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Frequently Asked Questions Pay & Leave

Recruitment, Relocation and Retention Incentives

  • To request a retention incentive in excess of 25 or 10 percent, as applicable, the agency must be facing a critical need.  The agency must determine that the employee’s (or group of employees‘) unusually high or unique qualifications are critical to the successful accomplishment of an important agency mission, project, or initiative (e.g., programs or projects related to a national emergency or implementing a new law or critical management initiative). (See 5 CFR 575.309(e)(1).)
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  • A service agreement is required in most cases when a retention incentive is paid. It is required when the agency pays the incentive—
    • In a single lump-sum payment after completion of the full service period;
    • In installments after the completion of periods of service (except when the incentive is paid in biweekly installments at the full retention incentive percentage rate established for the employee);
    • In all cases where the 25 percent cap (or 10 percent for groups of employees) has been waived, no matter how payment is made; and
    • In all cases when an employee is likely to leave for a different position in the Federal service.
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  • Under 5 CFR 575.311(f)(3), an agency considers the following factors in determining whether to reduce or terminate a retention incentive:
    • Whether a lesser amount (or none at all) would be sufficient to retain the employee (or group or category of employees);
    • Whether labor market factors make it more likely (or reasonably likely) to recruit a candidate with competencies similar to those possessed by the employee (or group or category of employees); or
    • Whether the agency's need for the services of the employee (or group or category of employees) has been reduced to a level that makes it unnecessary to continue payment at the level originally approved, or at all.
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  • An agency may unilaterally terminate a retention incentive service agreement based solely on the management needs of the agency.  For example, an agency may terminate a service agreement when there are insufficient funds to continue the planned incentive payments.  In such cases, the employee is entitled to retain all retention incentive payments attributable to completed service and to receive any portion of a retention incentive payment owed by the agency for completed service.  An agency must notify an employee in writing when it terminates a retention incentive service agreement.  (See 5 CFR 575.311.)
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  • Once an agency authorizes a retention incentive, payment of the incentive is considered a non-discretionary payment.
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  • Because a retained rate is not basic pay for the purpose of computing a retention incentive, the maximum rate of basic pay for the employee’s grade must be used in place of the retained rate to calculate the retention incentive. (See 5 CFR 536.307.)
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  • An agency must address the following factors when documenting a determination to pay a retention incentive:
    • The factors for authorizing a retention incentive for an individual employee described in 5 CFR 575.306(b) or for a group or category of employees described in 5 CFR 575.306(c);
    • The extent to which the employee’s departure for a different position in the Federal service would affect the agency's ability to carry out an activity, perform a function, or complete a project the agency deems essential to its mission before and during the closure or relocation period (e.g., the agency‘s need to retain the employee to ensure minimal disruption in the performance of mission-critical functions, continuity of key operations, or minimal disruption of service to the public before and during the closure or relocation; to train new employees who will move with the organization to the new geographic location; to assist with the actual closure or relocation of the office, facility, activity, or organization; or to perform similar mission-essential functions before or during the closure or relocation);
    • The competencies possessed by the employee that are essential to retain; and
    • The agency (which may be in the executive, judicial, or legislative branch) for which the employee would be likely to leave in the absence of the retention incentive.

    (See 5 CFR 575.315(d)(2) and (3).)

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  • Installment payments can be made at the same dollar amount (equal installment payments) or different dollar amounts (variable installment payments). For example, if an agency authorizes a $5,000 incentive for an employee to be paid in four installments, it could set the level of the installment payments at variable amounts, with the first three installment payments set at $1,000 each and the final installment payment set at $2,000.
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  • Under 5 CFR 575.208(a)(2), agencies must authorize payment of relocation incentives on a case-by-case basis for each employee. However, 5 CFR 575.208(b) allows agencies to waive the case-by-case approval requirement when a group of employees is subject to a mobility agreement and the agency determines that relocation incentives are necessary to retain these employees to ensure a continuation of operations, or when a major organizational unit of the agency is relocated to a new duty station and the agency determines that relocation incentives are necessary for a group 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 or without undue disruption of service to the public.

    All requirements in the regulations and the agency's relocation incentive plan must be met to pay a relocation incentive to an individual employee in the covered group. For example, agencies may authorize relocation incentives of up to 25 percent of basic pay, and each employee must relocate to a difficult-to-fill position, establish a residence in the new geographic area prior to payment of the incentive, and sign a service agreement.

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  • Yes. As long as all other conditions are met, an agency may pay a retention incentive if it makes a determination that the employee would be likely to leave the Federal service for any reason in the absence of a retention incentive.
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