B-155978, FEB. 9, 1965

B-155978, FEB. 9, 1965

TO THE HONORABLE SECRETARY OF THE AIR FORCE:

WE REFER TO THE LETTER OF JANUARY 19, 1965, FROM THE SPECIAL ASSISTANT FOR MANPOWER, PERSONNEL AND RESERVE FORCES, DEPARTMENT OF THE AIR FORCE, CONCERNING THE PROPRIETY OF INCLUDING COST-OF-LIVING ALLOWANCES FOR NONFOREIGN AREAS (5 U.S.C. 118H) IN LUMP-SUM PAYMENTS FOR ACCUMULATED ANNUAL LEAVE MADE TO EMPLOYEES SEPARATED FROM THE SERVICE AT THEIR POSTS OF DUTY.

THE LETTER INQUIRES WHETHER THE COST-OF-LIVING ALLOWANCE SHOULD HAVE BEEN INCLUDED IN THE LUMP-SUM PAYMENT FOR LEAVE IN THE FOLLOWING CIRCUMSTANCES:

"AN EMPLOYEE WAS SEPARATED ON JULY 10, 1964, WHICH WAS THE EMPLOYEE'S LAST DAY OF DUTY IN A POSITION IN ALASKA. PRIOR TO THE EFFECTIVE DATE OF THE SEPARATION IT WAS DETERMINED THAT THE EMPLOYEE WOULD DEPART PERMANENTLY FROM THE POST OF DUTY ON JULY 11, 1964, FOR A DESTINATION IN ONE OF THE 48 CONTIGUOUS STATES. THE EMPLOYEE'S ANNUAL LEAVE BALANCE WAS FULLY REIMBURSABLE BY A LUMP SUM PAYMENT.'

THE LUMP-SUM PAYMENT FOR LEAVE IN THE ABOVE-QUOTED SITUATION IS REPORTED TO HAVE BEEN MADE AT THE EMPLOYEE'S BASIC RATE OF COMPENSATION EXCLUSIVE OF THE COST-OF-LIVING ALLOWANCE. THE PROCEDURE FOLLOWED IN THE CASE APPEARS TO HAVE BEEN IN CONFORMITY WITH AIR FORCE MANUAL 40-1, SECTION 5614, PARAGRAPH 5. THAT REGULATION IS SAID TO HAVE STEMMED FROM AN INTERPRETATION OF OUR DECISION OF MARCH 10, 1959, B-134865, 38 COMP. GEN. 594.

OUR DECISION 38 COMP. GEN. 594 IS DIRECTED TOWARD THE TYPE OF SITUATION IN WHICH AN EMPLOYEE DEPARTS PERMANENTLY FROM HIS POST OF DUTY AT WHICH A NON-FOREIGN AREA COST-OF-LIVING ALLOWANCE IS PAYABLE AS ADDITIONAL COMPENSATION WHILE BEING CARRIED ON THE ROLLS IN A LEAVE STATUS. THUS HIS ENTITLEMENT TO A COST-OF-LIVING ALLOWANCE TERMINATES EFFECTIVE WITH THE DATE OF HIS DEPARTURE FROM HIS POST. SUBSEQUENTLY, WHEN SUCH AN EMPLOYEE'S TERMINAL LEAVE IN KIND IS EXHAUSTED AND HE IS SEPARATED FROM THE ROLLS, HIS LUMP-SUM PAYMENT FOR ACCUMULATED LEAVE MAY NOT INCLUDE THE COST-OF-LIVING ALLOWANCE. CONSEQUENTLY, IT DOES NOT APPLY TO ABOVE-QUOTED CASE OF THE CLAIMING EMPLOYEE.

TO FURTHER ILLUSTRATE THE DEPARTMENT'S APPLICATION OF AIR FORCE MANUAL 40 -1, SECTION 5614, THE SPECIAL ASSISTANT'S LETTER, PARAGRAPH 2, PAGE 2, PRESENTS A HYPOTHETICAL PROBLEM AND ITS SOLUTION UNDER THE REGULATION, WHICH WE QUOTE IN PART AS FOLLOWS:

"* * * THE POSSIBILITY MIGHT BE THAT TWO SEPARATING EMPLOYEES WOULD HAVE AN IDENTICAL AMOUNT OF ANNUAL LEAVE (40 DAYS), PERFORM THEIR LAST DAY'S DUTY ON AN IDENTICAL DAY, DEPART ON THE SAME PLANE FROM THE POST OF DUTY 5 WORK-DAYS LATER, AND ARRIVE ON THE SAME DATE AT THE SAME DESTINATION IN THE 48 CONTIGUOUS STATES. UNDER 38 COMP. GEN. 594, IF ONE OF THOSE EMPLOYEES HAD TO TAKE 10 DAYS OF TERMINAL ANNUAL LEAVE, HE WOULD BE PAID THE COST-OF-LIVING ALLOWANCE FOR 5 DAYS OF TERMINAL LEAVE WHILE HE REMAINED AT HIS POST OF DUTY, BUT HE WOULD NOT BE PAID THE COST-OF-LIVING ALLOWANCE FOR THE REMAINING 5 DAYS OF TERMINAL LEAVE (DAYS AFTER HIS PERMANENT DEPARTURE FROM HIS POST) AND HE WOULD NOT RECEIVE THE COST-OF- LIVING ALLOWANCE FOR THE 30 DAYS OF ANNUAL LEAVE PAYABLE IN LUMP SUM. THE OTHER EMPLOYEE COULD BE PAID LUMP SUM FOR HIS ENTIRE 40 DAYS OF ANNUAL LEAVE AND IT WAS KNOWN BEFORE THE EMPLOYEE SEPARATED THAT HE WOULD LEAVE ON THE FIFTH NORMAL WORK DAY AFTER THE EFFECTIVE DATE OF HIS SEPARATION, IT WAS CONSIDERED BY THIS DEPARTMENT THAT HE WOULD BE ENTITLED TO HAVE HIS LUMP SUM LEAVE PAYMENT FOR THE 40 DAYS ANNUAL LEAVE COMPUTED TO INCLUDE THE ALLOWANCE FOR THE FIRST 5 DAYS (WHILE HE REMAINED AT THE POST) BUT NOT FOR THE REMAINING 35 DAYS OF HIS ANNUAL LEAVE. * * *"

WE CONCUR IN THE CONCLUSION REACHED REGARDING THE FIRST EMPLOYEE, THAT IS, THE ONE WHOSE LAST DAY OF ACTIVE DUTY PRECEDED THE DATE OF HIS SEPARATION FROM THE SERVICE. HOWEVER, REGARDING THE CASES OF THE SECOND EMPLOYEE, WHO APPARENTLY WAS OR SHOULD HAVE BEEN SEPARATED FROM THE ROLLS ON THE DATE OF HIS LAST DAY OF ACTIVE DUTY, AND THE CLAIMANT GIVING RISE TO THE SUBMISSION, OUR CONCLUSION, BASED ON 29 COMP. GEN. 10 AND THE DECISIONS REFERRED TO THEREIN, WOULD DIFFER FROM THAT REACHED BY THE DEPARTMENT. ALSO, SEE 32 COMP. GEN. 323. IN SUCH CASES THE NON-FOREIGN AREA COST-OF-LIVING ALLOWANCE SHOULD BE INCLUDED IN THE COMPUTATION OF THE LUMP-SUM LEAVE PAYMENT.

CONCERNING EMPLOYEES FALLING WITHIN THE CATEGORY TYPIFIED BY THE SECOND EMPLOYEE WHICH INCLUDES THE PRESENT CLAIMANT, THE REGULATION REFERRED TO ABOVE, WHICH AS STATED IN THE SPECIAL ASSISTANT'S LETTER, APPEARS TO AFFORD AN EFFECTIVE ADMINISTRATIVE CONTROL FOR ASSURING THAT EMPLOYEES RECEIVE PAYMENT OF THE COST-OF-LIVING ALLOWANCES IN PROPER CASES, SHOULD BE MODIFIED TO CONFORM WITH THE RULE IN OUR DECISIONS 29 COMP. GEN. 10; 32 ID. 323.