See the General Schedule classification and pay system fact sheet at - http://www.opm.gov/oca/pay/HTML/GSClassandpay.asp
When a temporary promotion is made permanent immediately after the temporary promotion ends, the employee is not returned to the lower grade in order to process the permanent promotion. See 5 CFR 531.214(e). The agency must convert the employee’s temporary promotion to a permanent promotion without a change in pay. The appropriate action is to process the promotion (nature of action code 702) showing the higher grade as the grade before and after promotion. (See rules 5 and 6, Table 14-B, chapter 14, of the Office of Personnel Management’s Guide to Processing Personnel Actions.) In effect, the promotion increase granted at the time of the temporary promotion is ratified and made permanent by the removal of the not-to-exceed limitation on the temporary promotion.
If there is any period of time between the end of a temporary promotion and the beginning of a permanent promotion, the employee must be returned to the lower grade. As required by 5 CFR 531.215(c), the agency must recompute the employee’s rate of basic pay for the lower grade as if the employee had never been temporarily promoted.
If the employee’s temporary promotion was for more than 1 year, the agency may choose, at its discretion, to apply the maximum payable rate rule in 5 CFR 531.221 if that would yield a higher rate. Under the maximum payable rate rule, an agency may set pay at any step equal to or less than the maximum payable rate, but not less than the rate to which the employee is entitled under the normal pay-setting rules. Whatever method is used, the resulting rate is the basis for any subsequent promotion action.
No. An employee who is returned from a temporary promotion to his or her regular grade and step and is subsequently promoted to the same grade held during the temporary promotion receives an "equivalent increase" upon the permanent promotion and begins a new waiting period on the date of the permanent promotion. The time spent in the temporary grade and step is not creditable service towards the completion of a waiting period when the employee is permanently promoted.
NOTE: If a temporary promotion is made permanent immediately after the temporary promotion ends, the agency may not return the employee to the lower grade. The agency must convert the employee's temporary promotion to a permanent promotion without a change in pay. See 5 CFR 531.214(e).
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