Federal Employee Pay Retention Rights

An employee whose basic pay rate would be reduced as a result of a management action is entitled to retain that rate under pay retention rules. Pay retention may apply to an employee who is in a covered pay system or who is moving to a position under a covered pay system from a position not under a covered pay system, including the general schedule, prevailing rate system and certain special occupational systems.

Pay retention required in some cases

An agency must provide pay retention to an employee who moves from a position under a covered pay system whose payable rate of basic pay would be reduced (after application of any applicable geographic conversion) as a result of:

  • the expiration of the two-year period of grade retention;
  • a reduction in force or reclassification action that places an employee in a lower-graded position when the employee does not meet the eligibility requirements for grade retention;
  • a management action that places an employee in a non-special rate position or in a lower-paid special rate position from a special rate position;
  • a management action that places an employee under a different pay schedule;
  • a management action that places an employee in a formal employee development program generally utilized government-wide, such as upward mobility, apprenticeship, and career intern programs;
  • the application of the promotion rule for general schedule or prevailing rate employees when the employee’s payable rate of basic pay after promotion exceeds the maximum rate of the highest applicable rate range; or
  • a reduction or elimination of scheduled rates, special schedules, or special rate schedules (excluding a statutory reduction in scheduled rates of pay under the general schedule or prevailing rate schedule).

Eligibility for pay retention eligibility ceases or pay retention terminates if any of the following conditions occurs (after applying any applicable geographic conversion):

  • the employee has a break in service of one workday or more;
  • the employee is entitled to a rate of basic pay under a covered pay system which is equal to or greater than the employee’s retained rate (excluding a rate resulting from a temporary promotion or temporary reassignment);
  • the employee declines a reasonable offer of a position in which the employee’s rate of basic pay would be equal to or greater than the employee’s retained rate;
  • 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); or
  • the employee moves to a position not under a covered pay system.
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