Time-Off Awards

Introduction

A time–off award is time off from duty, without loss of pay or charge to leave, granted to a Federal employee as a form of incentive or recognition. This paper addresses time-off awards in the Federal Government. We provide this information for all Federal employees, particularly supervisors, human resources professionals, performance management program managers, and incentive awards administrators.

Legal Authorities

Statute

Paragraph 4502(e) of title 5, United States Code, states the Office of Personnel Management may by regulation permit agencies to grant employees time off from duty, without loss of pay or charge to leave, as an award in recognition of superior accomplishment or other personal effort that contributes to the quality, efficiency, or economy of Government operations.

Code of Federal Regulations

Paragraph 451.104(a) of title 5, Code of Federal Regulations, permits agencies to grant time-off award without charge to leave or loss of pay; (consistent with chapter 45 of title 5, United States Code, and these regulations) to an employee, as an individual or member of a group and 451.104(f) prohibits time-off awards from being converted to a cash payment.

Agency Policy

Agencies have their own internal policies for establishing and administering time–off awards to enhance their overall awards program and to support the achievement of the agency's goals and mission.

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Major Features

Time–off awards are a unique form of award agencies can grant Federal employees. (The other forms of awards are cash, honorary items, and informal recognition items). Agencies decide when and how to use time–off awards to enhance their overall awards program and support the achievement of the agency’s goals and mission. Major features of time-off awards include the following:

• Time–off awards do not require additional funding or cash disbursement by agencies. Because the form of the award is time off from duty and it does not have explicit cash value, agencies do not have to provide additional funding or disburse additional cash. However, they do need to remember these are salary dollars being paid for time not worked, so there is a cost involved.
• Agencies cannot convert time–off awards to cash under any circumstances. Agencies need to ensure employees will value, and are able to use, these awards. For example, if an agency grants a time–off award to an employee who plans to leave 2 months later, the agency cannot convert the award to cash, even though the employee might not be able to use the time–off award before leaving the agency.
• OPM does not set Governmentwide limits on the amount of time off an employee may receive. Agencies must establish their own guidelines and limitations on how much time off is appropriate for various employee contributions. Such guidelines should also contain any timeframes within which employees must use the award, which the agency determines are appropriate.
• Agencies may combine time–off awards with other forms of awards. Agencies may grant time-off awards along with other forms of awards as long as the total value of the awards given is commensurate with the contribution being recognized. For example, an employee might receive an award consisting of both a 1–day time–off award and $50 as recognition for a single contribution as long as the combined “value” of the awards is commensurate with the employee‘s contribution.
• Time–off awards are among the awards prohibited for certain employees during Presidential election periods. Section 4508 of title 5, United States Code, prohibits non–career Senior Executive Service employees or appointees in confidential or policy determining (Schedule C) positions from receiving certain awards during a Presidential election period. This period is from June 1 of any year in which there is a Presidential election through January 20 of the following calendar year.

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Eligibility Criteria

Most Federal employees are eligible for inclusion in a time–off award program. Federal agencies may grant time–off awards to any Federal civilian employee, either as an individual or member of a group, who meets the definition of employee in Section 2105 of title 5, United States Code. This definition includes an individual appointed in the civil service by —

• The President,
• A member of Congress,
• A member of a uniformed service,
• An employee,
• The head of a Government-controlled corporation, or
• An adjutant general designated by the Secretary concerned under section 709c of title 32.

In addition, to meet the definition of employee, the individual must perform a Federal function and be subject to the supervision of an individual cited above while performing official duties. The definition of employee also includes employees who are individuals employed at the U.S. Naval Academy in specific jobs (see 5 U.S.C. 2105 for a more detailed description).

Individuals Not Covered by Title 5 Awards Authority

Individuals who do not meet the definition of employee as defined by 5 U.S.C. 2105 include the following:

• Members of the military services,
• Contractors,
• Volunteers,
• Employees of non-appropriated fund instrumentalities, and
• Employees of the U.S. Postal Service.

These individuals may not receive awards under the authority of chapter 45 of title 5, U.S. Code, unless otherwise authorized and therefore cannot be included in a time–off award program administered under this authority. However, other authorities may allow agencies to grant paid time off to certain categories of employees excluded from 5 U.S.C. 2105. Agencies should consult their human resources offices or General Counsels to find out if they have another authority to grant paid time off to employees who are excluded from the definition of employee in 5 U.S.C. 2105.

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Basis for Granting Time–off Awards

Agencies may grant time-off awards for—

• a suggestion, invention, superior accomplishment, productivity gain, or other personal effort that contributes to the efficiency, economy, or other improvement of Government operations or achieving a significant reduction in paperwork; or
• a special act or service in the public interest in connection with or related to official employment.

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Uses of Time-off Awards

Agencies may use time–off awards as incentives or as recognition. Incentives help focus employees on the organization’s goals and promise specific rewards to employees who provide specified results that significantly help to achieve those goals. Incentives identify and communicate goals and reward formulas at the beginning of the performance period. Recognition provides after–the–fact acknowledgement to employees for their accomplishments when there was no previous promise of reward. Recognition signals the types of achievements the organization values. Incentives and recognition may involve individual employees, groups, or entire organizations.

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Possible Advantages of Using Time–Off Awards

Perceived to be More Equitable

Various employees can receive awards of comparable value. For example, since the "currency" for these awards is time, agencies can award the same number of hours to employees in different grades for the same, or comparable, achievements, thus eliminating any perceived inequity associated with grade differences.

No Additional Taxation

Time–off awards do not have explicit cash value and do not change the employee’s income. As a result, time–off awards are not subject to additional tax withholdings. Agencies deduct tax withholdings from the salary paid during the period the time–off award is used, just as agencies deduct tax withholdings when employees use annual or sick leave or other forms of authorized paid absence.

Immediate Reinforcement

Time–off awards can be one of the award forms most closely linked to the time and place of the accomplishment. Agency policy may permit immediate supervisors to grant them, and in some situations employees might be able to use them immediately.

More Perceived Value

Some employees may value paid time off more than a cash award. For example new employees traditionally have lower annual leave balances and may prefer additional paid time off.

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Possible Disadvantages of Using Time–Off Awards

Loss of Productivity

Because agencies do not have to provide additional cash outlay with time–off awards, they may not realize the real cost of these awards often can exceed the cost of paying for cash awards. Although agencies budget for salary expenses, managers may overlook the financial impact of time-off awards. A 40 hour time–off award represents about 2 percent of the employee’s total salary (not including benefits) the agency is paying even though the employee is not working. Managers need to take into consideration these hidden costs, especially in terms of productivity lost. Agencies need to ensure they manage the use of time-off awards and take into consideration—

• whether the organization can afford to do without one of its top performers for this period of time
• who will do the work while the time-off award recipients are away from the office, and
• whether the organization as a whole would suffer because too many top performers are not at work if managers across the organization give time–off awards instead of cash awards because awards funds are low.

Employees with "Use or Lose" Annual Leave

Unlike new employees who have not accumulated much leave, employees with “use or lose” leave may not appreciate a time–off award since additional paid time off may not be something they need as much. In addition, the agency would be losing additional valuable hours from a veteran employee when they use both their award and their “use or lose” hours.

External Perception

Agencies should consider the possible public perception of time–off awards. It could appear to the public (and to Congress) that an agency that gives substantial, frequent, or large numbers of time–off awards could be overstaffed since it can complete its mission while these employees are absent. Also, agencies must be careful not to abuse the time–off award authority by granting everyone in an organization a time–off award at the same time whether everyone deserves the recognition or not. For example, giving everyone the day after Thanksgiving off and calling it a time–off award without specifying what is being recognized and how everyone has contributed equally, does not, on its face, appear to be a valid use of the time-off award authority.

Nontransferable

Unlike other forms of pay for time not worked (e.g., annual and sick leave), employees are not entitled to a time–off award. If an employee transfers from one agency to another, the gaining agency is not obligated to “honor” the time–-off award. Therefore, any unused time–off awards are not transferable, unless a special arrangement is made with the receiving agency to honor the time–off award granted by the employee’s former agency. Also, the losing agency may not convert the time to cash (5 CFR 451.104(f)) and give cash to the employee for the time not taken.

Monitoring Issues

It may be difficult for agencies to monitor and manage the use of time–off awards supervisors grant on the spur of the moment. Once the award has been granted and used, supervisors may forget the need to document it. The Code of Federal Regulations requires agencies to document all cash and time-off awards (5 CFR 451.106(e)) in compliance with instructions in the OPM Operating Manual, The Guide to Processing Personnel Actions.

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