[Federal Register Volume 62, Number 145 (Tuesday, July 29, 1997)]
[Proposed Rules]
[Pages 40475-40482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19774]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 62, No. 145 / Tuesday, July 29, 1997 / 
Proposed Rules  

[[Page 40475]]


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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

[[Page 40476]]

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)

[[Page 40477]]

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