The award - coming one day after six rogue narcotics officers were indicted on racketeering, extortion, robbery, kidnapping and drug dealing charges - also gives the department the ability to rotate some officers out of the Narcotics and Internal Affairs units.
Nutter and Police Commissioner Charles Ramsey said yesterday that officers sometimes stay too long in those jobs.
"Sometimes it's just good for people to move on because they have lost their way," Nutter said.
John McNesby, president of the Fraternal Order of Police Lodge No. 5, said the new policy was one part of the award that he disagreed with.
"I'm a firm believer that if you're going to be a corrupt cop, you're going to be a corrupt cop whether you're in uniform or whether you're in plain clothes," he said.
Under the award, police officers will get 3 percent raises this year, 3.25 percent raises next year and another round of 3.25 percent raises the following year. They will also each get a $1,500 bonus once the department is accredited by the Pennsylvania Chiefs of Police Association, a process Ramsey has been working on for years and expects to be completed soon.
In a post on the FOP website, McNesby noted to his members that they have received combined raises of 28.5 percent since 2008, when Nutter came into office.
The award also strips language from the previous arbitration award that gave the city the right to furlough cops during economic downturns - a policy Nutter has fought vigorously to insert into all city labor contracts but only succeeded with the police award.
Shannon Farmer, the city's chief negotiator, said the police award instead made it easier for the city to implement temporary layoffs, which can be used for the same purpose as furlough days.
It's the second multiyear agreement Nutter has reached with the FOP, the only large city union that has had a consistently strong relationship with Nutter.
The administration is currently in arbitration talks with the firefighters union and is battling the city's blue-collar union in court over whether the city can impose contract terms on workers during an impasse. It settled a five-year stalemate with the white-collar union earlier this year.
Read the full text of the arbitration decision here.
On Twitter: @SeanWalshDN