Fact Sheet: Lump-Sum Payments For Annual Leave

Entitlement

An employee will receive a lump-sum payment for any unused annual leave when he or she separates from Federal service or enters on active duty in the armed forces and elects to receive a lump-sum payment. Generally, a lump-sum payment will equal the pay the employee would have received had he or she remained employed until expiration of the period covered by the annual leave.

Calculating a Lump-Sum Payment

An agency calculates a lump-sum payment by multiplying the number of hours of accumulated and accrued annual leave by the employee's applicable hourly rate of pay, plus other types of pay the employee would have received while on annual leave, excluding any allowances that are paid for the sole purpose of retaining a Federal employee in Government service (e.g., retention incentives and physicians comparability allowances).

Types of Pay Included in a Lump-Sum Payment

• Rate of basic pay
• Locality pay or other similar geographic adjustment
• Within-grade increase (if waiting period met on date of separation)
• Across-the-board annual adjustments
• Administratively uncontrollable overtime pay, availability pay, and standby duty pay
• Night differential for FWS employees only (including portion of lump-sum period that would have occurred when employee was scheduled to work night shifts)
• Regularly scheduled overtime pay under the Fair Labor Standards Act for employees on uncommon tours of duty
• Supervisory differentials
• Nonforeign area cost-of-living allowances and post differentials
• Foreign area post allowances

Return to Federal Service

In calculating a lump-sum payment, an agency projects forward an employee's annual leave for all the workdays the employee would have worked if he or she had remained in Federal service. By law, holidays are counted as workdays in projecting the lump-sum leave period.  If an employee is reemployed in the Federal service prior to the expiration of the period of annual leave (i.e., the lump-sum leave period), he or she must refund the portion of the lump-sum payment that represents the period between the date of reemployment and the expiration of the lump-sum period.  An agency recredits to the employee's leave account the amount of annual leave equal to the days or hours of work remaining between the date of reemployment and the expiration of the lump-sum leave period.

References:

• 5 U.S.C. 5551 and 6306
• 5 CFR part 550, subpart L