The Bloomberg administration and the union representing New York City school principals and assistant principals reached a tentative contract agreement yesterday that would offer bonuses of up to $25,000 a year to select principals who agree to spend three years in troubled schools.

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The deal would increase base pay by 23 percent, compounded over nearly seven years, and add 15 minutes to principals’ and assistant principals’ workdays. The contract would also revamp how principals are rated on their performance each year, discarding the blunt thumbs-up or thumbs-down system under which they are labeled either satisfactory or unsatisfactory.

It would be replaced by a more nuanced review, aligned to the Education Department’s new accountability system, which grades schools from A to F based on students’ progress.

The contract, which must be ratified by union members, would also end seniority rights that allowed veteran assistant principals without school assignments to force their way into certain vacancies, even over principals’ objections.

The change has long been sought by Schools Chancellor Joel I. Klein, who argued that “bumping rights” saddled principals with unwanted staff members.

The four-year contract fight with the union, the Council of School Supervisors and Administrators, was unusually bitter even by the standards of city labor relations. But at City Hall yesterday, Mayor Michael R. Bloomberg heralded the agreement as a turning point for the city and its principals. The mayor, using one of his favorite corporate metaphors, has often irked principals by likening them to “line managers” at a factory.

“Today’s agreement will allow us to give school principals and supervisors the substantial raises that we all know they deserve, while also making the reforms that will significantly improve education for our city’s 1.1 million students,” Mr. Bloomberg said. “The contract that we are proposing today reflects the important role that principals and supervisors play.”

Ernest A. Logan, the union president, said the contract would be a model. “We are now moving forward to recognizing people’s performance and paying them for the work that they do,” he said.

The deal would increase the starting salary of elementary school principals to $123,456 from $100,242. The maximum base pay for high school principals would rise to $154,295 from $125,282.

Starting salaries for assistant principals who work all year rather than just the 10 months that schools are in session would rise to $108,869 from $88,398, and their maximum salary would be $130,100, up from $108,869.

The raises, along with increases in retirement and other benefits, roughly track those for teachers in recent years.

The contract would also increase the maximum annual bonus that school supervisors could earn for good performance, to $25,000 from $15,000.

Principals could earn both the $25,000 troubled-school bonus and the $25,000 performance bonus, meaning that a senior principal could earn more than $200,000 annually by the 2009-10 school year.

City officials expressed particular pleasure that the contract agreement included incentive provisions that are often opposed by unions. “In the private sector, financial incentives encourage actions that are good for the company,” Mr. Bloomberg said. “And there is no reason we shouldn’t also use financial incentives in the public sector to encourage actions that are good for our schools.”

As part of the deal to end the seniority rights of assistant principals, the city would help find a position for anyone who is left without an assignment. Should an assistant principal still not get an offer from any principal, the city, for the first time, would be able to extend a buyout of up to one year’s pay.

Assistant principals who declined a buyout would be placed in schools where they could be required to teach three periods a day and perform other duties.

In addition to the longer workday, which would grow to 7 hours 15 minutes, principals and assistant principals would have to spend 25 hours a year at conferences, meetings or workshops outside of school time.

Besides the general wage increases, every union member who is still working as of June 27 would receive a $4,000 payment in August. The union’s last contract expired on June 30, 2003. The new one would be retroactive and would run through March 5, 2010, two months after the end of Mr. Bloomberg’s term.