The Civil Service Reform Act of 1978 (Title VIII of Public Law 95-454) provides that an employee who is placed in a lower grade as a result of reduction in force procedures or whose position is reduced in grade as a result of reclassification of the position, is entitled to retain for a period of 2 years the grade held immediately before that placement or reduction. Federal rules governing the use of retained grade and pay are contained in Title 5, Code of Federal Regulations, Part 536.
The Department of Defense (DoD), Field Advisory Service (FAS) has prepared a guide that prescribes the application of grade and pay retention to General Schedule and Federal Wage System employees within the Department of Defense. The criteria and conditions contained in the FAS Grade and Pay Retention Reference Guide apply within the Department of the Army. This guide may be viewed by clicking on the title in the Reference Section below.
In describing actions covered by the grade and pay retention rules, the DoD guidance states that grade and pay retention may be granted, " In other circumstances, as determined by activities, resulting from personnel actions initiated by management to further the agency's mission, to the extent that the intent of applicable law and regulation is met." Within the Department of the Army, authority to extend grade and pay retention under this provision was delegated to MACOM commanders who may redelegate it to subordinate appointing officials (HQDA message, DAPE-CPE, dated 171340Z August 1990, subject: Delegation of Grade and Pay Retention Approval Authority). When this authority is exercised, records will be maintained on-site to document the action.
Section 301 of the Federal Workforce Flexibilty Act of 2004 (Public Law 108-411, October 30, 2004) contains the following provisions:
- A locality rate may not be paid on top of a retained rate.
- Reduction in the rate of basic pay resulting from a geographic change in official work site is not a basis for pay retention.
- A retained rate is established based on an employee's highest payable rate of basic pay (including any locality payment or special rate supplement) compared to the employee's highest applicable rate range.
- At the time of a schedule adjustment, a retained rate is increased by an amount equal to 50% of the increase in the maximum rate of the highest applicable rate range.
- Pay retention rules apply to an employee with a retained grade in the same manner as those rules apply to other employees.