U.S. Office of Personnel Management - Ensuring the Federal Government has an effective civilian workforce

Recruitment, Relocation, and Retention Incentives Questions and Answers

Recruitment and Relocation Incentives

Q - What is a recruitment incentive?

A - A recruitment incentive is an incentive an agency may pay to a newly appointed employee if the agency has determined that the position is likely to be difficult to fill in the absence of such an incentive. In return, the employee must sign an agreement to fulfill a period of service with the agency of not less than 6 months and not more than 4 years. (See 5 U.S.C. 5753; 5 CFR part 575, subpart A; and the Recruitment Incentives fact sheet.)

Q - What is a relocation incentive?

A - A relocation incentive is an incentive an agency may pay to a current employee who must relocate to a position in a different geographic area that is likely to be difficult to fill in the absence of such an incentive. In return, the employee must sign an agreement to fulfill a period of service of not more than 4 years with the agency. In addition, the employee must establish a residence in the new geographic area prior to payment. (See 5 U.S.C. 5753; 5 CFR part 575, subpart B; and the Relocation Incentives fact sheet.)

Eligibility

Q - What categories of employees may receive a recruitment or relocation incentive?

A - Agencies may pay a recruitment or relocation incentive to an eligible individual who is appointed to one of the following categories of positions: General Schedule (GS); senior-level or scientific or professional (SL/ST); Senior Executive Service (SES); Federal Bureau of Investigation and Drug Enforcement Administration (FBI/DEA) SES; law enforcement officer (LEO); Executive Schedule (EX); prevailing rate (wage) positions; and positions in a category for which payment of recruitment or relocation incentives has been approved by OPM at the request of the head of an executive agency. (See 5 CFR 575.103 and 575.203.)

Q - What categories of employees may not receive a recruitment or relocation incentive?

A - Agencies may not pay a recruitment or relocation incentive to an employee in a position (1) to which the individual was appointed by the President; (2) in the Senior Executive Service as a non-career appointee; (3) which has been excepted from the competitive service by reason of its confidential, policy-determining, policy-making, or policy-advocating character; (4) designated as the head of an agency, including an agency headed by a collegial body composed of two or more individual members; or (5) in which the employee is expected to receive an appointment as the head of an agency. (See 5 CFR 575.104 and 575.204.)

Q - May a career SES member elect to retain coverage under the recruitment or relocation incentive authority when he or she accepts a Presidential appointment under 5 CFR part 317, subpart H?

A - No. Under 5 CFR 317.801(b), an SES member may only elect to retain basic pay, performance awards, rank awards, severance pay, leave, and retirement provisions. Recruitment and relocation incentives are not basic pay for this purpose.

Recruitment Incentive Payment Conditions

Q - Under what conditions may eligible employees receive a recruitment incentive?

A - A recruitment incentive may be paid to an employee who is newly appointed to an eligible category of position that is likely to be difficult to fill in the absence of such an incentive. An agency may target groups of similar positions that have been difficult to fill in the past or that may be difficult to fill in the future (except positions covered by 5 CFR 575.103(a)(2),(a)(3) or (a)(5), or in similar categories approved by OPM) and make the required determination to offer a recruitment incentive to newly-appointed employees on a group basis. (See 5 CFR 575.105.)

Q - When is an employee considered to be newly appointed for the purpose of paying a recruitment incentive?

A - For the purpose of paying a recruitment incentive, newly appointed refers to —

• The first appointment, regardless of tenure, as an employee of the Federal Government;
• An appointment of a former employee of the Federal Government following a break in service of at least 90 days; or
• An appointment of an individual in the Federal Government when his is her Federal service during the 90-day period immediately preceding the appointment was limited to one or more of the following:
  • A time-limited appointment in the competitive or excepted service;
  • A non-permanent appointment (excluding a Schedule C appointment under 5 CFR part 213) in the competitive or excepted service;
  • Employment with the government of the District of Columbia (DC) when the candidate was first appointed by the DC government on or after October 1, 1987;
  • An appointment as an expert or consultant under 5 U.S.C. 3109 and 5 CFR part 304;
  • Employment under a provisional appointment designated under 5 CFR 316.403; or
  • Employment under the Student Career Experience Program under 5 CFR 213.3202(b).

(See the definition of newly appointed in 5 CFR 575.102.)

Q - Are Department of Defense (DOD) and Coast Guard nonappropriated fund instrumentality (NAFI ) employees eligible for recruitment incentives without a 90-day break-in-service?

A - No.  DOD and Coast Guard NAFI employees must have a 90-day break-in-service to be eligible for a recruitment incentive upon movement to a position listed in 5 CFR 575.103 (unless one of the remaining exclusions in the definition of “newly appointed” applies).

Q - Is an employee who transfers from the judicial or legislative branch of the Federal Government considered newly appointed for the purpose of paying a recruitment incentive?

A - No. Under 5 CFR 575.102, newly appointed is defined as the first appointment as an employee of the Federal Government. All three branches are part of the Federal Government for this purpose.

Q - May we pay recruitment incentives to employees receiving a special rate or locality rate?

A - Yes. Agencies may pay a recruitment incentive to employees receiving a special rate or locality rate.

Q - May we pay recruitment incentives to temporary, seasonal, or part-time employees?

A - Yes, provided all other requirements are met. For example, a temporary appointment must be for at least 6 months to meet the minimum period of employment required by 5 CFR 575.110(a) for a service agreement.

Q - May we pay a recruitment incentive to a newly-appointed employee whose pay is set above step 1 using the superior qualifications and special needs pay-setting authority under 5 CFR 531.212?

A - Yes.

Q - May we authorize recruitment incentives for a group or category of employees?

A - Yes. Under 5 CFR 575.105(b), agencies may target groups of positions that have been difficult to fill in the past or that may be difficult to fill in the future and may make the required written determination to offer a recruitment incentive on a group basis (excluding positions covered by 5 CFR 575.103(a)(2), (a)(3), or (a)(5) or in similar categories approved by OPM). All requirements in the regulations and the agency's recruitment incentive plan must be met in order to pay a recruitment incentive to an individual employee in the covered group. For example, agencies may authorize a recruitment incentive of up to 25 percent of the annual rate of basic pay of the employee at the beginning of the service period multiplied by the number of years (including fractions of a year) in the service period (not to exceed 4 years), and the employee must be newly appointed in the Federal Government and must sign a service agreement of at least 6 months with the appointing agency.

Relocation Incentive Payment Conditions

Q - Under what conditions may eligible employees receive a relocation incentive?

A - A relocation incentive may be paid to an employee who must relocate to a different geographic area (permanently or temporarily) to accept a covered position in an agency when the position is likely to be difficult to fill and is an employee of the Federal Government immediately before the relocation.   Also, a relocation incentive may be paid only when the employee’s rating of record (or an official performance appraisal or evaluation under a system not covered by 5 U.S.C. chapter 43 or 5 CFR part 430) for the position held immediately before the move is at least "Fully Successful" or equivalent.  (See 5 CFR 575.205.)

Q - When is a position considered to be in a different geographic area for the purpose of paying a relocation incentive?

A - A position is considered to be in a different geographic area if the worksite of the new position is 50 or more miles from the worksite of the position held immediately before the move. If the worksite of the new position is less than 50 miles from the worksite of the position held immediately before the move, but the employee must relocate (i.e., establish a new residence) to accept the position, an authorized agency official may waive the 50-mile requirement and pay the employee a relocation incentive. (See 5 CFR 575.205(b).)

Q - May we pay a relocation incentive to a current employee of another agency to relocate to a position in our agency that is likely to be difficult to fill in the absence of such an incentive?

A - Yes. Under 5 CFR 575.205, an agency may pay a relocation incentive to an employee of another agency to relocate to a different geographic area without a break in service to accept a position that is likely to be difficult to fill.

Q - May we pay relocation incentives to employees receiving a special rate or locality rate?

A - Yes. Agencies may pay relocation incentives to employees receiving a special rate or locality rate.

Q - May we pay or offer relocation incentives to newly-appointed employees?

A - No. Agencies may pay relocation incentives only to current Federal employees.

Q - May we pay a relocation incentive to an employee who is temporarily appointed to a position in a different geographic area?

A - Yes. Under 5 CFR 575.205(a)(1), an agency may pay a relocation incentive to an employee who must relocate to a different geographic area either permanently or temporarily, assuming all other conditions are met.

Q - May we pay a relocation incentive to an employee who is involuntarily relocated?

A - Yes. An agency may pay a relocation incentive to an employee who is voluntarily or involuntarily relocated to a different geographic area, assuming all other conditions are met.

Q - May we pay a relocation incentive to a DOD or Coast Guard NAFI employee who moves to an appropriated fund position?

A - Yes. An agency may pay a relocation incentive to a NAFI employee in a DOD or USCG NAFI position who moves without a break in service to an appropriated fund position that is eligible for relocation incentives under 5 CFR 575.203 and that is in a different geographic area.

Q - May we authorize relocation incentives for groups or categories of employees?

A - 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.

Agency Plan

Q - What is required for an agency to use the recruitment or relocation incentive authority?

A - Before paying a recruitment or relocation incentive, an agency must establish a plan for using the authority.  (See 5 CFR 575.107 and 575.207.)  The plan must include the designation of officials with authority to review and approve the payment of recruitment or relocation incentives, the designation of officials with authority to waive the repayment of a recruitment or relocation incentive, the categories of employees who are prohibited from receiving recruitment or relocation incentives, the required documentation for determining that a position is likely to be difficult to fill, requirements for determining the amount of an incentive, the payment methods that may be authorized, requirements governing service agreements (including criteria for determining the length of a service period, the conditions for terminating a service agreement, and the obligations of the agency and the employee if a service agreement is terminated), and documentation and recordkeeping requirements.   Unless the head of the agency determines otherwise, agency recruitment and relocation incentive plans must apply uniformly across the agency.

Q - Must agencies submit their recruitment and relocation incentive plans to OPM for review and approval?

A - No, agencies are not required to submit their recruitment and relocation incentive plans to OPM for review or approval.

Approval Criteria and Documentation

Q - What is required in determining whether a position would be difficult to fill in the absence of a recruitment or relocation incentive?

A - Before the employee enters on duty in the position for which recruited, or in the position in the new geographic area, the agency must determine that, in the absence of a recruitment or relocation incentive (as applicable), the agency would encounter difficulty in filling the position. An agency may determine that a position is likely to be difficult to fill if the agency is likely to have difficulty recruiting candidates with the competencies required for the position in the absence of a recruitment or relocation incentive based on the fact that OPM has approved the use of a direct-hire authority applicable to the position or on a consideration of the following factors:

• The availability and quality of candidates possessing the competencies required for the position, including the success of recent efforts to recruit candidates for similar positions using indicators such as offer acceptance rates, the proportion of positions filled, and the length of time required to fill similar positions;
• The salaries typically paid outside the Federal Government for similar positions;
• Recent turnover in similar positions;
• Employment trends and labor-market factors that may affect the agency's ability to recruit candidates for similar positions;
• Special or unique competencies required for the position;
• Agency efforts to use non-pay authorities, such as special training and work scheduling flexibilities, to resolve difficulties, alone or in combination with a recruitment or relocation incentive;
• The desirability of the duties, work or organizational environment, or geographic location of the position; and
• Other supporting factors.

(See 5 CFR 575.106 and 575.206.)

Q - What must an agency document when approving a recruitment or relocation incentive authorization?

A - For each determination to pay a recruitment or relocation incentive, an agency must document in writing—

• The basis for determining that a position is likely to be difficult to fill;
• The basis for authorizing an incentive; and
• The basis for the amount and timing of the approved incentive payment and the length of the required service period.
• Also, for a relocation incentive, that the worksite of the employees new position is not in the same geographic area as the worksite of the position held immediately before the move (or that a waiver was approved under 5 CFR 575.205(b)) and that the employee established a residence in the new geographic area.

The authorized agency official must review and approve the recruitment or relocation incentive determination before the agency pays the incentive to the employee. (See 5 CFR 575.108(a) and 575.208(a).)

Q - In the regulations in effect prior to May 13, 2005, at 5 CFR 575.104(c)(2)(v), agencies were required to consider "the practicality of using the superior qualifications appointment authority . . . alone or in combination with a recruitment bonus" before they authorized a recruitment bonus. Must agencies consider using the superior qualifications and special needs pay-setting authority before they authorize a recruitment incentive?

A - No, agencies are no longer required to consider using the superior qualifications and special needs pay-setting authority before they authorize a recruitment incentive. However, under 5 CFR 531.212(d) (as in effect on and after May 1, 2005), an agency must consider the possibility of authorizing a recruitment incentive when determining whether to use the superior qualifications and special needs pay-setting authority. The reason for the distinction is that agencies should first consider whether they can attract a candidate by using an authority which has limited implications for the agency budget because it does not increase the employee’s basic pay (e.g., a recruitment incentive) before using a flexibility that increases basic pay (e.g., the superior qualifications and special needs pay-setting authority) which has longer term cost implications.

Q - May an agency use a recruitment incentive in conjunction with the superior qualifications and special needs pay-setting authority?

A - Yes, if it is not possible to recruit the candidate solely through offering a recruitment incentive. (See 5 CFR 531.212(d).)

Q - Who may approve the payment of a recruitment or relocation incentive?

A - An authorized agency official who is at least one level higher than the employee’s supervisor must review and approve each determination to pay a recruitment or relocation incentive, unless there is no official at a higher level in the agency. See 5 CFR 575.107(b) and 575.207(b) for additional exceptions. We encourage agencies to delegate authority to approve incentives to the lowest level practicable to help respond more effectively to their staffing needs.

Payment

Q - What is the maximum total recruitment or relocation incentive an employee may receive?

A - The total amount of recruitment or relocation incentive payments may not exceed 25 percent of the annual rate of basic pay of the employee at the beginning of the service period multiplied by the number of years (including fractions of a year) in the service period (not to exceed 4 years). (See 5 CFR 575.109(b) and 575.209(b).) With OPM approval, this cap may be raised to 50 percent (based on a critical agency need), as long as the total incentive does not exceed 100 percent of the employee’s annual rate of basic pay at the beginning of the service period. (See 5 CFR 575.109(c) and 575.209(c).)

Q - What is the definition of rate of basic pay for the purpose of paying a recruitment or relocation incentive?

A - For the purpose of paying a recruitment or relocation incentive, rate of basic pay means the rate of pay fixed by law or administrative action for the position to which an employee is or will be appointed, before deductions and including any special rate supplement under 5 CFR part 530, subpart C, or similar payment under other legal authority, and any locality-based comparability payment under 5 CFR part 531, subpart F, or similar payment under other legal authority, but excluding additional pay of any other kind. For example, a rate of basic pay does not include additional pay such as cost-of-living allowances or post differentials under 5 U.S.C. 5941, night shift differentials under 5 U.S.C. 5343(f) or environmental differentials under 5 U.S.C. 5343(c)(4). (See the definition of rate of basic pay in 5 CFR 575.102 and 575.202.)

Q - How do we compute the annual rate of basic pay for hourly rate employees for the purpose of determining an employee’s maximum recruitment or relocation incentive?

A - For hourly rate employees who do not have a scheduled annual rate of basic pay, compute the annual rate by multiplying the applicable hourly rate in effect at the beginning of the service period by 2,087 hours. (See 5 CFR 575.109(b)(2) and 575.209(b)(2).)

Q - How do we determine the number of years in a service period for the purpose of determining an employee’s maximum recruitment or relocation incentive?

A - For the purpose of determining the number of years in a service period, divide the total number of calendar days in the service period by 365 and round the result to two decimal places. For example, a service period covering 39 biweekly pay period equals 546 days, and 546 days divided by 365 days equals 1.50 years. (See 5 CFR 575.109(b)(3) and 575.209(b)(3).)

Q - If an employee is offered a relocation incentive to relocate to a new locality pay area, does the agency use the employee’s old locality rate or new locality rate to calculate his or her relocation incentive?

A - The agency must calculate the relocation incentive using the locality rate for the new locality pay area.

Q - Under what circumstances may the 25 percent cap on the recruitment or relocation incentive be waived?

A - An authorized agency official may request that OPM waive the 25 percent cap based on a critical agency need. The agency must determine that the competencies required for the position 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). Under such a waiver, the total amount of recruitment or relocation incentive payments paid to an employee in a service period may not exceed 50 percent of the annual rate of basic pay of the employee at the beginning of the service period multiplied by the number of years (including fractions of a year) in the service period. However, in no event may a waiver provide total incentive payments exceeding 100 percent of the employee’s annual rate of basic pay at the beginning of the service period. (See 5 CFR 575.109(c) and 575.209(c).)

Q - What information must agencies include in their waiver requests to OPM?

A - Waiver requests must include a description of the critical agency need the proposed incentive would address, the documentation required for the agency's written determination to authorize a recruitment incentive under 5 CFR 575.108 or a relocation incentive under 5 CFR 575.208, the proposed incentive payment amount and a justification for that amount, the timing and method of making the incentive payments, the service period required, and any other information pertinent to the case at hand. (See 5 CFR 575.109(c)(2) and 575.209(c)(2).)

Q - What are the different methods of paying a recruitment or relocation incentive?

A - An agency may pay a recruitment or relocation incentive as an initial lump-sum payment at the beginning of the service period, in equal or variable installment payments throughout the service period, as a final lump-sum payment upon completion of the service period, or in a combination of these methods. (See 5 CFR 575.109(a) and 575.209(a).)

Q - What does "equal or variable" installment payments mean?

A - 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.

Q - May an agency make quarterly or semi-annual installment payments?

A - Installment payments must be consistent with biweekly pay periods, e.g., every 2 pay periods, 6 pay periods, or 8 pay periods.

Q - May we pay a recruitment incentive before an employee enters on duty?

A - Yes. An agency may pay a recruitment incentive to an employee who has not yet entered on duty if the individual has accepted a written offer of employment and has signed a service agreement. (See 5 CFR 575.109(d).)

Q - May we pay a relocation incentive before an employee establishes a residence in the new geographic area?

A - No. Under 5 CFR 575.205(b), an employee must establish a residence in the new geographic area before the agency may pay a relocation incentive.

Q - Are recruitment or relocation incentives considered part of an employee’s rate of basic pay for severance pay, retirement, or other purposes? Are recruitment or relocation incentives included in a lump-sum payment for annual leave?

A - No. Recruitment and relocation incentives are not considered part of an employee’s rate of basic pay for any purpose, including severance pay, and are not included in lump-sum annual leave payments. (See 5 CFR 575.109(e), 575.209(d), and 550.1205(b).)

Q - Do recruitment and relocation incentives count toward the aggregate limitation on pay under 5 U.S.C. 5307?

A - Yes. See 5 CFR 575.109(f) and 575.209(e) and the definition of aggregate compensation at 5 CFR 530.202.

Q - Under the regulations concerning the administration of the aggregate limitation on pay at 5 CFR 530.203, agencies must first defer payment of nondiscretionary payments before deferring payment of discretionary payments. Are recruitment or relocation incentive payments considered non-discretionary or discretionary payments?

A - Once an agency authorizes a recruitment or relocation incentive, payment of the incentive is considered a non-discretionary payment.

Q - Are recruitment or relocation incentives subject to the annual and biweekly premium pay limitations under 5 U.S.C. 5547 and 5 CFR 550.105 and 550.106?

A - No. Recruitment and relocation incentive payments are not subject to the biweekly or annual premium pay limitation, since recruitment and relocation incentives are neither premium pay nor basic pay.

Q - How do we compute a recruitment or relocation incentive amount for an employee who is receiving a retained rate?

A - Because a retained rate is not basic pay for the purpose of computing recruitment and relocation incentives, the maximum rate of basic pay for the employee’s grade must be used in place of the retained rate to calculate the recruitment or relocation incentive. (See 5 CFR 536.307.)

Q - If an employee receiving a recruitment or relocation incentive in installment payments goes into non-pay or paid leave status during the course of the service agreement, should the agency continue the incentive installment payments? Are hours in a paid leave or leave without pay status creditable towards the completion of a service agreement?

A - Under 5 CFR 575.110(f) and 575.210(f), agencies may address the extent to which periods of time in a nonpay status or in a paid leave status (or paid time off status) are creditable toward the completion of an incentive service period and to determine whether recruitment or relocation incentive installment payments will continue as scheduled while an employee is in a non-pay status or paid leave status, with the exception of an employee who is on military leave without pay. An employee who is absent because of uniformed service is generally entitled upon reemployment to be treated as though he or she had never left. (See 5 CFR 353.107.) This means that a person who is reemployed following uniformed service receives credit for the entire period of the absence for the purpose of rights and benefits based upon seniority and length of service, including within-grade increases, career tenure, completion of probation, leave rate accrual, and severance pay. Therefore, the period of military LWOP is creditable toward the completion of a recruitment or relocation incentive service period, and scheduled recruitment or relocation installment payments specified in the service agreement must continue during the period of military LWOP.

Service Period

Q - What is the required period of employment under a service agreement?

A - The period of employment under a recruitment incentive service agreement may not be less than 6 months and may not exceed 4 years. (See 5 CFR 575.110(a).) The period of employment under a relocation service agreement may not exceed 4 years. (See 5 CFR 575.210(a).) There is no minimum period of employment under a relocation incentive service agreement.

Q - When must a service period begin and end?

A - The required service period must begin upon commencement of service with the agency for a recruitment incentive, and upon commencement of service at the new duty station for a relocation incentive. In both cases, the required service period must terminate on the last day of a pay period. (See 5 CFR 575.110(b) and 575.210(b), including the exceptions under 5 CFR 575.110(b)(2) and (b)(3) and 575.210(b)(2) and (b)(3).)

Q - Under what circumstances may the commencement of a service period be delayed?

A - If service with the agency (for a recruitment incentive) or at the new duty station (for a relocation incentive) does not begin on the first day of a pay period, the agency must delay the service period commencement date so that a required service period begins on the first day of the first pay period beginning on or after the commencement of service in the agency or at the new duty station.

An agency also may delay a service agreement commencement date until after an employee completes an initial period of formal training or a required probationary period when continued employment in the position is contingent on successful completion of the formal training or probationary period. The agency must make the determination to pay an incentive before the employee enters on duty in the position for which recruited or to which relocated. However, the service agreement must specify that if the employee does not successfully complete the training or probationary period before the service period commences, the agency is not obligated to pay any portion of the incentive to the employee. (See 5 CFR 575.110(b) and 575.210(b).)

Q - How is the length of a service period under a service agreement determined?

A - It is up to the agency to decide how long to set the service period, within certain limitations (e.g., it cannot be shorter than 6 months for a recruitment incentive or longer than 4 years for a recruitment or relocation incentive). Since the reason for the incentive is to attract a candidate to accept a position or to encourage an employee to relocate to a position-and remain at that position-the agency should consider what service period would best help achieve these objectives, i.e., what the agency believes to be a reasonable period of service for the amount of incentive it is willing to pay.

Service Agreement

Q - What information must be included in a recruitment or relocation service agreement?

A - The service agreement must specify the commencement and termination dates of the service period, the amount of the incentive, the method and timing of incentive payments, the amount of each incentive payment, the conditions under which an agreement will be terminated by the agency, any agency or employee obligations if a service agreement is terminated (including the conditions under which the employee must repay an incentive or under which the agency must make additional payments for partially completed service), and any other terms and conditions for receiving and retaining a recruitment or relocation incentive. (See 5 CFR 575.110 and 575.210.)

Q - What other types of information may a service agreement include?

A - The service agreement may include any other terms or conditions that, if violated, will result in termination of the service agreement. For example, the service agreement may specify the employee’s work schedule, type of position, and the duties he or she is expected to perform. In addition, the service agreement may address the extent to which periods of time on detail, in a nonpay status, or in a paid leave status are creditable towards the completion of the service period. (See 5 CFR 575.110(f) and 575.210(f).)

Q - Under what circumstances must an agency terminate an employee’s recruitment or relocation service agreement, and what are the consequences of terminating the agreement?

A - An agency must terminate a service agreement if an employee is demoted or separated for cause (i.e., for unacceptable performance or conduct), receives a rating of record lower than "Fully Successful" or equivalent during the service period, or otherwise fails to fulfill the terms of the service agreement.  In such cases, the employee must repay any portion of the incentive attributable to uncompleted service.  (See 5 CFR 575.111(h) and 575.211(h) for a repayment waiver authority.)  The employee is entitled to retain any incentive payments attributable to completed service.  Exception:  When the employee is separated as a result of material false or inaccurate statements or deception or fraud in examination or appointment, or as a result of failing to meet employment qualifications, the employee must repay all recruitment incentives received under that service agreement.  The agency is not obligated to pay the employee any outstanding incentive payment attributable to completed service unless such payment was required under the terms of the service agreement.  An agency must notify an employee in writing when it terminates a recruitment or relocation incentive service agreement.  (See 5 CFR 575.111 and 575.211.)

Q - Under what circumstances may an agency terminate an employee’s recruitment or relocation service agreement, and what are the consequences of terminating the agreement?

A - An agency may unilaterally terminate a recruitment or relocation incentive service agreement based solely on the management needs of the agency.  For example, an agency may terminate a service agreement when the employee’s position is affected by a reduction in force, when there are insufficient funds to continue the planned incentive payments, or when the agency assigns the employee to a different position (if the different position is not within the terms of the service agreement). In such cases, the employee is entitled to all incentive payments attributable to completed service and to retain any portion of an incentive payment already received that is attributable to uncompleted service. An agency must notify an employee in writing when it terminates a recruitment or relocation incentive service agreement. (See 5 CFR 575.111 and 575.211.)

Records and Reports

Q - What records must an agency keep concerning recruitment and relocation incentives?

A - An agency must keep a record of each determination to pay a recruitment or relocation incentive and make such records available for review upon OPM's request. (See 5 CFR 575.113(a) and 575.213(a).)

Q - What are the reporting requirements related to recruitment and relocation incentives?

A - By March 31 in each of the years 2006 through 2010, each agency must submit a written report to OPM on the use of the recruitment and relocation incentive authorities within the agency during the previous calendar year for use in compiling an OPM report to Congress, as required by section 101(c) of Public Law 108-411. Each agency report must include—

• A description of how the authority to pay recruitment and relocation incentives was used by the agency during the previous calendar year;
• The number and dollar amount of recruitment and relocation incentives paid during the previous calendar year by occupational series and grade, pay level, or other pay classification; and
• Other information, records, reports, and data as OPM may require.

(See 5 CFR 575.113(b) and 575.213(b).)

Retention Incentives

Q - What is a retention incentive?

A - A retention incentive is an incentive an agency may pay to a current employee if--

• The agency determines that the unusually high or unique qualifications of the employee or a special need of the agency for the employee’s services makes it essential to retain the employee and the employee would be likely to leave the Federal service in the absence of a retention incentive, or
• The agency has a special need for the employee’s services that makes it essential to retain the employee in his or her current position during a period of time before the closure or relocation of the employee’s office, facility, activity, or organization and the employee would be likely to leave for a different position in the Federal service in the absence of a retention incentive.

(See 5 CFR 575.301, 575.315(a)(1), the Retention Incentives (likely to leave the Federal service) fact sheet, and the Retention Incentives (likely to leave for a different Federal position) fact sheet.)

Eligibility

Q - What categories of employees may receive a retention incentive?

A - Agencies may pay a retention incentive to a current employee in the following categories of positions: General Schedule (GS); senior-level and scientific or professional (SL/ST); Senior Executive Service (SES); Federal Bureau of Investigation and Drug Enforcement Administration (FBI/DEA) SES; law enforcement officer (LEO); Executive Schedule (EX); prevailing rate (wage) positions; and positions in a category for which payment of retention incentives has been approved by OPM at the request of the head of an executive agency. (See 5 CFR 575.303 and 575.315(b)(1).)

Q - What categories of employees may not receive a retention incentive?

A - Agencies may not pay a retention incentive to an employee in a position (1) to which the individual was appointed by the President; (2) in the Senior Executive Service as a non-career appointee; (3) which has been excepted from the competitive service by reason of its confidential, policy-determining, policy-making, or policy-advocating character; (4) designated as the head of an agency, including an agency headed by a collegial body composed of two or more individual members; or (5) in which the employee is expected to receive an appointment as the head of an agency. (See 5 CFR 575.304 and 575.315(b)(1).)

Q - May we authorize retention incentives for individual employees and groups or categories of employees?

A - Yes. However, an agency may not include in a group retention incentive authorization an employee in a senior-level (SL), scientific or professional (ST), Senior Executive Service (SES), Federal Bureau of Investigation and Drug Enforcement Administration (FBI/DEA) SES, or Executive Schedule (EX) position or similar categories of positions for which the payment of a retention incentive has been approved by OPM. (See 5 CFR 575.305(c) and 575.315(a)(2).) Retention incentives for employees in such positions must be approved on an individual, case-by-case basis.

Q- May we pay a retention incentive to an employee whose rating of record is less than “Fully Successful” or equivalent?

A- No.  A retention incentive may be paid only when the employee’s rating of record (or other official performance appraisal or evaluation) is at least “Fully Successful” or equivalent.  (See 5 CFR 575.305(d) and 575.315(b)(2).)

Q- What other criteria must be met in order for an employee to be eligible for a retention incentive when he or she would be likely to leave for a different Federal position?

A- The agency must have provided a general or specific written notice to the employee that his or her position may or would be affected by the closure or relocation of the employee’s office, facility, activity, or organization (e.g., the employee’s position may or would move to a new geographic location or the employee’s position may or would be eliminated).  (See 5 CFR 575.315(b)(3).)

Q - May we pay retention incentives to employees receiving a special rate or locality payment?

A - Yes. Agencies may pay retention incentives to employees receiving a special rate or locality payment.

Q - May we offer a retention incentive to recruit an employee from another agency or to a job candidate when we know the candidate has a more lucrative private sector job offer?

A - No. An agency may not offer a retention incentive (or authorize the payment of a retention incentive) to recruit an employee from another agency or to recruit a job candidate. A retention incentive may not be offered or authorized prior to the individual's employment with the agency. (See 5 CFR 575.309(f).)

Q - May we pay a retention incentive to an employee who is likely to leave because of retirement?

A - 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.

Q - May we pay a retention incentive to an employee who is likely to leave for another Federal position in any situations other than before the closure or relocation of the employee’s office, facility, activity, or organization?

A - No.

Agency Plan

Q - What is required for an agency to use the retention incentive authority?

A - Before paying a retention incentive, an agency must establish a plan for using the authority. (See 5 CFR 575.307 and 575.315(c).) The plan must include the designation of officials with authority to review and approve payment of retention incentives, the categories of employees who are prohibited from receiving retention incentives, required documentation for determining that an employee would be likely to leave the Federal service or would be likely to leave for a different position in the Federal service, any requirements for determining the amount of a retention incentive, the payment methods that may be authorized, requirements governing service agreements (including the criteria for determining the length of a service period, the conditions for terminating a service agreement, and the obligations of the agency if it terminates a service agreement), the conditions for terminating retention incentive payments when no service agreement is required, and documentation and recordkeeping requirements.

Q - Must agencies submit their retention incentive plan to OPM for review and approval?

A - No. Agencies are not required to submit their retention incentive plans to OPM for review or approval.

Approval Criteria and Documentation

Q - What must an agency document when approving a retention incentive for an employee likely to leave the Federal service?

A - For each determination to pay a retention incentive for an employee likely to leave the Federal service, an agency must document in writing-

• The basis for determining that the unusually high or unique qualifications of the employee (or group of employees) or a special need of the agency for the employee’s (or group of employees') services makes it essential to retain the employee(s);
• The basis for determining that the employee (or a significant number of employees in a group) would be likely to leave the Federal service in the absence of a retention incentive; and
• The basis for establishing the amount and timing of the approved retention incentive payment and the length of the required service period.

(See 5 CFR 575.308(b).)

Q - What factors must an agency consider in making a determination to pay a retention incentive to an individual employee or a group or category of employees likely to leave the Federal service?

A - An agency must consider the following factors, as applicable in the case at hand, in making a retention incentive determination for an individual employee or a group or category of employees likely to leave the Federal service:

• Employment trends and labor market factors, such as the availability and quality of candidates in the labor market possessing the competencies required for the position and who, with minimal training, cost, or disruption of service to the public, could perform the full range of duties and responsibilities of the employee’s position at the level performed by the employee;
• The success of recent efforts to recruit candidates and retain employees with qualifications similar to those possessed by the employee for positions similar to the position held by the employee;
• Special or unique competencies needed for the position;
• Agency efforts to use non-pay authorities to help retain the employee instead of or in addition to a retention incentive, such as special training and work scheduling flexibilities or improved working conditions;
• The desirability of the duties, work or organizational environment, or geographic location of the position;
• The extent to which the employee’s departure 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;
• The salaries typically paid outside the Federal Government; and
• Other supporting factors.

(See 5 CFR 575.306(b) and 575.306(c).)

Q - What must an agency document when approving a retention incentive for an individual employee or a group or category of employees likely to leave for a different Federal position?

A - For each determination to pay a retention incentive, the agency must document in writing—

• The basis for determining the agency has a special need for the employee’s (or group of employees‘) services that makes it essential to retain the employee(s), based on the agency‘s mission needs and the employee’s (or group of employees‘) competencies, during a period of time before the closure or relocation of the employee’s (or group of employees‘) office, facility, activity, or organization;
• The basis for determining, in the absence of a retention incentive, the employee (or a significant number of employees in the group) would be likely to leave for a different position in the Federal service; and
• The basis for determining the amount and timing of the incentive payments and the length of the service period.

(See 5 CFR 575.315(d)(1).)

Q - What factors must an agency address when documenting the determination to pay a retention incentive to an individual employee or a group or category of employees likely to leave for a different Federal position?

A - 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).)

Q - How does an agency determine what constitutes a group or category of employees?

A - An agency must narrowly define a targeted category of employees using factors that relate to the group or category‘s unusually high or unique qualifications (i.e., competencies) or the agency‘s special need for the employees‘ services and the high risk that a significant number of the employees will leave the Federal service or for a different Federal position in the absence of a retention incentive.   Factors that may be appropriate include the following:  occupational series, grade level, distinctive job duties, unique competencies required for the position, assignment to a special project, minimum agency service requirements, organization or team designation, geographic location, and required rating of record.  (While a rating of record of higher than "Fully Successful" may be a factor used in defining the targeted category, a rating of record by itself is not sufficient to justify a retention incentive.)  Each retention incentive authorized for a group of employees likely to leave for another Federal position may cover no more than one occupational series.   (See 5 CFR 575.306(c)(2) and 575.315(d)(4).)

Q - Who may approve the payment of a retention incentive?

A - Under OPM regulations (5 CFR 575.307(b)), an agency official who is at least one level higher than the employee’s (or group of employees‘) supervisor must review and approve each determination to pay a retention incentive to an individual or group of employees, unless there is no official at a higher level in the agency.  A higher level approval is not needed when approving coverage of individual employees under a previously approved group retention incentive authorization.  The authorized agency official must review and approve the retention incentive determination before the agency pays the incentive to the employee.

We encourage agencies to delegate authority to approve retention incentives to the lowest level practicable to help respond more effectively to their staffing needs.

Payment

Q - What is the maximum total retention incentive an employee may receive?

A - An agency must establish a single retention incentive rate for each individual or group of employees, expressed as a percentage of each employee’s rate of basic pay, not to exceed 25 percent (for an individual employee) or 10 percent (for a group or category of employees). (See 5 CFR 575.309(a).) With OPM approval, this cap may be increased to as much as 50 percent under the conditions specified in 5 CFR 575.309(e).

Q - What conditions must exist for an agency to request a retention incentive in excess of 25 percent (for an individual employee) or 10 percent (for a group or category of employees)?

A - 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).)

Q - What information must agencies include in their waiver requests to OPM?

A - Under 5 CFR 575.309(e)(2), waiver requests must include—

• A description of the employee’s work requirements and responsibilities or, if requesting a group retention incentive, a description of the group or category of employees and the number of employees to be covered by the proposed retention incentive;
• A description of the critical agency need the proposed retention incentive would address;
• The written documentation required by 5 CFR 575.308;
• The proposed retention incentive percentage rate and a justification for that percentage;
• The timing and method of making the retention incentive payments;
• The service period required; and
• Any other information pertinent to the case at hand.

Q - What is the definition of rate of basic pay for the purpose of paying a retention incentive?

A - For the purpose of paying a retention incentive, rate of basic pay means the rate of pay fixed by law or administrative action for the position to which an employee is appointed before deductions and including any special rate supplement under 5 CFR part 530, subpart C, or similar payment under other legal authority and any locality-based comparability payment under 5 CFR part 531, subpart F, or similar payment under other legal authority, but excluding additional pay of any other kind. For example, a rate of basic pay does not include additional pay such as cost-of-living allowances or post differentials under 5 U.S.C. 5941, night shift differentials under 5 U.S.C. 5343(f) or environmental differentials under 5 U.S.C. 5343(c)(4). (See the definition of rate of basic pay in 5 CFR 575.302.)

Q - What are the different methods of paying a retention incentive?

A - An agency may pay a retention incentive in installments after the completion of specified periods of service or in a single lump sum after completion of the full period of service required by the service agreement.  (See 5 CFR 575.309(b).)  Installment payments must be consistent with biweekly pay periods, e.g., every 2 pay periods, 6 pay periods, or 8 pay periods.   An agency may not pay a retention incentive to an employee likely to leave for a different Federal position in biweekly installments at the full retention incentive percentage rate established for the employee.  See 5 CFR 531.315(e)(2).

Q - Do retention incentives count toward the aggregate limitation on pay under 5 U.S.C. 5307?

A - Yes.  See 5 CFR 575.309(i) and the definition of aggregate compensation at 5 CFR 530.202.

Q - Under the regulations concerning the administration of the aggregate limitation on pay at 5 CFR 530.203, agencies must first defer payment of nondiscretionary payments before deferring payment of discretionary payments. Are retention incentive payments considered non-discretionary or discretionary payments?

A - Once an agency authorizes a retention incentive, payment of the incentive is considered a non-discretionary payment.

Q - Are retention incentives subject to the annual and biweekly premium pay limitations under 5 U.S.C. 5547 and 5 CFR 550.105 and 550.106?

A - No. Retention incentive payments are not subject to the biweekly or annual premium pay limitation, since retention incentives are neither premium pay nor basic pay.

Q - If an employee is receiving a retention incentive and he or she goes into a nonpay status, how is an installment payment computed?

A - An installment payment is derived by multiplying the rate of basic pay the employee earned in the installment period by a percentage not to exceed the incentive percentage rate established for the employee. (See 5 CFR 575.309(c)(1).) If an employee is in nonpay status during the full installment period, then he or she has earned no basic pay in the installment period, and therefore would receive no retention payment for the period of time he or she is in a nonpay status. If an employee is in a nonpay status for part of the installment or service period, the employee’s retention incentive must be computed based on the amount of basic pay earned.

Q - Is a retention incentive considered part of an employee’s rate of basic pay for severance pay, retirement, or other purposes? Is a retention incentive included in a lump-sum payment for annual leave?

A - No. Retention incentives are not considered part of an employee’s rate of basic pay for any purpose, including severance pay, and are not included in lump-sum annual leave payments. (See 5 CFR 575.309(h) and 5 CFR 550.1205(b).)

Q - How do we compute a retention incentive amount for an employee who is receiving a retained rate?

A - 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.)

Retention Incentives with a Service Agreement

Q - When is a service agreement required in conjunction with a retention incentive?

A - 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.

Q - What information must be included in a service agreement for an employee likely to leave the Federal service?

A - The service agreement must specify—

• The commencement and termination dates of the service period;
• The retention incentive percentage rate established for the employee;
• Whether the incentive will be paid in installments or in a lump-sum payment upon completion of the service period and, if paid in installments, whether any installment payments will be paid at less than the full retention incentive percentage rate established for the employee, with the accrued but unpaid incentive payment being paid in a lump sum upon completion of the full service period;
• The timing of incentive payments;
• The conditions under which an agreement will be terminated by the agency;
• The effects of terminating the service agreement, including the conditions under which the agency will pay an additional retention incentive payment for partially completed service; and
• Any other terms and conditions for receiving and retaining a retention incentive.

(See 5 CFR 575.310.)

Q - In addition to the information listed in 5 CFR 575.310, what other types of information must be included in a service agreement for an employee likely to leave for a different Federal position?

A - In addition to the information listed in 5 CFR 575.310, the service agreement must also include-

• The conditions under which the agency must terminate the service agreement under 5 CFR 575.315(g), including the conditions under which the agency will pay an additional retention incentive payment for partially completed service under 5 CFR 575.311; and
• A notification to the employee that the agency will review the determination to pay the retention incentive at least annually to determine whether payment is still warranted.

(See 5 CFR 575.315(f).)

Q - What other types of information may a service agreement include?

A - The service agreement may include any other terms or conditions that, if violated, will result in termination of the service agreement. For example, the service agreement may specify the employee’s work schedule, type of position, and the duties he or she is expected to perform. In addition, the service agreement may address the extent to which periods of time on detail, in a nonpay status, or in a paid leave status are creditable towards the completion of the service period. (See 5 CFR 575.310(e).)

Q - What is the required period of employment under a service agreement?

A - There is no set period of employment under a retention incentive service agreement.

Q - How is the length of a service period under a service agreement determined?

A - It is up to the agency to decide how long to set the service period. Since the reason for the incentive is to encourage an employee to remain with the agency, the agency should consider what service period length would best help achieve this objective, i.e., what the agency believes to be a reasonable period of service for the amount of incentive it is willing to pay.  A service period under a service agreement for an employee likely to leave for a different Federal position may not extend past the date on which the employee’s position is actually affected by the relocation or closure of the employee’s office, facility, activity, or organization (e.g., the date the employee’s position moves to a new geographic location or the date the employee’s position is eliminated.)

Q - When must a service period begin and end?

A - Under 5 CFR 575.310(b), a service period must begin on the first day of a pay period and end on the last day of a pay period.

Q - Under what circumstances must an agency terminate an employee’s service agreement, and what are the consequences of terminating the agreement?

A - An agency must terminate a retention incentive service agreement when conditions change such that the original determination to pay the retention incentive no longer applies (such as when the agency assigns the employee to a different position that is not within the terms of the service agreement) or when payment is no longer warranted.  In such cases, the employee is entitled to retain any retention incentive payments attributable to completed service and to receive any portion of retention incentive payment owed by the agency for completed service.

An agency also must terminate a service agreement if an employee is demoted or separated for cause (i.e., for unacceptable performance or conduct), receives a rating of record of less than "Fully Successful" or equivalent, or otherwise fails to fulfill the terms of the service agreement.  In such cases, the employee is entitled to retain any retention incentive payments attributable to completed service.  The agency is not obligated to pay the employee any outstanding incentive payment attributable to completed service unless such payment was required under the terms of the retention incentive service agreement.

An agency must notify an employee in writing when it terminates a retention incentive service agreement.  (See 5 CFR 575.311.)

Q - In addition to the circumstances in 5 CFR 575.311, when must an agency terminate an employee’s service agreement under 5 CFR 575.315 (when an employee is likely to leave for a different position in the Federal service), and what are the consequences of terminating the agreement?

A - An agency must terminate a retention incentive service agreement if–

• The closure or relocation is cancelled or no longer affects the employee’s position;
• The employee moves to another position not affected by the closure or relocation (including another position within the same agency);
• For relocation situations, the employee accepts the agency's offer to relocate with his or her office, facility, activity, or organization and, thus, the employee is no longer likely to leave for a different position in the Federal service; or
• The employee moves to a different position in the same office, facility, activity, or organization subject to closure or relocation that is not covered by the employee’s service agreement.  In this situation, the agency may authorize a new retention incentive for the employee, as appropriate.

If an agency terminates a service agreement in cases in which (1) the employee’s movement to another position is by management action and not at the employee’s request or (2) the closure or relocation is cancelled or no longer affects the employee’s position, the employee is entitled to retain any retention incentive payments attributable to completed service and is entitled to receive any portion of a retention incentive payment owed by the agency for completed service.

If an agency terminates a service agreement when the employee’s movement to another position is at the employee’s request, the employee is entitled to retain retention incentive payments previously paid by the agency that are attributable to the completed portion of the service period.  If the employee received retention incentive payments that are less than the amount that would be attributable to the completed portion of the service period, the agency is not obligated to pay the employee the amount attributable to completed service, unless the agency agreed to such payment under the terms of the retention incentive service agreement.

(See 5 CFR 575.315(g).)

Q - Under what circumstances may an agency terminate an employee’s service agreement, and what are the consequences of terminating the agreement?

A - 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.)

Q - Are paid leave hours (e.g., annual leave, sick leave, or excused absence while receiving injury compensation) creditable toward the completion of a service agreement? What about time in a leave without pay status, including military leave without pay [LWOP] status?

A - Under 5 CFR 575.310(e), agencies may address the extent to which periods of time in a nonpay status (excluding military leave without pay) or in a paid leave status (or paid time off status) are creditable toward the completion of a retention incentive service period.

An employee who is absent because of uniformed service is generally entitled upon reemployment to be treated as though he or she had never left. (See 5 CFR 353.107.) This means that a person who is reemployed following uniformed service receives credit for the entire period of the absence for the purpose of rights and benefits based upon seniority and length of service, including within-grade increases, career tenure, completion of probation, leave rate accrual, and severance pay. Therefore, the period of military LWOP is creditable toward the completion of a retention service period.

Retention Incentives without a Service Agreement

Q - When is a service agreement not required in conjunction with a retention incentive?

A - A service agreement is not required when the agency pays the incentive —

• In biweekly installments at the full retention incentive percentage rate established for the employee; and
• The incentive percent amount established for the employee is set at or below the 25 percent cap (or 10 percent cap for groups of employees).   (See 5 CFR 575.310(f).)

Note:  See special exception in 5 CFR 575.309(e)(4) and 575.315(e)(2).

Q - How often should an agency review its determination to pay a retention incentive when no service agreement is required?

A - For retention incentives that are paid when no service agreement is required, an agency must review each determination to pay the incentive at least annually to determine whether payment is still warranted.  An authorized agency official must certify this determination in writing.  An agency may continue paying a retention incentive to an employee when no service agreement is required as long as the conditions giving rise to the original determination to pay the incentive still exist.  (See 5 CFR 575.311(f).)

Q - When must an agency reduce or terminate a retention incentive authorization when no service agreement is required?

A - An agency must reduce or terminate a retention incentive authorization when no service agreement is required whenever conditions change such that the original determination to pay the retention incentive no longer applies (such as when the agency assigns the employee to a different position that is not within the terms of the original determination) or payment at the level originally approved is no longer warranted.  An agency must terminate a retention incentive authorization if the employee is demoted or separated for cause (i.e., for unacceptable performance or conduct) or the employee receives a rating or record of less than "Fully Successful" or equivalent.   (See 5 CFR 575.311(f)(3) and (5).)

Q - What kinds of factors does an agency consider to determine whether to reduce or terminate a retention incentive when no service agreement is required?

A - 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.

Q - When may an agency reduce or terminate a retention incentive authorization when no service agreement is required?

A - An agency may terminate a retention incentive authorization when no service agreement is required 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 retention incentive payments.

Q - What must an agency do if it decides to reduce or terminate a retention incentive when no service agreement is required?

A - If an agency reduces or terminates a retention incentive when no service agreement is required, the agency must notify the employee in writing. The employee is entitled to receive any scheduled retention incentive payments through the end of the pay period in which the written notice is provided or until the date of separation, if sooner. (See 5 CFR 575.311(h).)

Paying Recruitment, Relocation, and Retention Incentives Concurrently

Q - May an agency simultaneously pay multiple incentives or allow concurrent recruitment, relocation, and retention incentive service agreements?

A - No, in most situations.  However, under 5 CFR 575.205(e), an agency may commence a relocation incentive service agreement during a period of employment established under a service agreement for a previously authorized retention incentive or for which an employee is receiving previously authorized retention incentive payments without a service agreement.

Records and Reports

Q - What records must an agency keep concerning retention incentives?

A - Each agency must keep a record of each determination to pay a retention incentive and make such records available for review upon OPM's request. (See 5 CFR 575.313(a).)

Q - What are the reporting requirements related to retention incentives?

A - By March 31 in each of the years 2006 through 2010, each agency must submit a written report to OPM on the use of the retention incentive authority within the agency during the previous calendar year for use in compiling an OPM report to Congress, as required by section 101(c) of Public Law 108-411. Each agency report must include—

• A description of how the authority to pay retention incentives was used by the agency during the previous calendar year;
• The number and dollar amount of retention incentives paid during the previous calendar year by occupational series and grade, pay level, or other pay classification; and
• Other information, records, reports, and data as OPM may require.

(See 5 CFR 575.313(b).)

Q - What are the reporting requirements related to retention incentives when an employee is likely to leave for a different Federal position?

A - In each of the years 2008 through 2010, each agency that uses a retention incentive for an employee likely to leave for another Federal position must include in its report—

• A description of how the authority to pay retention incentives was used by the agency during the previous calendar year;

• The number and dollar amount of retention incentives paid during the previous calendar year by occupational series and grade, pay level, or other pay classification;

• The agency (which may be in the executive, judicial, or legislative branch) to which each employee would be likely to leave in the absense of a retention incentive;

• Each employee’s official worksite and the geographic location of the agency (which may be executive, judicial, or legislative branch) for which each employee would be likely to leave in the absence of a retention incentive; and

• Other information, records, reports, and data as OPM may require.

(See 5 CFR 575.315(i).)

• Retention Incentives (likely to leave the Federal service)
• Retention Incentives (likely to leave for a different Federal position)
• Group Retention Incentives (likely to leave for a different Federal position)
• Group Retention Incentives (likely to leave the Federal service)
• Recruitment Incentives
• Relocation Incentives