Minister for Public Sector Innovation Sophie Løhde has decided to meet calls by a parliamentary majority to set in motion an investigation of the issue, according to a report by DR Nyheder.
The broadcaster recently reported that directors of rail operating company Banedanmark, a government agency, were paid bonuses in 2016 despite several of them not reaching targets.
Six directors were paid bonuses between 100,000 and 125,000 kroner (13,000 and 17,000 euros).
"I will now initiate an investigation of how result-based pay is used by the state… in which institutions and to what extent it is used, and whether guidelines are sufficinently clear as well as whether they are upheld," Løhde told DR Nyheder, adding that bonuses are an important motivational tool.
The investigation will also seek to expose cases in which bonuses have been paid automatically, according to the report.
The Social Democrats, Socialist People's Party and Danish People's Party have all demanded an investigation into the matter.
Negotiations over a deal on new terms for public sector workers in Denmark are currently ongoing and industrial action in the form of a strike or retaliatory 'lockout' could hit the country's public services.