5 C.F.R. Subpart C—Pay and Pay Administration
Title 5 - Administrative Personnel
(a) This subpart contains regulations establishing pay structures and pay administration rules for covered DoD employees to replace the pay structures and pay administration rules established under 5 U.S.C. chapter 53 and 5 U.S.C. chapter 55, subchapter V, as authorized by 5 U.S.C. 9902. Various features that link pay to employees' performance ratings are designed to promote a high-performance culture within DoD. (b) Any pay system prescribed under this subpart will be established in conjunction with the classification system described in subpart B of this part. (c) Any pay system prescribed under this subpart will be established in conjunction with the performance management system described in subpart D of this part. (a) This subpart applies to eligible DoD employees and positions in the categories listed in paragraph (b) of this section, subject to a determination by the Secretary under §9901.102(b)(2). (b) The following employees of, or positions in, DoD organizational and functional units are eligible for coverage under this subpart: (1) Employees and positions who would otherwise be covered by the General Schedule pay system established under 5 U.S.C. chapter 53, subchapter III; (2) Employees and positions who would otherwise be covered by a prevailing rate system established under 5 U.S.C. chapter 53, subchapter IV; (3) Employees in senior-level (SL) and scientific or professional (ST) positions who would otherwise be covered by 5 U.S.C. 5376; (4) Members of the Senior Executive Service (SES) who would otherwise be covered by 5 U.S.C. chapter 53, subchapter VIII, subject to §9901.102(d); and (5) Such others designated by the Secretary as DoD may be authorized to include under 5 U.S.C. 9902. (c) This section does not apply in determining coverage under §9901.361 (dealing with premium pay). (a) When a specified category of employees is covered under this subpart— (1) The provisions of 5 U.S.C. chapter 53 are waived with respect to that category of employees, except as provided in §9901.107 and paragraphs (b) and (c) of this section; and (2) The provisions of 5 U.S.C. chapter 55, subchapter V (except section 5545b), are waived with respect to that category of employees to the extent that those employees are covered by alternative premium pay provisions established by the Secretary under §9901.361 in lieu of the provisions in 5 U.S.C. chapter 55, subchapter V. (b) The following provisions of 5 U.S.C. chapter 53 are not waived: (1) Sections 5311 through 5318, dealing with Executive Schedule positions; (2) Section 5371, insofar as it authorizes OPM to apply the provisions of 38 U.S.C. chapter 74 to DoD employees in health care positions covered by section 5371 in lieu of any NSPS pay system established under this subpart or the following provisions of title 5, U.S. Code: Chapters 51, 53, and 61, and subchapter V of chapter 55. The reference to “chapter 51” in section 5371 is deemed to include a classification system established under subpart B of this part; and (3) Section 5377, dealing with the critical pay authority. (c) Section 5379 is modified. The Secretary may establish and administer a student loan repayment program for DoD employees, except that the Secretary may not make loan payments for any noncareer appointee in the SES (as defined in 5 U.S.C. 3132(a)(7)) or for any employee occupying a position that is excepted from the competitive service because of its confidential, policy-determining, policy-making, or policy-advocating character. Notwithstanding §9901.302(a), any DoD employee otherwise covered by section 5379 is eligible for coverage under the provisions established under this paragraph, subject to a determination by the Secretary under §9901.102(b)(2). In this part: Band means pay band. Band rate range means the range of rates of basic pay (excluding any local market supplements) applicable to employees in a particular pay band, as described in §9901.321. Each band rate range is defined by a minimum and maximum rate. Basic pay has the meaning given that term in §9901.103. Bonus means an element of the performance payout that consists of a one-time lump-sum payment made to employees. It is not part of basic pay. Career group has the meaning given that term in §9901.103. Competencies has the meaning given that term in §9901.103. Contribution has the meaning given that term in §9901.103. Contribution assessment means the determination made by the pay pool manager as to the impact, extent, and scope of contribution that the employee's performance made to the accomplishment of the organization's mission and goals. CONUS or Continental United States means the States of the United States, excluding Alaska and Hawaii, but including the District of Columbia. Extraordinary pay increase or EPI means a discretionary basic pay increase or bonus to reward an employee at the highest performance level who has been assigned the maximum number of shares available under the rating and contribution scheme when the payout formula does not adequately compensate them for the employee's extraordinary performance and contribution, as described in §9901.344(b). Local market supplement means a geographic- and occupation-based supplement to basic pay, as described in §9901.332. Modal rating means, for the purpose of pay administration, the most frequent rating of record assigned to employees in the same pay band within a particular pay pool for a particular rating cycle. Pay band or band has the meaning given that term in §9901.103. Pay pool means the organizational elements/ units or other categories of employees that are combined for the purpose of determining performance payouts. Each employee is in only one pay pool at a time. Pay pool also means the amount designated for performance payouts to employees covered by a pay pool. Pay schedule has the meaning given that term in §9901.103. Performance has the meaning given that term in §9901.103. Performance payout means the total monetary value of a performance pay increase and bonus provided under §9901.342. Performance share means a unit of performance payout awarded to an employee based on performance. Performance shares may be awarded in multiples commensurate with the employee's performance and contribution rating level. Performance share value means a calculated value for each performance share based on pay pool funds available and the distribution of performance shares across employees within a pay pool, expressed as a percentage or fixed dollar amount. Promotion has the meaning given that term in §9901.103. Rating of record has the meaning given that term in §9901.103. Reassignment has the meaning given that term in §9901.103. Reduction in band has the meaning given that term in §9901.103. Standard local market supplement means the local market supplement that applies to employees in a given pay schedule or band who are stationed within a specified local market area (the boundaries of which are defined under §9901.332(b)), unless a targeted local market supplement applies. Targeted local market supplement means a local market supplement established to address recruitment or retention difficulties or other appropriate reasons and which applies to a defined category of employees (based on occupation or other appropriate factors) in lieu of the standard local market supplement that would otherwise apply. Unacceptable performance has the meaning given that term in §9901.103. Pursuant to 5 U.S.C. 9902(f)(4) and (m)(7), any pay program established under authority of this subpart is not subject to collective bargaining. This bar on collective bargaining applies to all aspects of the pay program, including but not limited to coverage decisions, the design of pay structures, the setting and adjustment of pay levels, pay administration rules and policies, and administrative procedures and arrangements.
Title 5: Administrative Personnel
PART 9901—DEPARTMENT OF DEFENSE HUMAN RESOURCES MANAGEMENT AND LABOR RELATIONS SYSTEMS
Subpart C—Pay and Pay Administration
General
§ 9901.301 Purpose.
§ 9901.302 Coverage.
§ 9901.303 Waivers.
§ 9901.304 Definitions.
§ 9901.305 Bar on collective bargaining.
Overview of Pay System
§ 9901.311 Major features.
Through the issuance of implementing issuances, the Secretary will establish a pay system that governs the setting and adjusting of covered employees' rates of pay and the setting of covered employees' rates of premium pay. The NSPS pay system will include the following features:
(a) A structure of rate ranges linked to various pay bands for each career group, in alignment with the classification structure described in subpart B of this part;
(b) Policies regarding the setting and adjusting of band rate ranges based on mission requirements, labor market conditions, and other factors, as described in §§9901.321 and 9901.322;
(c) Policies regarding the setting and adjusting of local market supplements to basic pay based on local labor market conditions and other factors, as described in §§9901.331 through 9901.333;
(d) Policies regarding employees' eligibility for pay increases based on adjustments in rate ranges and supplements, as described in §§9901.323 and 9901.334;
(e) Policies regarding performance-based pay, as described in §§9901.341 through 9901.345;
(f) Policies on basic pay administration, including movement between career groups, positions, pay schedules, and pay bands, as described in §§9901.351 through 9901.356;
(g) Linkages to employees' ratings of record, as described in subpart D of this part; and
(h) Policies regarding the setting of and limitations on premium payments, as described in §9901.361.
§ 9901.312 Maximum rates.
The Secretary will establish limitations on maximum rates of basic pay and aggregate pay for covered employees.
§ 9901.313 National security compensation comparability.
(a) To the maximum extent practicable, for fiscal years 2004 through 2008, the overall amount allocated for compensation of the DoD civilian employees who are included in the NSPS may not be less than the amount that would have been allocated for compensation of such employees for such fiscal years if they had not been converted to the NSPS, based on at a minimum—
(1) The number and mix of employees in such organizational or functional units prior to conversion of such employees to the NSPS; and
(2) Adjustments for normal step increases and rates of promotion that would have been expected, had such employees remained in their previous pay schedule.
(b) To the maximum extent practicable, implementing issuances will provide a formula for calculating the overall amount to be allocated for fiscal years beyond fiscal year 2008 for compensation of the civilian employees included in the NSPS. The formula will ensure that in the aggregate employees are not disadvantaged in terms of the overall amount of compensation available as a result of conversion to the NSPS, while providing flexibility to accommodate changes in the function of the organization and other changed circumstances that might impact compensation levels.
(c) For the purpose of this section, “compensation” for civilian employees means basic pay, taking into account any applicable locality payment under 5 U.S.C. 5304, special rate supplement under 5 U.S.C. 5305, local market supplement under §9901.332, or similar payment under other legal authority.
Setting and Adjusting Rate Ranges
§ 9901.321 Structure.
(a) The Secretary will establish ranges of basic pay for pay bands, with minimum and maximum rates set and adjusted as provided in §9901.322.
(b) For each pay band within a career group, the Secretary will establish a common rate range that applies in all locations.
§ 9901.322 Setting and adjusting rate ranges.
(a) Within his or her sole and exclusive discretion, the Secretary may, subject to §9901.105(d)(2), set and adjust the rate ranges established under §9901.321. In determining the rate ranges, the Secretary may consider mission requirements, labor market conditions, availability of funds, pay adjustments received by employees of other Federal agencies, and any other relevant factors.
(b) The Secretary may determine the effective date of newly set or adjusted band rate ranges. Established rate ranges will be reviewed for possible adjustment at least annually.
(c) The Secretary may establish different rate ranges and provide different rate range adjustments for different pay bands.
(d) The Secretary may adjust the minimum and maximum rates of a pay band by different percentages.
§ 9901.323 Eligibility for pay increase associated with a rate range adjustment.
(a) Employees with a current rating of record above “unacceptable” and employees who do not have a current rating of record for the most recently completed appraisal period will receive a percentage increase in basic pay equal to the percentage by which the minimum of their rate range is increased. This section does not apply to employees receiving a retained rate under §9901.355.
(b) Employees with a current rating of record of “unacceptable” will not receive a pay increase under this section.
Local Market Supplements
§ 9901.331 General.
The basic pay ranges established under §§9901.321 through 9901.323 may be supplemented in appropriate circumstances by local market supplements, as described in §§9901.332, 9901.333, and 9901.334. These supplements are expressed as a percentage of basic pay and are set and adjusted as described in §9901.333.
§ 9901.332 Local market supplements.
(a) The Secretary may establish local market supplements that apply in specified local market areas whose boundaries are set at the Secretary's sole and exclusive discretion, subject to paragraph (b) of this section and §9901.105(d)(4). Local market supplements apply to employees whose official duty station is located in the given local market area. The Secretary may establish standard or targeted local market supplements.
(b)(1) The establishment or modification of geographic area boundaries for standard local market supplements by the Secretary will be effected by regulations which, notwithstanding 5 U.S.C. 553(a)(2), will be promulgated in accordance with the notice and comment requirements of 5 U.S.C. 553. As provided by the non-waived provisions of 5 U.S.C. 5304(f)(2) (modified here to apply to DoD regulations issued under the authority of this paragraph), judicial review of any such regulation is limited to whether or not it was promulgated in accordance with such requirements.
(2) Notwithstanding paragraph (b)(1) of this section, the Secretary's establishment of a standard local market area boundary or boundaries identical to those used for locality pay areas established under 5 U.S.C. 5304 does not require separate DoD regulations.
(c) Local market supplements are considered basic pay for only the following purposes:
(1) Retirement deductions, contributions, and benefits under 5 U.S.C. chapter 83 or 84;
(2) Life insurance premiums and benefits under 5 U.S.C. chapter 87;
(3) Premium pay under 5 U.S.C. chapter 55, subchapter V, or similar payments under other legal authority, including this subpart;
(4) Severance pay under 5 U.S.C. 5595;
(5) Cost-of-living allowances and post differentials under 5 U.S.C. 5941;
(6) Overseas allowances and differentials under 5 U.S.C. chapter 59, subchapter III, to the extent authorized by the Department of State;
(7) Recruitment, relocation, and retention incentives, supervisory differentials, and extended assignment incentives under 5 U.S.C. chapter 57, subchapter IV, and 5 CFR part 575;
(8) Lump-sum payments for accumulated and accrued annual leave under 5 CFR 550, subpart L;
(9) Determining the rate of basic pay upon conversion to the NSPS pay system as provided in §9901.373(b);
(10) Other payments and adjustments authorized under this subpart as specified by implementing issuances;
(11) Other payments and adjustments under other statutory or regulatory authority for which locality-based comparability payments under 5 U.S.C. 5304 are considered part of basic pay; and
(12) Any provisions for which DoD local market supplements are treated as basic pay by law.
§ 9901.333 Setting and adjusting local market supplements.
(a) Within his or her sole and exclusive discretion, the Secretary may, subject to §9901.105(d)(3), set and adjust local market supplements. In determining the amounts of the supplements, the Secretary will consider mission requirements, labor market conditions, availability of funds, pay adjustments received by employees of other Federal agencies, allowances and differentials under 5 U.S.C. chapter 59, and any other relevant factors.
(b) The Secretary may determine the effective date of newly set or adjusted local market supplements. Established supplements will be reviewed for possible adjustment at least annually in conjunction with rate range adjustments under §9901.322.
§ 9901.334 Eligibility for pay increase associated with a supplement adjustment.
(a) When a local market supplement is adjusted under §9901.333, employees to whom the supplement applies with a current rating of record above “unacceptable,” and employees who do not have a current rating of record for the most recently completed appraisal period, will receive any pay increase resulting from that adjustment.
(b) Employees with a current rating of record of “unacceptable” will not receive a pay increase under this section.
Performance-Based Pay
§ 9901.341 General.
Sections 9901.342 through 9901.345 describe the performance-based pay that is part of the pay system established under this subpart. These provisions are designed to provide the Secretary with the flexibility to allocate available funds to employees based on individual performance or contribution or team or organizational performance as a means of fostering a high-performance culture that supports mission accomplishment.
§ 9901.342 Performance payouts.
(a) Overview. (1) The NSPS pay system will be a pay-for-performance system and, when implemented, will result in a distribution of available performance pay funds based upon individual performance, individual contribution, team or organizational performance, or a combination of those elements. The NSPS pay system will use a pay pool concept to manage, control, and distribute performance-based pay increases and bonuses. The performance payout is a function of the amount of money in the performance pay pool and the number of shares assigned to individual employees.
(2) The rating of record used as the basis for a performance pay increase is the one assigned for the most recently completed appraisal period, except that if an appropriate rating official determines that an employee's current performance is inconsistent with that rating, that rating official may prepare a more current rating of record, consistent with §9901.409(b). Unless otherwise provided in implementing issuances, if an employee is not eligible to have a rating of record for the current rating cycle for reasons other than those identified in paragraphs (f) and (g) of this section, such employee will not be eligible for a performance payout under this part.
(3) Pay pools will be managed by a pay pool manager and/or pay pool panel. The Secretary will define in implementing issuances the responsibilities of pay pool managers and pay pool panels to include the review of proposed rating and share assignments to ensure that employees are treated fairly and consistently and in accordance with the merit system principles.
(b) Performance pay pools. (1) The Secretary will issue implementing issuances for the establishment and management of pay pools for performance payouts.
(2) The Secretary may determine a percentage of pay to be included in pay pools and paid out in accordance with accompanying implementing issuances as—
(i) A performance-based pay increase;
(ii) A performance-based bonus; or
(iii) A combination of a performance-based pay increase and a performance-based bonus.
(c) Performance shares. (1) The Secretary will issue implementing issuances regarding the assignment of a number or range of shares for each rating of record level, subject to paragraphs (c)(2) and (c)(3) of this section. Performance shares will be used to determine performance pay increases and/or bonuses.
(2) Employees with unacceptable ratings of record will be assigned zero shares.
(3) Where the Secretary establishes a range of shares for a rating of record level, he or she will provide guidance in implementing issuances on the use of share ranges. DoD organizations will notify employees at least 90 days prior to the end of the appraisal period of the factors that may be considered in making specific share assignments. Pay pool managers and/or pay pool panels will review proposed share assignments to ensure that factors are applied consistently across the pay pool and in accordance with the merit system principles.
(d) Performance payout. (1) The Secretary will establish a methodology that authorized officials will use to determine the value of a performance share. A performance share may be expressed as a percentage of an employee's rate of basic pay (exclusive of local market supplements under §9901.332) or as a fixed dollar amount, or both.
(2) To determine an individual employee's performance payout, the share value determined under paragraph (d)(1) of this section will be multiplied by the number of performance shares assigned to the employee.
(3) The Secretary may provide for the establishment of control points within a band that limit increases in the rate of basic pay. The Secretary may require that certain criteria be met for increases above a control point.
(4) A performance payout may be an increase in basic pay, a bonus, or a combination of the two. However, an increase in basic pay may not cause the employee's rate of basic pay to exceed the maximum rate or applicable control point of the employee's band rate range. Implementing issuances will provide guidance for determining the payout amount and the appropriate distribution between basic pay and bonus.
(5) The Secretary will determine the effective date(s) of increases in basic pay made under this section.
(6) Notwithstanding any other provision of this section, the Secretary will issue implementing issuances to address the circumstances under which an employee receiving a retained rate under §9901.355 may receive a lump-sum performance payout. Any performance payout in the form of a bonus for a retained rate employee may not exceed the amount that would be received by an employee in the same pay pool with the same rating of record whose rate of pay is at the maximum rate of the same band.
(e) Proration of performance payouts. The Secretary will issue implementing issuances regarding the proration of performance payouts for employees who, during the period between performance payouts, are—
(1) Hired, transferred, reassigned, or promoted;
(2) In a leave-without-pay status (except as provided in paragraphs (f) and (g) of this section); or
(3) In other circumstances where prorating is considered appropriate.
(f) Adjustments for employees returning after performing honorable service in the uniformed services. The Secretary will issue implementing issuances regarding how to set the rate of basic pay prospectively for an employee who leaves a DoD position to perform service in the uniformed services (in accordance with 38 U.S.C. 4303 and 5 CFR 353.102) and returns through the exercise of a reemployment right provided by law, Executive order, or regulation under which accrual of service for seniority-related benefits is protected (e.g., 38 U.S.C. 4316). The Secretary will credit the employee with increases under §9901.323 and increases to basic pay under this section based on the employee's DoD rating of record for the appraisal period upon which these adjustments are based. If an employee does not have a rating of record for the appraisal period serving as a basis for these adjustments, the Secretary will base such adjustments on the average basic pay increases granted to other employees in the same pay pool and pay band who received the same rating as the employee's last DoD rating of record or the modal rating, whichever is most advantageous to the employee. In unusual cases where insufficient statistical information exists to determine the modal rating or when previous ratings do not convert to the NSPS rating scale, the Secretary may establish alternative procedures for determining a basic pay increase under this section.
(g) Adjustments for employees returning to duty after being in workers' compensation status. The Secretary will issue implementing issuances regarding how to set the rate of basic pay prospectively for an employee who returns to duty after a period of receiving injury compensation under 5 U.S.C. chapter 81, subchapter I (in a leave-without-pay status or as a separated employee). For the intervening period, the Secretary will credit the employee with increases under §9901.323 and increases to basic pay under this section based on the employee's DoD rating of record for the appraisal period upon which these adjustments are based. If an employee does not have a rating of record for the appraisal period serving as a basis for these adjustments, such adjustments will be based on the average basic pay increases granted to other employees in the same pay pool and pay band who received the same rating as the employee's last DoD rating of record or the modal rating, whichever is most advantageous to the employee. In unusual cases where insufficient statistical information exists to determine the modal rating or when previous ratings do not convert to the NSPS rating scale, the Secretary may establish alternative procedures for determining a basic pay increase under this section.
§ 9901.343 Pay reduction based on unacceptable performance and/or conduct.
An employee's rate of basic pay may be reduced based on a determination of unacceptable performance, conduct, or both. Such reduction may not exceed 10 percent unless the employee has been changed to a lower pay band and a greater reduction is needed to set the employee's pay at the maximum rate of the pay band. (See also §§9901.352 and 9901.354.) An employee's rate of basic pay may not be reduced more than once in a 12-month period based on unacceptable performance, conduct, or both.
§ 9901.344 Other performance payments.
(a) In accordance with implementing issuances authorized officials may make other payments to—
(1) Recognize organizational or team achievement;
(2) Reward extraordinary individual performance through an extraordinary pay increase (EPI), as described in paragraph (b) of this section; and
(3) Provide for other special circumstances.
(b) An EPI is paid in addition to performance payouts under §9901.342 and will usually be made effective at the time of those payouts. The future performance and contribution level exhibited by the employee will be expected to continue at an extraordinarily high level.
§ 9901.345 Treatment of developmental positions.
The Secretary may issue implementing issuances regarding pay increases for developmental positions. These issuances may require employees to meet certain standardized assessment or certification points as part of a formal training/developmental program. The Secretary may provide adjustments under this section in lieu of or in addition to adjustments under §9901.342.
Pay Administration
§ 9901.351 Setting an employee's starting pay.
Subject to implementing issuances, the Secretary may set the starting rate of pay for individuals who are newly appointed or reappointed to the Federal service anywhere within the assigned pay band.
§ 9901.352 Setting pay upon reassignment.
(a) Subject to paragraphs (b) and (c) of this section and subject to implementing issuances, the Secretary may set pay anywhere within the assigned pay band when an employee is reassigned, either voluntarily or involuntarily, to a position in the same or comparable pay band.
(b) Subject to the adverse action procedures set forth in subpart G of this part and implementing issuances (or other appropriate adverse action procedures for employees not covered by subpart G of this part, such as procedures for National Guard Technicians under 32 U.S.C. 709(f)), the Secretary may reduce an employee's rate of basic pay within a pay band for unacceptable performance and/or conduct. A reduction in pay under this paragraph may not be more than 10 percent or cause an employee's rate of basic pay to fall below the minimum rate of the employee's pay band. Such a reduction may be made effective at any time.
(c) The Secretary will prescribe policies in implementing issuances regarding setting pay for an employee whose pay is reduced involuntarily, but not through adverse action procedures. In the case of completion of a temporary reassignment or failure to successfully complete an in-service probationary period, the employee's rate of basic pay will be set at the same rate the employee received prior to the temporary reassignment or placement in the position requiring the probationary period, with appropriate adjustment of the employee's rate of basic pay based on rate range increases or performance payouts that occurred during the time the employee was assigned to the new position. Any resulting reduction in basic pay is not considered an adverse action under subpart G of this part (or similar authority).
§ 9901.353 Setting pay upon promotion.
Except as otherwise provided in implementing issuances, upon an employee's promotion, the employee will receive an increase in his or her rate of basic pay equal to at least 6 percent, unless this minimum increase results in a rate of basic pay higher than the maximum rate of the applicable pay band. An employee's rate of basic pay upon promotion may not be less than the minimum of the rate range.
§ 9901.354 Setting pay upon reduction in band.
(a) Subject to paragraphs (b) and (c) of this section, pay may be set anywhere within the assigned pay band when an employee is reduced in band, either voluntarily or involuntarily. As applicable, pay retention provisions established under §9901.355 will apply.
(b) Subject to the adverse action procedures set forth in subpart G of this part (or other appropriate adverse action procedures for employees not covered by subpart G of this part, such as procedures for National Guard Technicians under 32 U.S.C. 709(f)), the Secretary may assign an employee involuntarily to a position in a lower pay band for unacceptable performance and/or conduct, and may simultaneously reduce the employee's rate of basic pay. A reduction in basic pay under this paragraph may not cause an employee's rate of basic pay to fall below the minimum rate of the employee's new pay band, or be more than 10 percent unless a larger reduction is needed to place the employee at the maximum rate of the lower band.
(c) The Secretary will prescribe policies in implementing issuances regarding setting pay for an employee who is reduced in band involuntarily, but not through adverse action procedures. In the case of termination of a temporary promotion or failure to successfully complete an in-service probationary period, the employee's rate of basic pay will be set at the same rate the employee received prior to the temporary promotion or placement in the position requiring the probationary period, with appropriate adjustment of the employee's rate of basic pay based on rate range increases or performance payouts that occurred during the time the employee was assigned to the new position. Any resulting reduction in basic pay is not considered an adverse action under subpart G of this part (or similar authority).
§ 9901.355 Pay retention.
(a) Subject to the requirements of this section, the Secretary will issue implementing issuances regarding pay retention. Pay retention prevents a reduction in basic pay that would otherwise occur by preserving the former rate of basic pay within the employee's new pay band or by establishing a retained rate that exceeds the maximum rate of the new pay band. Local market supplements are not considered part of basic pay in applying pay retention.
(b) Pay retention will be based on the employee's rate of basic pay in effect immediately before the action that would otherwise reduce the employee's rate. A retained rate will be compared to the range of rates of basic pay applicable to the employee's position.
(c) Subject to any employee eligibility requirements the Secretary may prescribe, pay retention will apply when an employee is reduced in band through reduction in force (RIF), reclassification, or other appropriate circumstances, as specified in implementing issuances. Pay retention will be granted for a period of 2 years (that is, 104 weeks).
(d) Employees entitled to a retained rate will receive any performance payouts in the form of bonuses, rather than salary adjustments, as provided in §9901.342(d)(6).
(e) Employees entitled to a retained rate will not receive minimum rate range adjustments under §9901.323(a), but are entitled to receive any applicable local market supplement adjustments under §9901.334(a).
§ 9901.356 Miscellaneous.
(a) Except in the case of an employee who does not receive a pay increase under §9901.323 because of an unacceptable rating of record, an employee's rate of basic pay may not be less than the minimum rate of the employee's pay band.
(b) Except as provided in §9901.355, an employee's rate of basic pay may not exceed the maximum rate of the employee's band rate range.
(c) The Secretary will follow the rules for establishing pay periods and computing rates of pay in 5 U.S.C. 5504 and 5505, as applicable. For employees covered by 5 U.S.C. 5504, annual rates of pay will be converted to hourly rates of pay in computing payments received by covered employees.
(d) The Secretary may promulgate implementing issuances that provide for a special increase prior to an employee's movement in recognition of the fact that the employee will not be eligible for a promotion increase under the GS system, if a DoD employee moves from the pay system established under this subpart to a GS position having a higher level of duties and responsibilities.
Premium Pay
§ 9901.361 General.
(a) This section applies to eligible DoD employees and positions which would otherwise be covered by 5 U.S.C. chapter 55, subchapter V, subject to a determination by the Secretary under §9901.102(b)(2). As provided in §9901.303(a)(2), for employees covered by such a determination, the provisions of 5 U.S.C. chapter 55, subchapter V (except section 5545b), are waived or modified to the extent that the Secretary establishes alternative premium pay provisions for such employees in lieu of the provisions in 5 U.S.C. chapter 55, subchapter V.
(b) The Secretary may establish alternative or additional forms of premium pay, or make modifications in premium payments under 5 U.S.C. chapter 55, subchapter V (except section 5545b), for specified categories of employees through implementing issuances. The types of premium payments the Secretary may establish or modify include, but are not limited to—
(1) Overtime pay (excluding overtime pay under the Fair Labor Standards Act);
(2) Compensatory time off;
(3) Sunday, holiday, and night pay;
(4) Annual premium pay for standby duty and administratively uncontrollable overtime work;
(5) Availability pay for criminal investigators; and
(6) Hazardous duty differentials.
(c) The Secretary will determine the conditions of eligibility for the amounts of and the limitations on payments made under the authority of this section.
Conversion Provisions
§ 9901.371 General.
(a) This section and §§9901.372 and 9901.373 describe the provisions that apply when DoD employees are converted to the NSPS pay system established under this subpart. An affected employee may convert from the GS system, a prevailing rate system, the SL/ST system, or the SES system (or such other systems designated by the Secretary as DoD may be authorized to include under 5 U.S.C. 9902), as provided in §9901.302. For the purpose of this section and §§9901.372 and 9901.373, the terms “convert,” “converted,” “converting,” and “conversion” refer to employees who become covered by the pay system without a change in position (as a result of a coverage determination made under §9901.102(b)(2)) and exclude employees who move from a noncovered position to a position already covered by the NSPS pay system.
(b) The Secretary will issue implementing issuances prescribing the policies and procedures necessary to implement these transitional provisions.
§ 9901.372 Creating initial pay ranges.
DoD will set the initial band rate ranges for the NSPS pay system established under this subpart. The initial ranges may link to the ranges that apply to converted employees in their previously applicable pay system (taking into account any applicable locality payment under 5 U.S.C. 5304, special rate supplement under 5 U.S.C. 5305, local market supplement under §9901.332, or similar payment under other legal authority).
§ 9901.373 Conversion of employees to the NSPS pay system.
(a) When the NSPS pay system is established under this subpart and applied to a category of employees, employees will be converted to the system without a reduction in their rate of pay (including basic pay and any applicable locality payment under 5 U.S.C. 5304, special rate supplement under 5 U.S.C. 5305, local market supplement under §9901.332, or similar payment under other legal authority).
(b) When an employee receiving a special rate under 5 U.S.C. 5305 before conversion is converted to an equal rate of pay under the NSPS pay system that consists of a basic rate and a local market supplement, the conversion is not a reduction in pay for the purpose of applying subpart G of this part (or similar authority).
(c) If another personnel action (e.g., promotion, geographic movement) takes effect on the same day as the effective date of an employee's conversion to the new pay system, the other action will be processed under the rules pertaining to the employee's former system before processing the conversion action.
(d) An employee on a temporary promotion at the time of conversion will be returned to his or her official position of record prior to processing the conversion. If the employee is temporarily promoted immediately after the conversion, pay will be set under the rules for promotion increases under the NSPS pay system.
(e) The Secretary has discretion to make one-time pay adjustments for employees when they are converted to the NSPS pay system. The Secretary will issue implementing issuances governing any such pay adjustment, including rules governing employee eligibility, pay computations, and the timing of any such pay adjustment.
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