On a case-by-case basis, you may pay a retention allowance of up to 25 percent of basic pay to a current employee who is, serving under an appointment without time limitation, and has completed at least 1 year of continuous service with the agency. The allowance is based on a written determination that:
The employee has unusually high or unique qualifications or a special need of the agency for the employee's service makes it essential to retain the employee, and
The employee, in the absence of a retention allowance would be likely to leave the Federal service for any reason. (5 CFR 575.301 and 304 [b]).
You may pay a group retention allowance of up to 10% of an employee's rate of basic pay to a group or category of employees based on a written determination that the category of employees have (5 CFR 575. 305[d]):
(1) Unusually high or unique qualifications, or
(2) That the program has a special need for the employees' services that makes it essential to retain them in that category, and
(3) That it is reasonable to presume that there is a high risk that a significant number of these employees in the targeted category are likely to leave Federal service without the allowance.
Definition of "Category or Group of Employees"
You should define a category/group of employees narrowly using the justification criteria and include information on the:
Occupational series,
Grade level,
Distinctive job duties,
Unique qualifications,
Assignment to a special project,
Minimum agency service requirements,
Organizational/team designation,
Geographic location, and/or
Performance level (this may not be used alone to justify an allowance. It may be used as a supporting factor or in setting the allowance rate only to the extent that it directly relates to the "What is a Retention Allowance?" and "Justification Criteria" sections). (5 CFR 575.305 [d] [iii].)
Conditions
You may pay this allowance only if:
Your employee has completed 1 year of continuous service with the agency immediately prior to the payment, or
If applicable, a period of employment established under the service agreement required for payment of a recruitment or relocation bonus, whichever occurs later. (Departmental Manual 4050 - 575, 2-6)
A retention allowance is a part of an employee's biweekly pay check, but it is not considered to be part of basic pay; therefore, payment of the allowance does not affect the employee's future pay entitlements such as retirement, life insurance, premium pay, etc.
The annual rate of all continuing payments to an employee who receives a retention allowance may not exceed the rate payable for Level I of the Executive Schedule. At the time of an increase in one or more nondiscretionary continuing payments to an employee, the amount of a retention allowance will be reduced to the extent necessary to ensure that the annual rate of all continuing payments does not exceed the rate payable for Level I of the Executive Schedule.
Justification Criteria for Individuals
When deciding whether to approve the payment of a retention allowance, you must consider:
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;
The availability in the labor market of candidates for employment who, with minimal training or disruption of services to the public, could perform the full range of duties and responsibilities assigned to the position held by the employee;
The likely duration of the allowance;
The likely effects of such payment on the morale of co-workers;
Funding availability;
The current and expected performance level of the employee; and,
The relationship of a retention allowance to such payments as previous recruitment or relocation bonuses for which a service agreement has been completed, salary based on superior qualifications, performance awards, etc., that affect the aggregate monies received by an employee.
Justification Criteria for Group Allowances
When deciding whether to recommend or approve a group retention allowance, consider if:
(1) Employees in the targeted group are likely to leave based on evidence of extreme labor market conditions,
(2) A high demand exists in the private sector for the knowledge and skills possessed by these employees,
(3) Significant disparities exist between Federal and private sector salaries, and/or
(4) Other similar conditions exist (see above).
You must also make a written determination that the unusually high or uniquequalifications of the employee or a special need of the agency makes it essential to retain the employee and that in the absence of this allowance the employee would be likely to leave Federal service. Your justification must describe how the employee's departure would affect the agency's ability to carry out an activity or perform a function that is deemed essential to the agency's mission (5 CFR 575.305 [c]).
Reduction/ Termination Justification Criteria
You must reduce or terminate a retention allowance when you determine that:
A lesser amount (or none at all) would be sufficient to retain the employee;
Labor-market factors make it likely to recruit a candidate with qualifications similar to those possessed by the employee;
A reduced need for the services of the employee makes it unnecessary to continue payment at the level originally approved, or at all;
The employee leaves the position for which the allowance was authorized;
The employee's performance falls below the "fully successful" level, or
Budgetary considerations make it difficult to continue payment at the level originally approved, or at all.
Process for Paying Retention Allowances
Step
If:
Then:
1
Requesting approval
Consult the Justification Criteria in this section and develop a written justification.
2
Payment is justified
Request approval by submitting Form AD-1073 (4/91) and the written justification to the approving official.
3
Request has been approved
Give employee written notice of the allowance authorization or re-authorization. Include: percent of salary added, expected duration and dates, and early termination or reduction provisions. Activate payment by sending a copy of the documentation to the SPO.
SPO must promptly submit a report of each determination as part of its regular submission to OPM's Central Personnel Data File (DM 4050- 575, Chapter 2).
Annual Review Process
Step
At Least Annually Recommending & Approving Officials Must:
And:
1
consult the Reduction/Termination Justification criteria in this section and review the original determination
certify, in writing, whether payment is still warranted based on the original determination
2
provide a copy of the certification/termination decision to the employee 30 days prior to its effective date
must advise the employee, in writing, that the decision is not appealable or grievable (this does not extinguish or lessen any right or remedy under 5 USC 12, Subchapter 2, or any laws referred to in 5 U.S.C. 2302[d]).
3
Provide a copy of the decision to the SPO for action.
If you have the authority to take personnel actions (e.g., hire, promote, approve leave), you may recommend retention allowances for GS-1 through GS-15 employees.
Authority to Approve
If Allowance Is:
Then the Approving Official Is:
Notes:
for a GS-1 to GS-15 employee
1 level above the recommending official and within hi/her direct chain of command
Authority may not be re-delegated.
for an SES employee
Secretary of Agriculture
For employees appointed to:
A senior-level or scientific or professional position paid under 5 U.S.C. 5376;
A Senior Executive Service position paid under 5 U.S.C. 5383;
A position under the Executive Schedule established under 5 U.S.C. Chapter 53 Subchapter 2, or a position the rate of pay for which is fixed by law at a rate equal to a rate for the Executive Schedule; or
An executive branch position filled by Presidential appointment (with or without the advice and consent of the Senate).
Above 10% and up to 25% of pay
OPM
Forward written request to HRD. Include:
Number of employees and a description of the group/category of employees for which you are seeking the allowance,
Proposed percentage of the allowance and, justification for it,
Written justification that the group/category of employees meets the requirements in the "What is a Retention Allowance?" and "Justification Criteria" sections,
Expected duration of the allowance, and
Any other pertinent information.
Up to 10% for groups of GS-1 through GS-15 employees
Deputy Administrator, Division Director or Activity Head
Authority may not be re-delegated.
Reports
HRD will periodically review the use and effectiveness of these allowances. During these reviews Programs will be asked to provide a written evaluation of the effect of the payment of retention allowances on the ability to retain high quality employees in key positions.
HRD will provide reports and data to OHRM upon request.
