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

A. There are no Governmentwide limits on granting time-off awards. However, agencies are free to establish their own guidelines and limitations on how much time off is appropriate for various employee contributions, as well as overall periodic limits that may be useful for preserving the integrity of their time-off award program and preventing abuse and/or criticism.

A. The regulations provide that time-off awards shall not be converted to cash. Agencies will document a time-off award, as well as cash awards, in compliance with the OPM operating manual, Guide to Processing Personnel Actions, and they must submit time-off award, as well as cash award, data to the Central Personnel Data File in compliance with the Office of Personnel Management operating manual, Guide to the Central Personnel Data File.

A. The "currency" of a time-off award is time, not money. A method for conversion would have to be developed. The obvious, apparently straightforward solution is to convert time to cash using an hourly rate of pay. However, lower-graded employees may well find such salary-based conversion unfair. If a mixed-grade group of employees were granted equal time-off awards (which is a common practice), they would convert to cash very unequally. In addition, several administrative issues are involved. For instance, the administrative problems associated with "withdrawing" a reported time-off award and "substituting" a cash award would also wreak havoc on the integrity of agency and Office of Personnel Management reports of award use. Although administrative concerns ought not to drive sensible policy choices, they are serious enough in this instance to leave the prohibition on conversion in place.

A. Technically, there is no legal bar to offering that choice. However, the Office of Personnel Management strongly recommends that agencies not offer such a choice. To do so would put the employee who opts for time-off in "constructive receipt," for tax withholding purposes, of the cash award offered. Appropriate withholding based on the cash award offered would have to be done at the time the choice is offered (i.e., when the employee reasonably would be expected to receive the cash), rather than based on the pay associated with the time off when the time off is actually taken.

When offering the employee a choice between time off or cash as an award, and if the employee chooses the time off, difficulties arise:

• it will be difficult to explain to the employee the basis for the unexpected additional tax withholding that occurs as a result of the constructive receipt of the cash award; and
• the administrative burden on the agency may well be prohibitive because agencies would be responsible when the choice of award is offered for assuring that the initial withholding based on the cash award offered is made at that time. When the time-off award is actually used, the agency would be responsible for comparing the amount already withheld for the cash award offered and the amount that otherwise would be due based on the pay for the time off. No additional withholding would be made if the tax due for the time off is at least equal to the tax already withheld for the cash offered. If pay for the time off is greater than the cash award offered, an additional withholding is made on the difference when the time-off award is used.

A. 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 off to cash (5 CFR 451.106(f)) and give that cash to the employee.