Pay Administration (General); Lump-Sum Payments for Annual Leave

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 550

RIN 3206-AF38

Pay Administration (General); Lump-Sum Payments for Annual Leave

AGENCY: Office of Personnel Management.

ACTION: Proposed rule with request for comments.

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SUMMARY: The Office of Personnel Management (OPM) is issuing proposed

regulations to establish a Governmentwide policy for calculating lump-

sum payments for accumulated and accrued annual leave for employees who

separate from the Federal service.

DATES: Comments must be received on or before September 29, 1997.

ADDRESSES: Comments may be sent or delivered to Donald J. Winstead,

Assistant Director for Compensation Policy, Human Resources Systems

Service, Office of Personnel Management, Room 6H31, 1900 E Street NW.,

Washington, DC 20415 (FAX: (202) 606-0824), or email at

[email protected].

FOR FURTHER INFORMATION CONTACT: Brenda Roberts, (202) 606-2858, FAX

(202) 606-0824, or email at [email protected].

SUPPLEMENTARY INFORMATION: The Technical and Miscellaneous Civil

Service Amendments Act of 1992 (Pub. L. 102-378, October 2, 1992) added

section 5553 to title 5, United States Code, to give the Office of

Personnel Management regulatory authority for the administration of

lump-sum payments for accumulated and accrued annual leave. Under 5

U.S.C. 5551 and 5552, such lump-sum payments are made when an employee

(1) separates from the Federal service or (2) enters on active duty in

the armed forces and elects to receive a lump-sum payment for

accumulated and accrued annual leave. The lump-sum payment must equal

the pay the employee would have received had he or she remained

employed until expiration of the period of annual leave.

Section 6306 of title 5, United States Code, provides that when an

employee is reemployed in the Federal service prior to the expiration

of the lump-sum period, he or she must refund an amount equal to the

pay covering the period between the date of reemployment and the

expiration of the lump-sum period. In addition, an amount of annual

leave equal to the days or hours of work remaining between the date of

reemployment and the expiration of the lump-sum leave period is

recredited to the employee. OPM is authorized to regulate this

requirement by 5 U.S.C. 6311.

OPM recognizes that agencies currently calculate lump-sum payments

for annual leave and refunds based on their interpretation of the broad

statutory language in 5 U.S.C. 5551, 5552, and 6306; OPM's regulations

on lump-sum payments for employees who receive nonforeign area cost-of-

living allowances, post differentials, or availability pay; and

additional guidance provided by the former Federal Personnel Manual,

Comptroller General opinions, court decisions, and the Federal Wage

System Operating Manual. Consequently, agencies may not have consistent

policies for including some types of pay in lump-sum payments for

annual leave. On March 3, 1995, OPM asked Directors of Personnel for

assistance in developing proposed regulations on lump-sum payments for

annual leave. We received comments from 30 agencies. Agency opinions

varied widely on what types of pay should be included in or excluded

from lump-sum payments. After careful consideration of all agency

comments, we are proposing Governmentwide rules for determining how

lump-sum payments should be calculated. The proposed regulations are

designed to ensure that lump-sum payments are calculated consistently

throughout the Federal Government. When OPM issues final regulations on

lump-sum payments for annual leave, they will not be made retroactive.

The final regulations will apply only to lump-sum payments made by an

agency on or after the effective date of the final regulations. The

following paragraphs summarize the major provisions of the proposed

regulations.

Employees Eligible for a Lump-Sum Payment

Generally, an employee is entitled to a lump-sum payment for

accumulated and accrued annual leave when he or she (1) separates or

retires from Federal service; (2) dies; or (3) transfers to a position

that is not covered by subchapter I of chapter 63 of title 5, United

States Code, or to a position that is covered by a different leave

system, when his or her accumulated and accrued annual leave cannot be

transferred. In addition, section 1611 of Pub. L. 104-201, September

23, 1996, added paragraph (c) to 5 U.S.C. 5551 to require the

Department of Defense (DOD) to pay a lump-sum payment to an employee

for any unused annual leave that was restored under 5 U.S.C. 6304(d)(3)

when the employee (1) transfers to a position in any other department

or agency of the Federal Government or (2) moves to a position within

DOD not located at an installation undergoing closure or realignment.

This new entitlement to a lump-sum payment for certain DOD employees

became effective on September 23, 1996.

There are five exceptions to the general rule that employees who

separate, die, or transfer are entitled to a lump-sum payment:

(1) An employee who enters on active duty in the armed forces may

elect to receive a lump-sum payment for accumulated and accrued annual

leave or may request that the annual leave remain to his or her credit

until he or she returns from active duty.

(2) An employee in a missing status (as defined in 5 U.S.C.

5561(5)) on or after January 1, 1965, is entitled to receive a lump-sum

payment for accumulated and accrued annual leave upon return or may

elect to have the annual leave restored in a separate leave account

under 5 U.S.C. 6304(d)(2). The lump-sum payment is computed based on

the pay in effect at the time the annual leave became subject to

forfeiture.

(3) An employee who transfers to a position excepted from

subchapter I of chapter 63 of title 5, United States Code, by 5 U.S.C.

6301(2)(x)-(xiii) (i.e., certain Presidential appointees or designees)

may not receive a lump-sum payment upon appointment to the new

position. The annual leave must be held in abeyance for recredit if the

employee is

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subsequently reemployed without a break in service in a position to

which his or her annual leave may be transferred. If the employee does

not return to a position to which his or her annual leave can be

transferred and later becomes eligible for a lump-sum payment, the

lump-sum payment is computed based on the pay in effect at the time the

employee initially transferred to the excepted position. The lump-sum

period is projected beginning on the effective date of the employee's

separation, death, or transfer.

(4) An employee who transfers to a position not covered by the

Federal leave system established under chapter 63 of title 5, United

States Code, and to which only a portion of his or her annual leave may

be transferred, will have the remaining annual leave held in abeyance

for recredit until he or she is subsequently reemployed without a break

in service in a position to which his or her annual leave may be

transferred. If the employee does not return to a position to which his

or her annual leave can be transferred and later becomes eligible for a

lump-sum payment, the lump-sum payment is computed based on the rate in

effect at the time the employee initially transferred to the position

to which only a portion of his or her annual leave could be

transferred. The lump-sum payment is paid by the current employing

agency. The lump-sum period is projected beginning on the effective

date of the employee's separation, death, or transfer.

(5) An employee who has been determined by an agency to be in a

continuing employment program under which the employee is required to

work a ``mixed tour of duty'' will have his or her annual leave held in

abeyance during intermittent duty and recredited when he or she returns

to full-time or part-time employment. If the employee separates,

transfers, or dies during the period of intermittent employment, he or

she is entitled to a lump-sum payment for the annual leave held in

abeyance. (A ``mixed tour of duty'' is a condition of employment for

positions in which a fluctuating workload requires an employee to work

full-time or part-time for a portion of the year and intermittent for

the remainder.)

Employees not Eligible for a Lump-Sum Payment

An employee is not entitled to a lump-sum payment for accumulated

and accrued annual leave when he or she (1) transfers between positions

covered by subchapter I of chapter 63 of title 5, United States Code,

except as provided by 5 U.S.C. 5551(c); (2) transfers to a position not

covered by subchapter I of chapter 63 of title 5, United States Code,

but to which his or her accumulated and accrued annual leave may be

transferred under 5 U.S.C. 6308; (3) transfers to the government of the

District of Columbia or the U.S. Postal Service; or (4) is concurrently

employed in more than one part-time position and who separates from one

of the part-time positions. (If an employee is employed in part-time

positions in different agencies, the annual leave accumulated and

accrued in the agency from which the employee separates must be

transferred to the current employing agency.)

Projecting the Lump-Sum Leave Period

A lump-sum payment for accumulated and accrued annual leave equals

the pay an employee would have received had he or she remained in the

service until expiration of the period of annual leave. The period of

leave used for calculating the lump-sum payment may not be extended due

to any holiday occurring after separation. Annual leave donated under

the Federal voluntary leave transfer and leave bank programs may not be

included in a lump-sum payment and does not serve to extend the lump-

sum leave period. (See 5 CFR 630.909(e)(2) and 630.1009(e)(1).)

Compensatory time off and unused credit hours accumulated under a

flexible work schedule are not annual leave. Therefore, they are not

included in a lump-sum payment and do not serve to extend the lump-sum

leave period. Any remaining compensatory time off or credit hours (not

in excess of 24) may be paid separately as part of a final salary

payment when an employee separates. (See 5 CFR 550.114(d) and

551.531(d) and 5 U.S.C. 6126.)

The lump-sum payment is projected beginning on the first workday

(counting any holiday) occurring after the date of separation, death,

or transfer, as applicable, and including subsequent workdays and

holidays. An agency must project the lump-sum leave period so that any

annual leave restored under 5 U.S.C. 6304(d) is used before projecting

any accumulated annual leave to the employee's credit in his or her

regular annual leave account. (Under 5 CFR 630.306 and 630.309, annual

leave that is restored must be used by a certain date. Projecting the

lump-sum leave period so that restored annual leave is used before

regular annual leave will preclude the forfeiture of restored annual

leave for employees who are reemployed in the Federal service prior to

the expiration of the lump-sum leave period.)

Calculating the Lump-Sum Payment

Under 5 U.S.C. 5551, ``the lump-sum payment shall equal the pay

(excluding any differential under section 5925 and any allowance under

section 5928) the employee or individual would have received had he

remained in the service until expiration of the period of the annual or

vacation leave.'' The term ``pay'' is not further defined in law. In

these proposed regulations, we have attempted to offer an

interpretation of the ``pay'' to be included in a lump-sum payment that

is consistent with former Federal Personnel Manual guidance,

Comptroller General opinions, and agency practices.

The proposed regulations provide that the following types of pay

and adjustments are to be included in a lump-sum payment for annual

leave:

(1) An employee's rate of basic pay. An employee's rate of basic

pay is defined as the rate fixed by law or administrative action for

the position held by the employee and includes any applicable special

salary rate established under 5 U.S.C. 5305 or similar provision of law

or a special rate for law enforcement officers under section 403 of the

Federal Employees Pay Comparability Act of 1990; a locality rate of pay

under subpart F of part 531 of title 5, Code of Federal Regulations; a

special law enforcement adjusted rate of pay under subpart C of part

531, including a rate continued under Sec. 531.307; and any continued

rate of pay under subpart G of part 531.

(2) Any statutory adjustments in pay and any general system-wide

increases in pay that are authorized by law (or the President's

alternative plan) under sections 5303, 5304, 5304a, 5305, 5318, 5363,

5372, 5372a, 5376, 5382, or 5392 of title 5, United States Code, prior

to the date of separation, death, or transfer and which become

effective during the lump-sum leave period. The lump-sum payment is

adjusted to reflect the increased rate beginning on the effective date

of the pay adjustment.

(3) For a prevailing rate employee, the scheduled rate of pay under

5 U.S.C. 5343 and any applicable wage adjustment that is determined

under 5 U.S.C. 5343 if the employee separates, dies, or transfers after

issuance of an official order to conduct a wage survey for his or her

applicable wage area in accordance with 5 CFR 532.231(d)(3)

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and which becomes effective during the lump-sum leave period. The lump-

sum payment is adjusted to reflect the increased rate beginning on the

effective date of the wage adjustment.

(4) A within-grade increase authorized under 5 U.S.C. 5335 (if the

employee's work is of an acceptable level of competence) or under 5

U.S.C. 5343(e)(2) (if the employee's work performance rating is

satisfactory or better) and the employee has completed the required

waiting period prior to separation, death, or transfer. (See 5 CFR

531.404 and 532.417.)

(5) Annual premium pay for standby duty (5 U.S.C. 5545(c)(1)),

annual premium pay for administratively uncontrollable overtime (AUO)

work (5 U.S.C. 5545(c)(2)), and availability pay for criminal

investigators (5 U.S.C. 5545a). The lump-sum payment is calculated

using the percentage rate received by the employee immediately prior to

separation, death, or transfer.

(6) For certain employees, night pay earned for nonovertime hours

(5 U.S.C. 5545), Sunday premium pay (5 U.S.C. 5546(a)), and night

differential for prevailing rate employees earned during nonovertime

hours (5 U.S.C. 5343(f)).

The amount of night pay and/or Sunday premium pay to include in a

lump-sum payment is based on the average amount of night pay and/or

Sunday premium pay earned by the employee during the 12 administrative

workweeks immediately prior to separation, death, or transfer (or a

lesser period if the employee was not employed for the full 12 weeks

prior to separation, death, or transfer).

Night differential for prevailing rate employees is included for

all regularly scheduled nonovertime periods of night shift duty covered

by the unused annual leave as if the employee had continued to work

beyond the effective date of separation. The night shift differential

is paid at the percentage rate received by the employee for the last

full workweek immediately prior to separation. When a night shift has

been formally canceled or an employee has been regularly scheduled for

continuous day shift work on or before the date of separation, the

lump-sum leave payment is computed on the day rate.

As a result of the decision in Armitage, et. al. v. United States

(Fed. Cir. No. 92-5157, April 12, 1993), employees who are regularly

scheduled to work on Sunday are entitled to Sunday premium pay for

periods of paid leave. Based on this decision, OPM revised its

regulations in December 1994 to require the payment of Sunday premium

pay for periods of paid leave or excused absence (5 CFR 550.171). Under

the proposed regulations, certain employees covered by the Armitage

decision are entitled to include night pay earned during nonovertime

hours, Sunday premium pay, and night differential for prevailing rate

employees earned during nonovertime hours in their lump-sum payments

for annual leave.

However, recently enacted legislation prohibits the use of funds

appropriated by the Treasury, Postal Service, and General Government

Appropriations Act, 1997, as contained in section 101(f) of Public Law

104-208, the Omnibus Consolidated Appropriations Act, 1997, for the

payment of Sunday premium pay and night differential pay to employees

who do not actually perform work during the time corresponding to such

Sunday premium or night differential pay. This provision became

effective on September 30, 1996, and will expire on September 30, 1997,

unless legislation is enacted to continue it. Employees covered by this

Act may not receive Sunday premium and night differential pay during

periods of paid leave. The restriction on paying Sunday premium pay

during periods when work is not performed has been in effect for

employees of the Federal Aviation Administration under the

Transportation and Related Agencies Appropriations Acts for fiscal

years 1995, 1996, and 1997.

(7) Overtime pay under the Fair Labor Standards Act of 1938, as

amended (FLSA), for overtime hours regularly scheduled during an

employee's uncommon tour of duty as defined in 5 CFR 630.201.

(8) Nonforeign area cost-of-living allowances under 5 U.S.C. 5941,

nonforeign area post differentials under 5 U.S.C. 5941, and foreign

area post allowances under 5 U.S.C. 5924(1) (as authorized by section

220 of the U.S. Department of State's Standardized Regulations

(Government Civilians, Foreign Areas)) if the employee was receiving

such differential or allowance immediately prior to separation, death,

or transfer in the nonforeign or foreign area. Current OPM regulations

in 5 CFR 591.210(b)(1) already require a nonforeign area cost-of-living

allowance and a nonforeign post differential to be included in a lump-

sum payment if the employee separates in the nonforeign area. However,

it should be noted that 5 U.S.C. 5551 specifically excludes a foreign

area post differential (5 U.S.C. 5925) and foreign area danger pay (5

U.S.C. 5928) from lump-sum payments for annual leave.

OPM proposes to delegate authority to the head of each agency to

determine other kinds of pay authorized in statutes other than title 5,

United States Code, that should be included in a lump-sum payment,

consistent with 5 U.S.C. 5551, 5552, and 6306. No other types of pay or

pay adjustments may be included in a lump-sum payment for annual leave

unless specifically authorized by the head of an agency through the

authority delegated by OPM.

Refund of Lump-Sum Payment

Under 5 U.S.C. 6306, when an employee who receives a lump-sum

payment for accumulated and accrued annual leave under 5 U.S.C. 5551 is

reemployed in the Federal service prior to the end of the period

covered by the lump-sum payment, the employee must refund to the

employing agency an amount equal to the payment covering the period

between the date of reemployment and the expiration of the lump-sum

period. This rule applies whether an employee is reemployed in a

position covered by chapter 63 of title 5, United States Code, or a

different formal leave system. The refund is based on the pay used to

compute the lump-sum payment; e.g., an employee who received a lump-sum

payment based on the pay for a GS-11 position must refund the lump-sum

payment based on the same GS-11 pay, even if he or she is reemployed at

a lower or higher grade level. The refund is deposited in the Treasury

of the United States to the credit of the employing agency.

An agency may permit an employee to refund the lump-sum payment for

annual leave in installments. If an agency permits the lump-sum refund

to be paid in installments, the employee must pay the lump-sum payment

refund in full within 1 year after the date of reemployment. The annual

leave will be recredited to the employee's annual leave account on the

date the refund is paid in full.

An employee who is reemployed in the Federal service after the

expiration of the lump-sum period is not required to refund any portion

of a lump-sum payment. An employee who is reemployed prior to the

expiration of the lump-sum period in a Federal position that does not

have a formal leave system and whose annual leave cannot be recredited

is not required to refund any portion of a lump-sum payment. Under 5

U.S.C. 6306(a), an employee who is reemployed in a position listed in 5

U.S.C. 6301(2)(ii), (iii), (vi), or (vii) (i.e., an intermittent

position; a temporary, hourly-rate position in construction work; a

position as an employee of either or both Houses of Congress; or

certain positions in corporations supervised by

[[Page 40478]]

the Farm Credit Administration) is not required to refund any portion

of a lump-sum payment.

Recredit of Annual Leave

When an individual is reemployed in the Federal service prior to

the expiration of the lump-sum leave period in a position covered by

subchapter I of chapter 63 of title 5, United States Code, an amount of

annual leave equal to the days or hours of work remaining between the

date of reemployment and the expiration of the lump-sum leave period

must be recredited to the employee by the employing agency. Upon full

payment of the lump-sum payment refund, the agency must recredit the

employee's annual leave to his or her account. The recredited annual

leave is available for use by the employee on or after the date it is

recredited.

When an individual is reemployed in the Federal service prior to

the expiration of the lump-sum leave period in a position covered by a

different formal leave system, the amount of annual leave to be

recredited to the employee by the employing agency must be converted

based on the rules for recrediting annual leave in 5 CFR 630.501(b).

If any part of the lump-sum refund is for a period of annual leave

restored under 5 U.S.C. 6304(d), the restored leave is credited in a

separate leave account, and the expiration date for its use is the same

date as that originally established during the former employment. If

the originally established expiration date for the restored leave

occurs before the date of reemployment, a refund is required for all of

the unexpired portion, but none of that restored leave may be

recredited. Therefore, an agency may wish to consider delaying the date

of reemployment until expiration of the period represented by restored

annual leave.

In most cases, the annual leave recredited is subject to the

maximum annual leave limitation in 5 U.S.C. 6304(a), (b), (c), or (f),

as appropriate, for the position in which reemployed. For example, if

an employee is reemployed in a position covered by 5 U.S.C. 6304(a),

the maximum annual leave limitation is 240 hours. If the annual leave

to be recredited is in excess of the maximum annual leave ceiling

permitted for the position in which reemployed, a new maximum leave

ceiling is established for the employee as follows:

(1) If the maximum leave ceiling in the former position (prior to

separation or transfer) is higher than the maximum leave ceiling in the

current position in which reemployed, a new maximum annual leave

ceiling is established at the lesser of: (a) The employee's former

maximum annual leave ceiling at the time of separation or transfer, or

(b) the amount of annual leave to be recredited. The employee's new

maximum leave ceiling is subject to reduction in the same manner as

provided in 5 U.S.C. 6304(c) until the employee's accumulated annual

leave is equal to or less than the maximum leave ceiling for the

position in which reemployed.

(2) If a member of the Senior Executive Service (SES) had a

personal leave ceiling established under 5 CFR 630.301(d) prior to

separation or transfer that is higher than the maximum leave ceiling in

the current position in which employed, a new personal leave ceiling is

established at the lesser of: (a) The employee's personal leave ceiling

established under 5 CFR 630.301(d) prior to separation or transfer, or

(b) the amount of annual leave to be recredited. The new personal leave

ceiling is subject to reduction in the same manner as provided in 5

U.S.C. 6304(c) until the employee's accumulated annual leave is equal

to or less than the maximum leave ceiling for the position in which

reemployed.

Under 5 U.S.C. 6306(b), when an employee is reemployed in a

position listed in 5 U.S.C. 6301(2)(x)-(xiii) (i.e., certain

Presidential appointees or designees), the amount of annual leave to be

recredited is to be held in abeyance and remain to the employee's

credit. The employee will receive a lump-sum payment for the annual

leave if he or she later separates, transfers, or dies. If, instead,

the employee transfers to a position covered by chapter 63 of title 5,

or to a position covered by a different formal leave system, the annual

leave to the employee's credit must be recredited to the employee by

the employing agency.

Income Tax and Deductions

Under 5 U.S.C. 5551, a lump-sum payment to a separated or

transferred employee is considered pay for income tax purposes. A lump-

sum payment is not subject to deductions for retirement under the Civil

Service Retirement System or the Federal Employees Retirement System,

health benefits under the Federal Employees Health Benefits program,

life insurance under the Federal Employees Group Life Insurance

program, or savings under the Thrift Savings Plan. An employee does not

accrue leave for the period covered by the lump-sum payment. Finally, a

lump-sum payment is subject to garnishment under parts 581 and 582 of

title 5, Code of Federal Regulations, and to administrative offset (for

collection of debts to the Federal Government under part 102 of title

4, Code of Federal Regulations).

Regulatory Flexibility Act

I certify that these regulations will not have a significant

economic impact on a substantial number of small entities because they

will affect only Federal employees and agencies.

List of Subjects in 5 CFR Part 550

Administrative practice and procedure, Claims, Government

employees, Wages.

Office of Personnel Management.

James B. King,

Director.

Accordingly, OPM is proposing to amend part 550 of title 5 of the

Code of Federal Regulations as follows:

PART 550--PAY ADMINISTRATION (GENERAL)

1. Subpart L is added to read as follows:

Subpart L--Lump-sum Payment for Accumulated and Accrued Annual Leave

550.1201 Purpose, applicability, and administration.

550.1202 Definitions.

550.1203 Eligibility.

550.1204 Projecting the lump-sum leave period.

550.1205 Calculating a lump-sum payment.

550.1206 Refund of lump-sum payment and recredit of annual leave.

Subpart L--Lump-sum Payment for Accumulated and Accrued Annual

Leave

Authority: 5 U.S.C. 5553, 6306, and 6311.

Sec. 550.1201 Purpose, applicability, and administration.

(a) Purpose. This subpart provides regulations to implement

sections 5551, 5552, and 6306 of title 5, United States Code, and must

be read together with those sections. 5 U.S.C. 5551 and 5552 provide

for a lump-sum payment for accumulated and accrued annual leave when an

employee enters on active duty in the armed forces and elects to

receive a lump-sum payment for accumulated and accrued annual leave or

separates from Federal service. 5 U.S.C. 6306 requires that when an

employee is reemployed in the Federal service prior to the expiration

of the lump-sum period, he or she shall refund an amount equal to the

pay covering the period between the date of reemployment and the

expiration of the lump-sum period.

[[Page 40479]]

(b) Applicability. This subpart applies to--

(1) Any employee who separates, dies, or transfers under the

conditions prescribed in Sec. 550.1203; and

(2) Any employee or any individual employed by a territory or

possession of the United States who enters on active duty in the armed

forces and who elects to receive a lump-sum payment for accumulated and

accrued annual leave.

(c) Administration. The head of an agency having employees subject

to this subpart shall be responsible for the proper administration of

this subpart.

Sec. 550.1202 Definitions.

In this subpart--

Accumulated and accrued annual leave means any annual leave

accumulated and accrued, as these terms are defined in Sec. 630.201 of

this chapter, plus any annual leave credited to an employee under 5

U.S.C. 6304(c) and Sec. 630.301(d) of this chapter and any annual leave

restored under 5 U.S.C. 6304(d). Accumulated and accrued annual leave

does not include annual leave received by a leave recipient under the

voluntary leave transfer and leave bank programs under subchapters III

and IV of chapter 63 of title 5, United States Code, and annual leave

advanced to an employee under 5 U.S.C. 6302(d).

Administrative workweek has the meaning given that term in

Sec. 610.102 of this chapter.

Agency means--

(1) An executive agency and a military department as defined in

sections 105 and 102 of title 5, United States Code, respectively; and

(2) A legislative or judicial agency or a unit of the legislative

or judicial branch of the Government that has positions in the

competitive service.

Employee has the meaning given that term in 5 U.S.C. 2105.

Lump-sum payment means a final payment to an employee for

accumulated and accrued annual leave.

Mixed tour of duty means a condition of employment for positions in

which a fluctuating workload requires an employee to work full-time or

part-time for a limited portion of the year and intermittent for the

remainder.

Rate of basic pay means the rate of pay fixed by law or

administrative action for the position held by an employee before any

deductions and exclusive of additional pay of any kind.

Transfer means the movement of an employee to another position

without a break in service of 1 or more workdays.

Sec. 550.1203 Eligibility.

(a) A lump-sum payment for accumulated and accrued annual leave

shall be paid when an employee--

(1) Separates or retires from the Federal service;

(2) Dies; or

(3) Except as provided in paragraphs (c), (d), and (e), of this

section, transfers to a position that is not covered by subchapter I of

chapter 63 of title 5, United States Code, or to a position that is

covered by a different leave system, when his or her accumulated and

accrued annual leave cannot be transferred.

(b) An employee who has unused annual leave that was restored under

5 U.S.C. 6304(d)(3) shall receive a lump-sum payment for the restored

annual leave from the Department of Defense (DOD) when the employee

transfers to a position in any other department or agency of the

Federal Government or moves to a position within DOD not located at an

installation undergoing closure or realignment.

(c) An employee who enters on active duty in the armed forces may

elect to receive a lump-sum payment for accumulated and accrued annual

leave or may request that his or her annual leave remain to his or her

credit until return from active duty. However, any annual leave

previously restored under 5 U.S.C. 6304(d) may not be credited and may

be paid in a lump-sum payment when the employee enters active duty.

(d) An employee who transfers to a position in a public

international organization under 5 U.S.C. 3582 may elect to receive a

lump-sum payment for accumulated and accrued annual leave or may

request that his or her annual leave be held in abeyance for recredit

upon reemployment without a break in service in the Federal service. If

the employee chooses to receive a lump-sum payment and is reemployed in

the Federal service within 6 months after transfer to a public

international organization, he or she shall refund the amount of the

lump-sum payment to the agency. An amount of leave equal to the leave

represented by the refund shall be credited to the employee's account

under Sec. 550.1206.

(e) Except as provided in paragraph (d)(1) of this section, an

employee who transfers to a position excepted from subchapter I of

chapter 63 of title 5, United States Code, by 5 U.S.C. 6301(2) (x)-

(xiii) shall not receive a lump-sum payment upon appointment to the new

position. The accumulated and accrued annual leave shall be held in

abeyance for recredit when the employee is subsequently reemployed

without a break in service in a position to which his or her

accumulated and accrued annual leave may be transferred.

(f) An employee shall receive a lump-sum payment for any annual

leave restored under 5 U.S.C. 6304(d) upon transfer to a position

excepted by 5 U.S.C. 6301(2) (x)-(xiii). If the employee later becomes

eligible for a lump-sum payment under the conditions specified in this

section, a lump-sum payment shall be paid at that time for the annual

leave held in abeyance. The lump-sum payment shall be computed under

Sec. 550.1205(b) based on the pay the employee was receiving

immediately before the date of the transfer to the position excepted by

5 U.S.C. 6301(2) (x)-(xiii).

(g) An employee who transfers to a position that is not covered by

subchapter I of chapter 63 of title 5, United States Code, and to which

only a portion of his or her accumulated and accrued annual leave may

be transferred, shall have the annual leave that cannot be transferred

held in abeyance for recredit when the employee is subsequently

employed without a break in service in a position to which his or her

accumulated and accrued annual leave may be transferred. If the

employee later becomes eligible for a lump-sum payment under the

conditions specified in this section, a lump-sum payment shall be paid

at that time for the annual leave held in abeyance. The lump-sum

payment shall be computed under Sec. 550.1205(b) based on the pay the

employee was receiving immediately before the date the transfer became

effective. The employee's current employing agency shall compute and

pay the lump-sum payment.

(h) An employee in a missing status (as defined in 5 U.S.C.

5561(5)) on or after January 1, 1965, shall receive a lump-sum payment

for accumulated and accrued annual leave or may elect to have such

annual leave restored in a separate leave account under 5 U.S.C.

6304(d)(2) upon his or her return to Federal service. The lump-sum

payment shall be computed under Sec. 550.1205(b) based on the rate of

pay in effect at the time the annual leave became subject to forfeiture

under 5 U.S.C. 6304(a), (b), or (c).

(i) A lump-sum payment for accumulated or accrued annual leave

shall not be paid to--

(1) An employee who transfers between positions covered by

subchapter I of chapter 63 of title 5, United States Code, except to

the extent provided by paragraph (b) of this section;

(2) An employee who transfers to a position not covered by

subchapter I of chapter 63 of title 5, United States Code, but to which

his or her accumulated and

[[Page 40480]]

accrued annual leave may be transferred;

(3) An employee who transfers to the government of the District of

Columbia or the U.S. Postal Service;

(4) An employee who is concurrently employed in more than one part-

time position and who separates from one of the part-time positions, in

which case (if the part-time positions are in different agencies) the

annual leave accumulated and accrued in the agency from which the

employee separates shall be transferred to the current employing

agency;

(5) A nonappropriated fund employee of the Department of Defense or

the Coast Guard who moves without a break in service of more than 3

days to an appropriated fund position within the Department of Defense

or the Coast Guard, respectively, under 5 U.S.C. 6308(b); or

(6) An employee who is determined by an agency to be in a

continuing employment program under which the employee is required to

work a mixed tour of duty. (The annual leave shall be held in abeyance

during intermittent duty and recredited when the employee returns

without a break in service to full-time or part-time employment. In

addition, any fractional hours of creditable service for annual leave

accrual purposes under Sec. 630.204 of this chapter shall be held in

abeyance and recredited when the employee returns to full-time or part-

time employment.)

Sec. 550.1204 Projecting the lump-sum leave period.

(a) A lump-sum payment shall equal the pay an employee would have

received if he or she had remained in the Federal service until the

expiration of the accumulated and accrued annual leave to the

employee's credit. The lump-sum period shall be projected beginning on

the first workday (counting any holiday) occurring after the date of

separation, death, or transfer under the conditions prescribed in

Sec. 550.1203 and shall continue counting all subsequent workdays and

holidays until the expiration of the period of annual leave. The period

of leave used for calculating the lump-sum payment shall not be

extended by any holidays under 5 U.S.C. 6103 or applicable Executive

order occurring after the date of separation, death, or transfer;

annual leave donated to an employee under the leave transfer or leave

bank programs under subparts I and J of part 630 of this chapter;

compensatory time off earned under 5 U.S.C. 5543 and Secs. 550.114(d)

or 551.531; or credit hours accumulated under an alternative work

schedule under 5 U.S.C. 6126.

(b) For employees whose annual leave was held in abeyance

immediately prior to becoming eligible for a lump-sum payment, the

lump-sum payment shall be projected beginning on the first workday

occurring after the date of separation, death, or transfer under the

conditions prescribed in Sec. 550.1203.

(c) An agency shall project the lump-sum leave period so that any

annual leave restored under 5 U.S.C. 6304(d) in a separate leave

account expires before projecting any accumulated annual leave to the

employee's credit in his or her regular annual leave account.

Sec. 550.1205 Calculating a lump-sum payment.

(a) A lump-sum payment shall be computed based on the types of pay

in paragraph (b) of this section in effect at the time an employee

becomes eligible for a lump-sum payment under the conditions prescribed

in Sec. 550.1203 and any adjustments in pay included in paragraphs (b)

(2), (3), and (4) of this section. An agency shall calculate a lump-sum

payment by multiplying the number of hours of accumulated and accrued

annual leave by the applicable hourly rate of pay, including types of

pay listed in paragraph (b) of this section, or by using a

mathematically equivalent method, such as multiplying weeks of annual

leave by the applicable weekly rate of pay. If a lump-sum payment is

calculated using weekly rates, the number of weeks of annual leave must

be rounded to the fourth decimal place (e.g., 0.4444). An annual rate

of pay shall be converted to an hourly rate of pay by dividing the

annual rate of pay by 2,087 and rounding to the nearest cent, counting

one-half cent and over as the next higher cent.

(b) A lump-sum payment shall be computed using the following types

of pay and pay adjustments, as applicable:

(1) The greatest of the following rates of pay:

(i) An employee's rate of basic pay, including any applicable

special salary rate established under 5 U.S.C. 5305 or similar

provision of law or a special rate for law enforcement officers under

section 403 of the Federal Employees Pay Comparability Act of 1990

(FEPCA), Public Law 101-509, 104 Stat. 1465;

(ii) A locality rate of pay under subpart F of part 531 of this

chapter or similar provision or law, where applicable;

(iii) A special law enforcement adjusted rate of pay under subpart

C of part 531 of this chapter, where applicable, including a rate

continued under Sec. 531.307 of this chapter; or

(iv) A continued rate of pay under subpart G of part 531 of this

chapter.

(2) Any statutory adjustments in pay or any general system-wide

increases in pay that are authorized by law or the President's

alternative plan, such as adjustments under sections 5303, 5304, 5305,

5318, 5363, 5372, 5372a, 5376, 5382, or 5392 of title 5, United States

Code, prior to the date of separation, death, or transfer, and which

become effective during the lump-sum leave period. The lump-sum payment

shall be adjusted to reflect the increased rate on and after the

effective date of the pay adjustment.

(3) In the case of a prevailing rate employee, a lump-sum payment

shall include the scheduled rate of pay under 5 U.S.C. 5343 and any

applicable adjustments in prevailing rates that are determined under 5

U.S.C. 5343 when the employee separates after issuance of an official

order to conduct a wage survey for his or her applicable wage area in

accordance with 5 CFR 532.231(d)(3) and which become effective during

the lump-sum leave period. The lump-sum payment shall be adjusted to

reflect the increased prevailing rate on and after the effective date

of the rate adjustment.

(4) A within-grade increase under 5 U.S.C. 5335 or 5 U.S.C.

5343(e)(2) if the employee has met the requirements of Sec. 531.404 or

Sec. 532.417 of this chapter prior to separation, death, or transfer,

as applicable.

(5) The following types of premium pay:

(i) Night differential under 5 U.S.C. 5343(f) for nonovertime hours

at the percentage rate received by a prevailing rate employee for the

last full workweek immediately prior to separation, death, or transfer;

(ii) Night pay under 5 U.S.C. 5545 for nonovertime hours based on

the average amount of night pay received by an employee during the 12

workweeks immediately prior to the date the employee became eligible

for a lump-sum payment (or a lesser period if the employee was not

employed in the position for at least 12 workweeks immediately prior to

the date he or she became eligible for a lump-sum payment);

(iii) Sunday premium pay under 5 U.S.C. 5546(a) for nonovertime

hours on Sunday based on the average amount of Sunday premium pay

received by the employee during the 12 workweeks immediately prior to

the date the employee became eligible for a lump-sum payment (or a

lesser period if the employee was not employed in the position for at

least 12 workweeks immediately prior to the date the

[[Page 40481]]

employee became eligible for a lump-sum payment); and

(iv) Premium pay under 5 U.S.C. 5545(c) or 5545a if the employee

was receiving premium pay immediately prior to separation, death, or

transfer under the conditions prescribed in Sec. 550.1203. The lump-sum

payment shall be based on the percentage rate received by the employee

immediately prior to separation, death, or transfer.

(6) Overtime pay under the Fair Labor Standards Act of 1938, as

amended (FLSA), for overtime work that is regularly scheduled during an

employee's established uncommon tour of duty as defined in Sec. 630.201

of this chapter if such uncommon tour of duty was applicable to the

employee immediately prior to separation, death, or transfer under the

conditions prescribed in Sec. 550.1203. The lump-sum payment shall

include the amount of FLSA overtime pay for regularly scheduled

overtime work ordered or approved at the time of separation, death, or

transfer.

(7) A cost-of-living allowance and/or post differential in a

nonforeign area under 5 U.S.C. 5941 if the employee was receiving the

allowance and/or post differential immediately prior to separation,

death, or transfer in the nonforeign area.

(8) A post allowance in a foreign area under 5 U.S.C. 5924(1) and

the Standardized Regulations (Government Civilians, Foreign Areas) if

the employee was receiving the post allowance immediately prior to

separation, death, or transfer in the foreign area.

(c) The head of an agency shall prescribe regulations or standards

for the inclusion of any other kinds of pay authorized in statutes

other than title 5, United States Code, in a lump-sum payment. Such

regulations or standards shall be consistent with 5 U.S.C. 5551, 5552,

6306, and other applicable provisions of law.

(d) Except as provided in paragraph (c) of this section, a lump-sum

payment shall exclude any other pay not specifically listed in

paragraph (b) of this section.

(e) An employee shall not earn leave for the period covered by a

lump-sum payment.

(f) A lump-sum payment is not subject to deductions for retirement

under the Civil Service Retirement System or the Federal Employees

Retirement System established by chapters 83 and 84 of title 5, United

States Code, respectively; health benefits under the Federal Employees

Health Benefits program established by chapter 89 of title 5, United

States Code; life insurance under the Federal Employees Group Life

Insurance program established by chapter 87 of title 5, United States

Code; and savings under the Thrift Savings Plan established by

subchapter III of chapter 84 of title 5, United States Code.

(g) When a reemployed annuitant's pay is reduced in accordance with

5 CFR 831.702 of this chapter, the reemployed annuitant's lump-sum

payment at the time of his or her separation, death, or transfer under

the conditions prescribed in Sec. 550.1203 shall be computed using his

or her pay before such reduction.

(h) A lump-sum payment is subject to garnishment under parts 581

and 582 of this chapter and to administrative offset (for recovery of

debts to the Federal Government) under 4 CFR part 102.

Sec. 550.1206 Refund of lump-sum payment and recredit of annual leave.

(a) Except as provided in paragraphs (d), (e), and (f) of this

section, when an employee who receives a lump-sum payment for

accumulated and accrued annual leave under 5 U.S.C. 5551 is reemployed

in the Federal service prior to the end of the period covered by the

lump-sum payment, the employee shall refund to the employing agency an

amount equal to the pay included in the lump-sum payment under

Sec. 550.1205(b) that covers the period between the date of

reemployment and the expiration of the lump-sum period. The refund

shall be computed based on the pay used to compute the lump-sum payment

under Sec. 550.1205(b). An agency may permit an employee to refund the

lump-sum payment for annual leave in installments. If an agency permits

the lump-sum refund to be paid in installments, the employee shall pay

the lump-sum payment refund in full within 1 year after the date of

reemployment.

(b) An amount of annual leave equal to the days or hours of work

remaining between the date of reemployment and the expiration of the

lump-sum period shall be recredited to the employee when the full

refund is paid to the agency. The recredited annual leave shall be made

available for use by the employee on and after the date the annual

leave is recredited. Annual leave shall be recredited as follows:

(1) When an employee is reemployed in the Federal service in a

position covered by subchapter I of chapter 63 of title 5, United

States Code, an amount of annual leave equal to the days or hours of

work remaining between the date of reemployment and the expiration of

the lump-sum period shall be recredited to the employee by the

employing agency.

(2) When an employee is reemployed in the Federal service in a

position that is not covered by subchapter I of chapter 63 of title 5,

United States Code, but is covered by a different leave system, an

amount of annual leave representing the days or hours of work remaining

between the date of reemployment and the expiration of the lump-sum

period, as determined under Sec. 630.501(b) of this chapter, shall be

recredited to the employee by the employing agency. If the unexpired

period of leave covers a larger amount of leave than can be recredited

under a different leave system, the employee shall refund only the

amount that represents the leave that can be recredited.

(3) If any part of the lump-sum refund made under paragraph (a) of

this section reflects annual leave restored under 5 U.S.C. 6304(d), the

annual leave shall be restored in a separate account, and the time

limit for using the restored annual leave shall be the same as that

originally established under Sec. 630.306 of this chapter prior to the

employee's separation or transfer under the conditions prescribed in

Sec. 550.1203.

(c) Except as provided in paragraph (d) of this section, the annual

leave recredited under paragraph (b) of this section shall be subject

to the maximum annual leave limitation established under 5 U.S.C. 6304

(a), (b), (c), or (f), as appropriate, for the position in which

reemployed.

(d) If the annual leave recredited to an employee under paragraph

(b) of this section is in excess of the maximum annual leave limitation

established under 5 U.S.C. 6304 (a), (b), (c), or (f), as appropriate,

for the position in which reemployed, the employee's maximum annual

leave limitation shall be determined as follows:

(1) If at the time of separation or transfer an employee was

subject to a higher maximum annual leave limitation than the maximum

annual leave limitation for the position in which reemployed, a new

maximum annual leave limitation shall be established at the lesser of

the employee's former maximum annual leave limitation at the time of

separation or transfer or the amount of annual leave to be recredited

to the employee under paragraph (b) of this section. The new maximum

annual leave limitation shall be subject to reduction in the same

manner as provided in 5 U.S.C. 6304(c) until the employee's accumulated

annual leave is equal to or less than the maximum annual leave

limitation for the position in which reemployed.

(2) A member of the Senior Executive Service (SES) who had a

personal leave ceiling established under Sec. 630.301(d) of

[[Page 40482]]

this chapter and who is reemployed in a position covered by subchapter

I of chapter 63 of title 5, United States Code, shall have a new

personal leave ceiling established at the lesser of his or her personal

leave ceiling established under Sec. 630.301(d) of this chapter at the

time of separation or transfer or the amount of annual leave to be

recredited to the SES member under paragraph (b) of this section. The

new personal leave ceiling shall be subject to reduction in the same

manner as provided in 5 U.S.C. 6304(c) until the SES member's

accumulated annual leave is equal to or less than the maximum annual

leave limitation for the position in which reemployed.

(e) An employee who is reemployed in a position listed in 5 U.S.C.

6301(2) (ii), (iii), (vi), or (vii) shall not be required to refund a

lump-sum payment under paragraph (a) of this section.

(f) An employee who is reemployed in a position that has no leave

system to which annual leave can be recredited shall not be required to

refund a lump-sum payment under paragraph (a) of this section.

(g) When an employee is reemployed in a position listed in 5 U.S.C.

6301(2) (x)-(xiii), the amount of annual leave to be recredited to the

employee under paragraph (b) of this section shall remain to the

employee's credit and shall become payable when the employee becomes

eligible for a lump-sum payment under the conditions prescribed in

Sec. 550.1203. If the employee subsequently transfers to a position

covered by subchapter I of chapter 63 of title 5, United States Code,

or to a position under a different formal leave system to which his or

her annual leave can be recredited, the annual leave to the employee's

credit shall be recredited to the employee by the employing agency

under Sec. 550.1206(b)(1).

(h) An agency shall document the calculation of an employee's lump-

sum payment as provided in Sec. 550.1205(b) so as to permit the

subsequent calculation of any refund required under paragraph (a) of

this section and any recredit of annual leave required under paragraph

(b) of this section.

[FR Doc. 97-19774 Filed 7-28-97; 8:45 am]

BILLING CODE 6325-01-P