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Pay & Leave Pay Administration

Fact Sheet: Promotions

Description

A promotion is a change of an employee while continuously employed from one General Schedule (GS) grade to a higher GS grade.

Employee Coverage

Only GS employees who are promoted to a higher grade under the General Schedule without a break in service are covered by the two-step promotion rule in 5 U.S.C. 5334(b) and 5 CFR 531.214 (also, 5 CFR 531.243 for GM employees).

Two-Step Promotion Rule

The two-step promotion rule states that a GS employee promoted to a position in a higher grade is entitled to basic pay at the lowest rate of the higher grade that exceeds his or her existing rate of basic pay by not less than two step increases of the grade from which promoted. The two-step promotion rule must be applied using one of two methods--the standard method or the alternate method.

Geographic Conversion Rule

When an employee's official worksite is changed to a new location upon promotion where different pay schedules apply*, the agency must convert the employee to the applicable pay schedule(s) and rate(s) of basic pay for the new official worksite based on the employee's position of record before promotion before applying the two-step promotion rule. Set the employee's rate(s) of basic pay in the applicable pay schedule(s) in the new location based on his or her position of record (including grade) and step (or a GM employee's GS rate) immediately before the change in the employee's official worksite. The resulting rate must be used as the existing rate in applying the two-step promotion rule. (See 5 CFR 531.206 and 531.214 for information on processing other pay actions that may occur simultaneously with a promotion action.)

*In the context of applying the geographic conversion rule, the phrase "where different pay schedules apply" means that an employee's official worksite is changed to a new location that would cause the employee to lose or gain coverage under a location-based pay schedule (i.e., locality rate schedule or special rate schedule) if the employee were to remain in the same position of record.

Standard Method

Apply the standard method for the two-step promotion rule if the employee is covered by the same pay schedules before and after promotion. For example, an employee may be covered by the General Schedule and the same locality rate schedule before and after promotion. The steps for the standard method are as follows:

Promotion Rule - Standard Method
StepDescription
Step A If applicable, apply the geographic conversion rule to determine the employee's rate(s) and range(s) of basic pay based on the employee's position of record before promotion and the new official worksite. Also, if applicable, provide any simultaneous within-grade increase or quality step increase. Use the resulting rate(s) of basic pay as the existing rate(s) in effect immediately before promotion in applying steps B and C.
Step B Identify the employee's existing GS rate (or LEO special base rate) in the grade before promotion, and increase that rate by two GS within-grade increases for that grade.
Step C Determine the payable (highest) rate of basic pay for the step or rate determined in step B by applying any locality payment or special rate supplement applicable to the given grade, based on the employee's position of record before promotion and official worksite after promotion. (If the rate determined in step B is above the range maximum, use the same locality payment or special rate supplement that applies to rates within the rate range.)
Step D Identify the highest applicable rate range for the employee's position of record after promotion and find the lowest step rate in that range that equals or exceeds the rate determined in step C. This is the employee's payable rate of basic pay upon promotion. (If the rate identified in step C exceeds the maximum of the rate range identified in this step, the employee's payable rate is that maximum rate, or, if the employee's existing rate is higher than that maximum rate, a retained rate under 5 CFR part 536 equal to that existing rate.)

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Alternate Method

Apply the alternate method for the two-step promotion rule if the employee is covered by different pay schedules before and after promotion and if the alternate method will produce a higher payable rate upon promotion than the standard method. For example, an employee may be covered after promotion by a special rate schedule that did not apply to him or her before promotion, and the alternate method will produce a higher rate.

Exception: An agency may apply the alternate method for an employee covered by different pay schedules before and after promotion, even though the alternate method produces a lesser payable rate than the standard method, only under the following conditions:

  • The agency determines it would be inappropriate to use the standard method based on a finding that the higher pay for the position before promotion is not sufficiently related to the knowledge and skills required for the position after promotion; and
  • The agency informs the employee of the determination to use the alternate method before the effective date of the promotion.
Promotion Rule - Alternate Method
StepDescription
Steps A, B, C Same as steps A, B, and C, of the standard method.
Step D Identify the highest applicable rate range for the employee's grade after promotion based on consideration of any pay schedule that applied to the employee's position of record before promotion (after any geographic conversion). (Do not consider pay schedules that apply only to the employee's new position of record after promotion. For example, if a particular special rate schedule applies only to an employee's position of record after promotion, disregard that schedule in applying this step.) Find the lowest step in the highest applicable rate range that equals or exceeds the rate identified in step C. (If the rate identified in step C exceeds the maximum of the rate range identified in this step, the employee's payable rate is that maximum rate, or, if the employee's existing rate is higher than that maximum rate, a retained rate under 5 CFR part 536 equal to that existing rate.)
Step E Convert the lowest step rate identified in step D to a corresponding step rate (same step) in the highest applicable rate range for the employee's new position of record after promotion. This is the employee's alternate payable rate of basic pay upon promotion. (If the rate derived under step D was a retained rate, see 5 CFR 531.214(d)(4)(ii) to determine the alternate payable rate.)
Step F If the alternate payable rate identified in step E exceeds the payable rate resulting from the standard method, the employee is entitled to the alternate rate upon promotion. Otherwise, the employee is entitled to the payable rate derived under the standard method.

Retained Rate Employees

If an employee was receiving a retained rate before promotion, apply the promotion rule as follows:

  1. If the employee's existing payable rate of basic pay before promotion is a retained rate, apply the standard method or alternate method, as applicable, as if the employee were receiving the maximum rate of the employee's grade before promotion.
  2. If the payable rate of basic pay after promotion determined under paragraph (1) is greater than the employee's existing retained rate, the employee is entitled to that payable rate.
  3. If the existing retained rate is greater than the rate determined under paragraph (1), the retained rate must be compared to the highest applicable rate range for the position after promotion, as provided in 5 CFR 536.304. The employee is entitled to the lowest step rate in the range that equals or exceeds the retained rate or, if the retained rate exceeds the range maximum, to the retained rate.

Maximum Payable Rate

An agency may use the maximum payable rate provisions of 5 CFR 531.221 through 531.223 (and 5 CFR 531.247 for GM employees) to set an employee's pay at a higher rate upon promotion. The maximum payable rate provisions allow an agency to set pay based on higher pay the employee previously earned in another Federal job. However, agencies may not use the maximum payable rate provisions to set an employee's pay at a lower rate than that provided by the two-step promotion rule. See the fact sheet entitled "Maximum Payable Rate Rule" for additional information.

Key Terms

Highest applicable rate range means the rate range applicable to a GS employee based on a given position of record and official worksite that provides the highest rates of basic pay, excluding any retained rates. For example, a rate range of special rates may exceed an applicable locality rate range. In certain circumstances, the highest applicable rate range may consist of two types of pay rates from different pay schedules--e.g., a range where special rates (based on a fixed dollar supplement) are higher in the lower portion of the range and locality rates are higher in the higher portion of the range.

Pay schedule means a set of rate ranges established for GS employees under a single authority--i.e., the General Schedule, an LEO special base rate schedule (for grades GS-3 through 10), a locality rate schedule based on GS rates, a locality rate schedule based on LEO special base rates (for grades GS-3 through 10), or a special rate schedule. A pay schedule applies to or covers a defined category of employees based on established coverage conditions (e.g., official worksite, occupation). A pay schedule is considered to apply to or cover an employee who meets the established coverage conditions even when a rate under that schedule is not currently payable to the employee because of a higher pay entitlement under another pay schedule.

Position of record means an employee's official position (defined by grade, occupational series, employing agency, LEO status, and any other condition that determines coverage under a pay schedule (other than official worksite)), as documented on the employee's most recent Notification of Personnel Action (Standard Form 50 or equivalent) and current position description. A position to which an employee is temporarily detailed is not documented as a position of record.

Rate of basic pay means the rate fixed by law or administrative action for the position held by a GS employee before deductions. A rate of basic pay includes a GS rate under 5 U.S.C. 5332, a law enforcement officer special base rate under section 403 of the Federal Employees Pay Comparability Act of 1990, a special rate under 5 U.S.C. 5305, a locality rate under 5 U.S.C. 5304, or a retained rate under 5 U.S.C. 5363. (See section on retained rate employees for more information.)

References

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