Basically, the engine is flat rated at sea level at certain temperature. For the sake of argument, lets say the engine is rated at 50000 ibs of thrust at sea level, standard atmospheric conditions to ISA + 15. That means, the manufacturer guarantees that the engine will produce 50000 lbs of thrust up to 30 deg C at sea level. Above 30 deg C, the manufacturer reduces the thrust accordingly to ensure reliability and maintenance schedules, under nominal use. Most of the time, the thrust limits are programmed in the FMC or FMGEC, which when coupled to the auto-thrust system, sets the engine N1 accordingly..
May not be the most comprehensive answer, I'm certainly not an engineer, but that's the basic logic...