of employees is probably the most important distinction and clearly idea of delineation of prohibited practices and merit system principles. Bureaucrats for example are intended to be in it for the long run as a career choice and therefore their performance, human capital, and other investments and incentives is seen to be encouraging and an attempt to achieve better results from the employee. However, these performances are supposed to be free from political bias, political intrusion, and domination. Bowman and West (2009) highlight the recent lightening of the political restrictions on government bureaucrats and the negative effects that such actions can results. They describe the "ethical triangle" that basically includes integrity and following the rules, neutrality and results based incentives, and moral applications to achieve public benefit (Bowman and West, 2009).
One of the ethical problems that occur with bureaucrats is the issue of addressing conflicting values. Because political parties hold values but those values are not identical nor right or wrong even among its own members, the fluctuation in the majority party and periods where there is mixed party control of different portions of the government, it would make the government more volatile if bureaucrats reflected or enforced the values of the in power political party. So as a benefit a reduction in political influence enhances the longevity and sustainability of the bureaucratic processes. However it is important to identify the political influences in play and to address issues in a neutral manner as Hans Weggemans proposes, to get to the central purpose of legislation rather than the political interest (McKevitt and Lawton, 2004).
One of the troublesome areas where it can get tricky and local variation come into play tends to involve performance management, review, and incentives. These areas are usually restricted based off of local budgeting funds, local views on government work and pay, and a variety of effects on government employment. As such people are also motivated by a variety of factors above and beyond pay and there are multiple opportunities to encourage and foster personal and performance growth as well as maintaining sustainable funding and expenditures. John Greiner highlights three beneficial motivational approaches: "performance targeting, monetary incentives and participation" (Kearney and Berman, 1999).
When we go back to idea of the ethical triangle we also come to where we see the need and the benefit of prohibited personnel practices. In addition to keeping with the ethical requirements it's important that incentives are not utilized to break those ethical standards. Just as monetary incentives can be used to encourage performance and increase production and results, so too can monetary resources be used to remove ethical walls, ensure biased action, and to corrupt the bureaucratic processes. Within the federal government and rules usually these restrictions on incentives, gifts, etc. are usually restricted based on who the giver of these resources is as well as the reason. For example, it would be perfectly acceptable for a boss to give financial incentives to a government employee such as a performance award but a government contractor with a pending contract consideration giving that employee gifts or benefits would obviously break neutrality, ethical standards, etc. But what if the boss was giving awards for the employee based off of who the employee was awarding contracts to? This would also be a prohibited practice because it's breaking ethical standards; it's removing neutrality and public benefit, and is not based off of performance and results. Candris (2002) notes that there are even different stipulations and pay requirements based off of applicability and exemptions of the fair labor standards act, that can affect how and why employees are paid or incentivized with monetary gains. I think it's fair to say that any time that money or items of monetary value are exchanged there has to be a clear consideration of the validity and ethical ways in which it is given or exchanged.