Grade Retention Entitlements for Federal Employees

Employees that are placed in a lower-graded position as a result of certain actions such as a reduction in force can be eligible for grade retention. This applies employees under the general schedule, the prevailing rate system and certain occupational pay systems.

Employees placed in a lower-graded position under the same or different covered pay system (such as a result of an RIF or when his or her position is reduced in grade as a result of a reclassification) are entitled to retain the grade held immediately before the reduction for a period of two years.

An employee is eligible for optional grade retention only if, immediately before being placed in the lower grade, the employee has served for at least 52 consecutive weeks in one or more positions under a covered pay system at one or more grades higher than that lower grade.

An agency must provide grade retention to an employee who moves from a position under a covered pay system to a lower-graded position under a covered pay system as a result of reduction in force procedures or a reclassification process.

Eligibility for Grade Retention

An employee is eligible for grade retention as a result of a reduction in force only if the employee has served for at least 52 consecutive weeks in one or more positions under a covered pay system at one or more grades higher than the grade of the position in which the employee is placed.

An employee is eligible for grade retention based on a reclassification of his or her position only if, immediately before the reduction in grade, that position was classified at the existing grade or a higher grade for a continuous period of at least one year.

An agency may provide grade retention to an employee moving from a position under a covered pay system to a lower-graded position under a covered pay system when management announces a reorganization or reclassification decision in writing that may or would affect the employee, and the employee moves to a lower-graded position (either at the employee’s initiative or in response to a management offer) on or before the date the announced reorganization or reclassification occurs.

An employee is entitled to retain the grade held immediately before the action that provides entitlement to grade retention for two years beginning on the date the employee is placed in the lower-graded position, unless grade retention is terminated.

An agency must treat an employee’s retained grade as the employee’s grade for almost all purposes, including pay and pay administration and premium pay.

If the employee’s actual position of record is under a different covered pay system than the covered pay system associated with the retained grade, the agency also must treat the employee as being under the covered pay system associated with the retained grade for the same purposes.

Special Rules

Special rules apply when an employee becomes entitled to grade retention or becomes covered by different pay schedules (because of a change in the employee’s position of record, official worksite, or the establishment of a new pay schedule) during a period of grade retention.

When an employee’s existing pay schedule is adjusted or a new pay schedule that covers the employee’s existing position of record (for the retained grade) is established (e.g., establishment of a new special rate schedule) while the employee is entitled to grade retention, the employee receives the same pay adjustments as any employee at the same grade and step.

An employee who is receiving a retained rate while entitled to grade retention is entitled to 50 percent of the increase in the maximum rate of the highest applicable rate range for the employee’s position and retained grade.

Termination of Eligibility for Grade Retention

Eligibility for mandatory grade retention ceases or grade retention terminates if any of the following conditions occurs:

  • the employee has a break in service of one workday or more;
  • the employee is reduced in grade for personal cause or at the employee’s request (based on the grade of the employee’s position of record rather than the employee’s retained grade);
  • the employee moves to a position under a covered pay system with a grade that is equal to or higher than the retained grade (excluding temporary promotions);
  • the employee declines a reasonable offer of a position with a grade equal to or higher than the retained grade;
  • the employee elects in writing to terminate the benefits of grade retention; or
  • the employee moves to a position not under a covered pay system.

An employee whose grade retention benefits are terminated based on a declination of a reasonable offer of a position the grade of which is equal to or higher than his or her retained grade may appeal the termination to the Office of Personnel Management.

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