[Federal Register Volume 60, Number 124 (Wednesday, June 28, 1995)]
[Rules and Regulations]
[Pages 33323-33327]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15713]



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  Federal Register / Vol. 60, No. 124 / Wednesday, June 28, 1995 / 
Rules and Regulations  

[[Page 33323]]

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 531 and 575

RIN 3206-AF86


Recruitment and Relocation Bonuses and Retention Allowances

AGENCY: Office of Personnel Management.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Personnel Management is issuing final 
regulations to provide agencies with greater flexibility in paying 
recruitment and relocation bonuses and retention allowances (the 3 
R's).

EFFECTIVE DATE: These regulations are effective July 28, 1995, except 
the amendment to 5 CFR 531.101, which is effective on the first day of 
the first applicable pay period beginning on or after January 1, 1995.

FOR FURTHER INFORMATION CONTACT:
Bryce Baker, (202) 606-2858.

SUPPLEMENTARY INFORMATION: On July 5, 1994, the Office of Personnel 
Management (OPM) published proposed revisions in the current 
regulations on recruitment and relocation bonuses and retention 
allowances (59 FR 34393). Interested parties were invited to comment 
for a 30-day period. OPM received comments from 13 agencies. Eleven 
agencies expressed support for the majority of the proposed changes and 
commented favorably on the increased flexibility provided by the 
proposed regulations. Comments included support for the overall goal of 
eliminating regulatory restrictions and administrative requirements in 
the spirit of the National Performance Review. Specific comments are 
discussed below along with a description of changes made in the final 
regulations.

Recruitment Bonuses

Service Agreement

    One agency proposed that there be no minimum time limit for a 
service agreement for payment of a recruitment bonus. Another agency 
proposed keeping the 12-month minimum requirement and stated that it 
would be difficult for the agency to specify an agency requirement of 
12 months if the regulations require a minimum of 6 months. We have not 
adopted either of these suggestions. The final regulations require a 
service agreement for a minimum period of 6 months, as proposed, in 
order to increase agency flexibility while maintaining a requirement 
for a reasonable minimum period. An agency may require a longer minimum 
period in its recruitment bonus plan.

Break in Service

    One agency commented that the exception to the break-in-service 
requirement for a temporary appointment in paragraph (b) of the 
definition of ``newly appointed'' in 5 CFR 575.103 should not be 
limited to a temporary appointment that is not full-time and not the 
employee's principal employment. The agency also suggested that a 30-
day special need appointment should be an exception to the break-in-
service requirement. We have not adopted these suggestions. Allowing 
payment of a recruitment bonus following an appointment that is not 
full-time and not the employee's principal employment assists agencies 
in recruiting candidates for difficult-to-fill positions who have 
worked for the Federal Government for brief periods, such as physicians 
who have served as members of boards or advisory committees. However, 
an employee's acceptance of a full-time temporary appointment without a 
bonus, such as a special need appointment to begin work before the 
examining process can be completed, is an indication that a bonus is 
not needed as a recruitment incentive.
    A technical correction has been made in the definition of ``newly 
appointed'' (Sec. 575.103) to reflect the recent consolidation of 
student employment programs into one program entitled the Student 
Educational Employment Program. (See 5 CFR 213.3202, as revised on 
December 16, 1994 (59 FR 64839).) Employment in a cooperative work-
study program and employment under the Stay-in-School program have been 
removed and replaced by employment under the Student Educational 
Employment Program. The Student Educational Employment Program has two 
components--the Student Temporary Employment Program and the Student 
Career Experience Program. Employment under either program will not be 
considered service for purposes of the 90-day break-in-service rule.
    An agency questioned whether the term ``principal employment'' in 
the last paragraph of the definition of ``newly appointed'' in 
Sec. 575.103 refers to the majority of an individual's hours of 
employment or to the majority of an individual's income from 
employment. ``Principal employment'' refers to either the majority of 
hours of employment or income from employment. If an individual is 
engaged in Federal employment that accounts for a majority of his or 
her hours of employment or his or her income from employment, a 
recruitment bonus is not warranted, and such employment is not an 
exception to the 90-day break-in-service required to meet the 
definition of ``newly appointed.''
    One agency said it was unclear whether the appointments listed in 
paragraph (b) of the definition of ``newly appointed'' in Sec. 575.103 
are allowed or precluded during the 90-day break-in-service requirement 
in that paragraph. We believe paragraph (b) clearly indicates that the 
appointments listed do not count as service in applying the break-in-
service requirement for payment of a recruitment bonus.

Candidate Quality

    An agency commented that recruitment bonuses should be available 
for difficult-to-fill positions or for highly-qualified candidates. In 
order to pay a recruitment bonus, it must be determined that an agency 
would be likely, in the absence of such a bonus, to encounter 
difficulty in filling the position, as required by 5 U.S.C. 5753(a). 
Therefore, the requirement that the candidate must be highly qualified 
is not sufficient, by itself, to justify the payment of a recruitment 
bonus. (Often, there are many highly qualified canadidates for 
positions that are not difficult to fill.)
    An agency commented that the regulations should continue to require 
that a candidate be highly qualified for [[Page 33324]] payment of both 
recruitment and relocation bonuses. OPM has not adopted this 
recommendation. OPM has advised agencies to consider using the 3 R's 
before requesting any new or increased special salary rates because, 
unlike the 3 R's, special rates are basic pay and, in most situations, 
are more expensive than the 3 R's. As explained in the supplementary 
information for the proposed regulations, the requirement that a 
candidate be highly qualified is being removed because it has been 
cited as a barrier to considering the payment of recruitment bonuses 
before requesting new or increased special salary rates under 5 U.S.C. 
5305. Provided that minimum qualification requirements established by 
OPM are met, agencies may tailor qualification requirements to meet the 
specific needs of the agency. Also, it is up to each agency to 
determine the level of candidate quality it should target when offering 
a recruitment or relocation bonus. Another agency questioned whether 
this change means that bonuses could be offered to candidates who are 
not well qualified. It does not. Any candidate offered a recruitment 
bonus must meet the qualification requirements established for the 
position and be among the best qualified in order to be selected.

Definition of Commuting Area

    An agency commented that the definition of ``commuting area'' 
should not be removed from the regulations for recruitment bonuses 
because this term appears in the definition of ``involuntarily 
separated.'' We agree. The definition will not be removed.

Definition of ``Employee''

    An agency commented that the definition of ``employee'' for 
purposes of recruitment bonuses was not clearly worded with respect to 
the coverage of certain individuals prior to commencement of their 
appointments. We have revised the definition to make clear that, prior 
to the starting date of actual employment, only those individuals who 
have accepted an offer to be newly appointed and who have signed the 
required service agreement are eligible to be paid recruitment bonuses.

Relocation Bonuses

Case-by-Case Determination

    There are certain exceptions to the requirement for case-by-case 
approval of relocation bonuses, such as relocation of a major 
organizational unit for which continued operation must be ensured 
without undue disruption. The positions to which employees are 
relocated in this circumstance must be determined to be difficult to 
fill, as required by 5 U.S.C. 5753(a), in order to pay relocation 
bonuses. One agency requested that an exception be added for a facility 
that is closing. We have not adopted this suggestion. If a facility 
closes, employees of that facility who relocate to other positions are 
typically in various occupations and move to positions in various 
locations, including locations in the same commuting area. We believe 
this situation requires approval on a case-by-case basis because the 
positions in various occupations and locations to which these employees 
move may or may not meet the ``difficult-to-fill'' requirement in law 
and may or may not be in a different commuting area. A relocation bonus 
may be paid only to an employee who must relocate to accept a position 
in a different commuting area, and the employee must establish 
residence in the new commuting area before the bonus may be paid. (See 
Secs. 575.201 and 575.205(c).)
    Another agency requested an exception to the requirement for case-
by-case approval on the basis of category during a reorganization. We 
have not adopted this suggestion because specificity is required to 
determine whether the position in a new commuting area to which an 
employee is moving is a position that is difficult to fill. Therefore, 
case-by-case approval is necessary.

Definition of ``Employee''

    An agency commented that the definition of ``employee'' for 
purposes of relocation bonuses should include the phrase ``without a 
break in service.'' We agree and have revised the definition 
accordingly.

Service Agreement

    An agency commented that, as in the case of recruitment bonuses, a 
minimum service agreement of 6 months also should be required for 
payment of a relocation bonus. We have not adopted this suggestion. The 
regulations already include a provision in Sec. 575.206 allowing 
agencies to determine any length of time to be appropriate for a 
service agreement in the case of a relocation bonus paid for a 
temporary change in duty station. A 6-month minimum requirement would 
be more restrictive. Agencies, of course, may include criteria for 
establishing time periods in the agency plan for relocation bonuses.

Candidate Quality

    An agency commented that the term ``high-quality employee'' should 
not be removed. We have not adopted this suggestion for the same 
reasons discussed above for recruitment bonuses.
Retention Allowances

Reason for Being Likely to Leave

    Three agencies expressed concern that allowing retention allowances 
to be paid to employees who would leave the Federal service for any 
reason, including retirement, could be subject to abuse. We believe the 
previous provision that allowed payment only to employees who leave the 
Federal service for other employment was too narrow and that additional 
flexibility is warranted. An agency may limit the circumstances under 
which a retention allowance may be paid in the criteria in the agency's 
plan for payment of retention allowances.
    One agency expressed concern that the proposed changes in the 
retention allowance regulations could lead to costly competition among 
Federal agencies. This is not the case, since the regulations continue 
to restrict payment of a retention allowance to employees who would 
otherwise leave the Federal service. Therefore, a retention allowance 
may not be paid to an employee who would leave one Federal agency to go 
to another Federal agency. A second agency commented that the 
regulations should allow payment of a retention allowance to an 
employee who is leaving for another Federal agency. A third agency 
commented that the regulations should allow payment of a retention 
allowance by an agency that is closing to an employee who would 
otherwise leave for another Federal agency, if the closing agency needs 
to retain the employee until the closure date because the employee's 
leaving would create an undue disruption in an essential function of 
the closing agency. We have not adopted these suggestions because we 
must be cognizant of the needs of every agency and do not believe it 
would be desirable to allow Federal agencies to enter into bidding 
wars.
    An agency suggested that payment of a retention allowance to an 
employee who is planning to leave for retirement should be limited to 1 
year because this would allow time for management to find a 
replacement. We have not included this limitation in the regulations 
because agencies already are authorized to limit the circumstances 
under which a retention allowance may be paid as a part of their own 
retention [[Page 33325]] allowance plans. Also, as required by 
Sec. 575.306(c), agencies must review each determination to pay a 
retention allowance at least annually. To continue payment of a 
retention allowance, the conditions giving rise to the original 
determination to pay the allowance must still exist.
    In view of the change allowing payment of a retention allowance 
when an employee would leave the Federal Government for a reason other 
than employment, an agency commented that, for consistency, we should 
remove a phrase in Sec. 575.305(c)(1) referring to employment. We agree 
and have removed the phrase.

Aggregate Limitation

    One agency commented that payment of a retention allowance should 
be allowed even if it would cause an employee's aggregate compensation 
to exceed the aggregate limit (level I of the Executive Schedule) at 
the end of the calendar year. We have not adopted this suggestion. The 
requirement in Sec. 575.306(b) prohibiting authorization of a retention 
allowance that would cause the aggregate compensation of an employee to 
exceed the rate payable for level I of the Executive Schedule was 
established (1) to prevent accumulation of large amounts that would be 
carried over from one calendar year to the next and paid only upon 
separation or death, thus potentially obligating the expenditure of 
appropriated funds for several years in advance, and (2) because 
accumulation of a large amount that would be payable in a lump sum upon 
separation could be an incentive for an employee to leave.

Miscellaneous

    Executive Order 12944 of December 29, 1994, deleted the San 
Francisco-Oakland-San Jose, CA Consolidated Metropolitan Statistical 
Area (CMSA) as an interim geographic adjustment area because locality 
pay rates implemented in January 1995 for the San Francisco CMSA are 
greater than interim geographic adjusted rates for 1995. Therefore, OPM 
is removing the San Francisco CMSA from the definition of interim 
geographic adjustment area in Sec. 531.101.

Waiver of Notice of Proposed Rule Making and Delay in Effective Date

    Pursuant to 5 U.S.C. 553(b)(3)(B) and 5 U.S.C. 553(d)(3), I find 
that good cause exists for waiving the general notice of proposed 
rulemaking for the rule in 5 CFR 531.101 and making this rule effective 
retroactively. Executive Order 12944 of December 29, 1994, deleted the 
San Francisco-Oakland-San Jose, CA Consolidated Metropolitan 
Statistical Area as an interim geographic adjustment area effective on 
the first day of the first applicable pay period beginning on or after 
January 1, 1995. The amendment to 5 CFR 531.101 is being made effective 
on the effective date of the Executive order.

E.O. 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with E.O. 12866.

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 apply only to Federal agencies and employees.

List of Subjects in 5 CFR Parts 531 and 575

    Government employees, Law enforcement officers, Wages.

U.S. Office of Personnel Management.
James B. King,
Director.

    Accordingly, OPM is amending parts 531 and 575 of title 5 of the 
Code of Federal Regulations as follows:

PART 531--PAY UNDER THE GENERAL SCHEDULE

    1. The authority citation for part 531 is revised to read as 
follows:

    Authority: 5 U.S.C. 5115, 5307, and 5338; sec. 4 of Pub. L. 103-
89, 107 Stat. 981; and E.O. 12748, 56 FR 4521, February 4, 1991, 3 
CFR, 1991 Comp., p. 316;

    Subpart A also issued under 5 U.S.C. 5304, 5305, and 5553; 
section 302 of the Federal Employees Pay Comparability Act of 1990 
(FEPCA), Pub. L. 101-509, 104 Stat. 1462; and E.O. 12786, 56 FR 
67453, December 30, 1991, 3 CFR 1991 Comp., p. 376;
    Subpart B also issued under 5 U.S.C. 5303(g), 5333, 5334(a), and 
7701(b)(2);
    Subpart C also issued under 5 U.S.C. 5304, 5305, and 5553; 
sections 302 and 404 of FEPCA, Pub. L. 101-509, 104 Stat. 1462 and 
1466; and section 3(7) of Pub. L. 102-378, 106 Stat. 1356;
    Subpart D also issued under 5 U.S.C. 5335(g) and 7701(b)(2);
    Subpart E also issued under 5 U.S.C. 5336;
    Subpart F also issued under 5 U.S.C. 5304, 5305(g)(1), and 5553; 
and E.O. 12883, 58 FR 63281, November 29, 1993, 3 CFR 1993 Comp., p. 
682.

    2. In Sec. 531.101, the definition of interim geographic adjustment 
area is revised to read as follows:


Sec. 531.101  Definitions.

* * * * *
    Interim geographic adjustment area means either of the following 
Consolidated Metropolitan Statistical Areas (CMSA's), as defined by the 
Office of Management and Budget (OMB):
    (a) New York-Northern New Jersey-Long Island, NY-NJ-CT-PA; or
    (b) Los Angeles-Riverside-Orange County CA.
* * * * *

PART 575--RECRUITMENT AND RELOCATION BONUSES; RETENTION ALLOWANCES; 
SUPERVISORY DIFFERENTIALS

    3. The authority citation for part 575 continues to read as 
follows:

    Authority: 5 U.S.C. 1104(a)(2), 5753, 5754, and 5755; sec. 302 
and 404 of the Federal Employees Pay Comparability Act of 1990 (Pub. 
L. 101-509) 104 Stat. 1462 and 1466, respectively; E.O. 12748, 
February 1, 1991, 3 CFR, 1992 Comp. p. 316.

    4. Section 575.101 is revised to read as follows:


Sec. 575.101  Purpose.

    This subpart provides regulations to implement 5 U.S.C. 5753, which 
authorizes payment of a recruitment bonus of up to 25 percent of the 
annual rate of basic pay to a newly appointed employee, provided there 
is a determination that, in the absence of such a bonus, difficulty 
would be encountered in filling the position.
    5. In Sec. 575.103, the definitions of employee and newly appointed 
are revised to read as follows:


Sec. 575.103  Definitions.

* * * * *
    Employee means--
    (a) An employee in or under an agency who is newly appointed; or
    (b) An individual not yet employed who has received a written offer 
to be newly appointed and has signed a written service agreement in 
accordance with Sec. 575.106 prior to payment of the recruitment bonus.
* * * * *
    Newly appointed refers to--
    (a) The first appointment, regardless of tenure, as an employee of 
the Federal Government; or
    (b) An appointment as an employee of the Federal Government 
following a break in service of at least 90 days from the candidate's 
last period of Federal employment, other than--
    (1) Employment under the Student Educational Employment Program 
under Sec. 213.3202;
    (2) Employment as a law clerk trainee under Sec. 213.3102(e) of 
this chapter;
    (3) Employment while a student during school vacations under a 
short-term temporary appointing authority;
    (4) Employment under a provisional appointment designated under 
[[Page 33326]] Sec. 316.403 if the new appointment is permanent and 
immediately follows the provisional appointment; or
    (5) Employment under a temporary appointment that is neither full-
time nor the principal employment of the candidate.
* * * * *
    6. In Sec. 575.104, paragraphs (b)(2), (c)(1), and (c)(2) (i) and 
(iii) are revised to read as follows:


Sec. 575.104  Agency recruitment bonus plans; higher level review and 
approval; and criteria for payment.

* * * * *
    (b) * * *
    (2) When necessary to make a timely offer of employment, a higher 
level official may establish criteria for offering recruitment bonuses 
in advance and authorize the recommending official to offer a 
recruitment bonus (in any amount within a pre-established range) to any 
candidate without further review or approval.
    (c) Criteria for payment. (1) Each bonus paid under this subpart 
shall be based on a written determination that, in the absence of such 
a bonus, the agency would encounter difficulty in filling the position. 
Such a determination shall be made before the employee actually enters 
on duty in the position for which he or she was recruited. An agency 
may target groups of positions that have been difficult to fill in the 
past or that may be difficult to fill in the future and may make the 
required written determination to offer a recruitment bonus on a group 
basis.
    (2) * * *
    (i) The success of recent efforts to recruit candidates for similar 
positions, including indicators such as offer acceptance rates, the 
proportion of positions filled, and the length of time required to fill 
similar positions;
* * * * *
    (iii) Labor-market factors that may affect the ability of the 
agency to recruit candidates for similar positions now or in the 
future;
* * * * *
    7. Section 575.105 is revised to read as follows:


Sec. 575.105  Payment of recruitment bonus.

    A recruitment bonus shall be calculated as a percentage of the 
employee's annual rate of basic pay (not to exceed 25 percent) and paid 
as a lump sum. It shall not be considered part of an employee's rate of 
basic pay for any purpose.
    8. Section 575.106 is revised to read as follows:


Sec. 575.106  Service agreement.

    (a) Before a recruitment bonus may be paid, an agency shall require 
that the employee sign a written service agreement to complete a 
specified period of employment with the appointing agency (or successor 
agency in the event of a transfer of function).
    (b) The minimum period of employment to be established under a 
service agreement for a recruitment bonus shall be 6 months.
    9. Section 575.108 is revised to read as follows:


Sec. 575.108  Internal monitoring.

    Each agency shall monitor the use of recruitment bonuses to ensure 
that its recruitment bonus plan conforms to the requirements 
established under this subpart and that the payment of recruitment 
bonuses conforms to the criteria established under this subpart.
    10. Section 575.201 is revised to read as follows:


Sec. 575.201  Purpose.

    This subpart provides regulations to implement 5 U.S.C. 5753, which 
authorizes payment of a relocation bonus of up to 25 percent of the 
annual rate of basic pay to an employee who must relocate to accept a 
position in a different commuting area, provided there is a 
determination that, in the absence of such a bonus, difficulty would be 
encountered in filling the position.
    11. In Sec. 575.203, the definitions of employee and service 
agreement are revised to read as follows:


Sec. 575.203  Definitions.

* * * * *
    Employee means an employee in or under an agency who is appointed 
without a break in service to a position in a different commuting area 
or whose duty station is changed permanently or temporarily to a 
different community area.
* * * * *
    Service agreement means a written agreement between an agency and 
an employee under which the employee agrees to a specified period of 
employment with the agency at the new duty station to which relocated 
in return for payment of a relocation bonus.
    12. In Sec. 575.204, paragraphs, (c)(1), (c)(2)(i), (c)(2)(iii), 
and (d) are revised to read as follows:


Sec. 575.204  Agency relocation bonus plans; higher level review and 
approval; criteria for payment; and exceptions to case-by-case 
approval.

* * * * *
    (c) Criteria for payment. (1) Each bonus paid under this subpart 
shall be based on a written determination that, in the absence of such 
a bonus, the agency would encounter difficulty in filling the position. 
Each such determination shall be made before the employee actually 
enters on duty in the position to which he or she was relocated. An 
agency may target groups of positions that have been difficult to fill 
in the past or that may be difficult to fill in the future. However, 
except as provided in paragraph (d) of this section, any determination 
to pay a bonus shall be made on a case-by-case basis for each employee.
    (2) * * *
    (i) The success of recent efforts to recruit candidates for similar 
positions, including indicators such as offer acceptance rates, the 
proportion of positions filled, and the length of time required to fill 
similar positions;
* * * * *
    (iii) Labor market factors that may affect the ability of the 
agency to recruit candidates for similar positions now or in the 
future; and
* * * * *
    (d) Exceptions to case-by-case approval. The head of an agency may 
waive, for a specified period of time, the case-by-case approval 
requirement for any employee whose rating of record is at least Level 3 
(``Fully Successful'' or equivalent), when--
    (1) The employee is a member of a specified group of employees 
subject to a mobility agreement, and the head of the agency determines 
that relocation bonuses are necessary to ensure the agency's ability to 
retain employees subject to such an agreement; or
    (2) A major organizational unit of the agency is relocated to a 
different commuting area, and the head of the agency determines that 
relocation bonuses are necessary for specified groups of employees to 
ensure the continued operation of that unit without undue disruption of 
an activity or function that is deemed essential to the agency's 
mission and/or without undue disruption of service to the public.
    13. In Sec. 575.205, paragraphs (a) and (b) are revised to read as 
follows:


Sec. 575.205  Payment of relocation bonus.

    (a) A relocation bonus shall be calculated as a percentage of the 
employee's annual rate of basic pay and paid as a lump sum. Except as 
provided in paragraph (b) of this section, the amount of a relocation 
bonus may not exceed 25 percent of the employee's annual rate of basic 
pay. It shall not be considered part of an employee's rate of basic pay 
for any purpose.
    (b) The amount of a relocation bonus may not exceed the greater of 
$15,000 or [[Page 33327]] 25 percent of a law enforcement officer's 
annual rate of basic pay in the case of--
    (1) A law enforcement officer, as defined in Sec. 550.103 of this 
chapter, with respect to whom the provisions of chapter 51 of title 5, 
United States Code, apply;
    (2) A member of the United States Secret Service Uniformed 
Division;
    (3) A member of the United States Park Police;
    (4) A special agent within the Diplomatic Security Service;
    (5) A probation officer (referred to in section 3672 of title 18, 
United States Code; and
    (6) A pretrial services officer (referred to in section 3153 of 
title 18, United States Code).
* * * * *
    14. Section 575.206 is revised to read as follows:


Sec. 575.206  Service agreement.

    Before a relocation bonus may be paid, an agency shall require that 
the employee sign a written service agreement to complete a specified 
period of employment with the appointing agency (or the successor 
agency in the event of a transfer of function) at the new duty station.
    15. Section 575.208 is revised to read as follows:


Sec. 575.208  Internal monitoring.

    Each agency shall monitor the use of relocation bonuses to ensure 
that its relocation bonus plan conforms to the requirements established 
under this subpart and that the payment of relocation bonuses conforms 
to the criteria established under this subpart.
    16. In Sec. 575.302, paragraph (c) is revised to read as follows:


Sec. 575.302  Delegation of authority.

* * * * *
    (c) The head of an Executive agency may request that OPM authorize 
the payment of a retention allowance to one or more categories of 
employees of his or her agency not otherwise covered by 5 U.S.C. 5754 
or this subpart.
* * * * *
    17. In Sec. 575.303, the definition of employee is revised to read 
as follows:


Sec. 575.303  Definitions.

* * * * *
    Employee means an employee in or under an agency.
* * * * *
    18. In Sec. 575.304, paragraphs (a) and (b) are revised to read as 
follows:


Sec. 575.304  Conditions for payment.

    (a) An agency may not begin payment of a retention allowance during 
a period of employment established under any service agreement required 
by payment of a recruitment bonus under subpart A of this part or 
relocation bonus under subpart B of this part. After retention 
allowance payments have commenced, a relocation bonus may be paid 
without affecting the payment of a retention allowance.
    (b) An agency may pay a retention allowance to an employee if the 
employee is likely to leave the Federal service for any reason.
* * * * *
    19. In Sec. 575.305, paragraph (c)(1) is revised to read as 
follows:


Sec. 575.305  Agency retention allowance plans; higher level review and 
approval; and criteria for payment.

* * * * *
    (c) Criteria for payment. (1) Each allowance paid under this 
subpart shall be based on a written determination that the unusually 
high or unique qualifications of the employee or a special need of the 
agency for the employee's services makes it essential to retain the 
employee and that, in the absence of such an allowance, the employee 
would be likely to leave the Federal service.
* * * * *
    20. In Sec. 575.306, a new paragraph (d) is added to read as 
follows:


Sec. 575.306  Payment of retention allowance.

* * * * *
    (d) A retention allowance is not pay for purposes of a lump-sum 
payment for annual leave under 5 U.S.C. 5551 or 5552.
    21. Section 575.308 is revised to read as follows:


Sec. 575.308  Internal monitoring.

    Each agency shall monitor the use of retention allowances to ensure 
that its retention allowance plan conforms to the requirements 
established under this subpart and that the payment of retention 
allowances conforms to the criteria established under this subpart.

[FR Doc. 95-15713 Filed 6-27-95; 8:45 am]
BILLING CODE 6325-01-M