B-46683, JANUARY 11, 1945, 24 COMP. GEN. 511

B-46683: Jan 11, 1945

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HAVE NO APPLICATION TO EMPLOYEES WHO HAD ENTERED A TERMINAL LEAVE STATUS PRIOR TO THE DATE OF THE ACT. ARE MANDATORY. TERMINAL ANNUAL OR VACATION LEAVE MAY NOT BE GRANTED IMMEDIATELY PRIOR TO SEPARATION FROM SERVICE IN ANY CASE WHERE IT IS KNOWN IN ADVANCE THAT AN EMPLOYEE IS TO BE SEPARATED FROM SERVICE. - BUT WHO WERE PAID FOR THEIR ACCUMULATED AND ACCRUED LEAVE ON THE REGULAR DECEMBER 31 PAY ROLL IN THE USUAL MANNER. OFFICIAL PERSONNEL ACTIONS WILL BE REQUIRED TO ADJUST THE OFFICIAL STATUS (INCLUDING RETIREMENT ADJUSTMENTS) OF SUCH EMPLOYEES IN ACCORDANCE WITH THE MANDATORY PROVISIONS OF THE ACT. WHICH THE ACT REQUIRES IF THE EMPLOYEE IS REEMPLOYED PRIOR TO EXPIRATION OF THE LEAVE PERIOD COVERED BY THE PAYMENT.

B-46683, JANUARY 11, 1945, 24 COMP. GEN. 511

LEAVES OF ABSENCE - LUMP-SUM PAYMENTS UPON SEPARATION FROM SERVICE THE PROVISIONS OF THE ACT OF DECEMBER 21, 1944, RESPECTING LUMP-SUM PAYMENTS FOR ACCUMULATED AND CURRENT ACCRUED ANNUAL OR VACATION LEAVE, HAVE NO APPLICATION TO EMPLOYEES WHO HAD ENTERED A TERMINAL LEAVE STATUS PRIOR TO THE DATE OF THE ACT. THE PROVISIONS OF THE ACT OF DECEMBER 21, 1944, RESPECTING LUMP-SUM PAYMENTS FOR ACCUMULATED AND CURRENT ACCRUED ANNUAL OR VACATION LEAVE UPON SEPARATION FROM SERVICE, ARE MANDATORY, AND TERMINAL ANNUAL OR VACATION LEAVE MAY NOT BE GRANTED IMMEDIATELY PRIOR TO SEPARATION FROM SERVICE IN ANY CASE WHERE IT IS KNOWN IN ADVANCE THAT AN EMPLOYEE IS TO BE SEPARATED FROM SERVICE. IN THE CASE OF EMPLOYEES WHO RESIGNED ON OR AFTER DECEMBER 21, 1944- - THE DATE OF THE ACT PROVIDING FOR LUMP-SUM PAYMENTS FOR ACCUMULATED AND CURRENT ACCRUED ANNUAL OR VACATION LEAVE UPON SEPARATION FROM SERVICE--- BUT WHO WERE PAID FOR THEIR ACCUMULATED AND ACCRUED LEAVE ON THE REGULAR DECEMBER 31 PAY ROLL IN THE USUAL MANNER, OFFICIAL PERSONNEL ACTIONS WILL BE REQUIRED TO ADJUST THE OFFICIAL STATUS (INCLUDING RETIREMENT ADJUSTMENTS) OF SUCH EMPLOYEES IN ACCORDANCE WITH THE MANDATORY PROVISIONS OF THE ACT. THE REFUND OF THE LUMP-SUM LEAVE PAYMENT RECEIVED BY A SEPARATED EMPLOYEE PURSUANT TO THE ACT OF DECEMBER 21, 1944, WHICH THE ACT REQUIRES IF THE EMPLOYEE IS REEMPLOYED PRIOR TO EXPIRATION OF THE LEAVE PERIOD COVERED BY THE PAYMENT, SHOULD BE MADE AT THE SALARY RATE UPON THE BASIS OF WHICH THE LUMP-SUM PAYMENT WAS COMPUTED; THAT IS, AT THE RATE RECEIVED AT THE AGENCY FROM WHICH SEPARATED. IN THE EVENT OF THE REEMPLOYMENT OF A SEPARATED EMPLOYEE PRIOR TO THE EXPIRATION OF THE LEAVE PERIOD COVERED BY A LUMP-SUM PAYMENT RECEIVED PURSUANT TO THE ACT OF DECEMBER 21, 1944, AN ADJUSTMENT OF THE AMOUNT OF INCOME TAX WITHHELD FROM THE LUMP-SUM PAYMENT IS REQUIRED UPON REFUND OF AN AMOUNT EQUAL TO THE COMPENSATION COVERING THE UNEXPIRED PORTION OF THE LEAVE PERIOD; HOWEVER, THE AMOUNT OF SUCH TAX ADJUSTMENT, WHETHER ONE OR TWO CALENDAR YEARS BE INVOLVED, IS FOR DETERMINATION BY THE COMMISSIONER OF INTERNAL REVENUE. SEE, ALSO, 24 COMP. GEN. 522. THE LAST DAY OF ACTIVE SERVICE OF AN EMPLOYEE RECEIVING A LUMP-SUM PAYMENT FOR LEAVE UNDER THE ACT OF DECEMBER 21, 1944, WILL BE THE DATE OF SEPARATION FROM THE SERVICE, AND ANY PERIOD BETWEEN THAT DATE AND THE DATE OF REEMPLOYMENT, EITHER IN THE SAME OR A DIFFERENT AGENCY, MUST BE REGARDED AS A BREAK IN SERVICE FOR THE PURPOSE OF DETERMINING RIGHTS TO WITHIN-GRADE PROMOTIONS, TRANSFER OF SICK LEAVE AND REEMPLOYMENT BENEFITS, EVEN THOUGH THE PERIOD USED AS THE MEASURE FOR COMPUTING THE LUMP-SUM PAYMENT OTHERWISE WOULD BRIDGE OVER THE BREAK IN SERVICE IN WHOLE OR IN PART.

COMPTROLLER GENERAL WARREN TO THE DIRECTOR OF CENSORSHIP, JANUARY 11, 1945:

I HAVE YOUR LETTER OF JANUARY 2, 1945, AS FOLLOWS:

THIS AGENCY IS PLANNING TO INSTITUTE LUMP-SUM PAYMENTS FOR TERMINAL LEAVE IN ACCORDANCE WITH THE PROVISIONS OF PUBLIC LAW NO. 525, 76TH CONGRESS, APPROVED DECEMBER 21, 1944. SINCE THERE ARE NOW IN PROCESS SOME MAJOR PERSONNEL REDUCTIONS WHICH WILL RESULT IN THE COMPLETE CLOSING OF CERTAIN OF OUR FIELD OFFICES, I WISH TO REQUEST YOUR DECISION ON THE FOLLOWING QUESTIONS AT YOUR FIRST OPPORTUNITY.

1. ARE EMPLOYEES WHO ENTERED TERMINAL LEAVE STATUS PRIOR TO DECEMBER 21, 1944 AFFECTED?

2. WILL OFFICIAL PERSONNEL ACTIONS BE REQUIRED TO ADJUST THE OFFICIAL STATUS (INCLUDING RETIREMENT ADJUSTMENTS) OF EMPLOYEES PAID ON THE REGULAR DECEMBER 31 PAY ROLL IN THE NORMAL MANNER, BUT WHO WERE ENTITLED TO A LUMP -SUM PAYMENT BECAUSE THEY RESIGNED ON OR AFTER DECEMBER 21?

3. SHALL REFUNDS TO AGENCIES RE-EMPLOYING PERSONS PRIOR TO THE EXPIRATION OF THE PERIOD COVERED BY THE LUMP-SUM PAYMENT BE COMPUTED AT THE SALARY RATE RECEIVED AT THE AGENCY FROM WHICH SEPARATED OR AT THE SALARY RATE AT WHICH RE-EMPLOYED?

4. WILL REFUNDS DESCRIBED ABOVE REQUIRE THE ADJUSTMENT OF THE AMOUNT OF TAX WITHHELD FROM THE LUMP-SUM PAYMENT? IF SUCH ADJUSTMENTS ARE NECESSARY, HOW SHOULD THEY BE HANDLED WHERE (1) ONE CALENDAR YEAR IS INVOLVED, AND (2) TWO CALENDAR YEARS ARE INVOLVED?

5. HOW DOES PUBLIC LAW 525 AFFECT THE FOLLOWING CONDITIONS RELATIVE TO THE STATUS OF A PERSON RE-EMPLOYED EITHER AT THE SAME GRADE OR AT A DIFFERENT GRADE PRIOR TO THE EXPIRATION OF THE PERIOD COVERED BY THE LUMP- SUM PAYMENT?

(A) PRIOR SERVICE TOWARD A WITHIN-GRADE PROMOTION UNDER THE PROVISIONS OF PUBLIC LAW NO. 200, 77TH CONGRESS.

(B) TRANSFER OF ACCRUED SICK LEAVE.

(C) RE-EMPLOYMENT RIGHTS.

SECTION 1 OF THE ACT OF DECEMBER 21, 1944, 58 STAT. 845, PUBLIC LAW 525, PROVIDES:

THAT WHENEVER ANY CIVILIAN OFFICER OR EMPLOYEE OF THE FEDERAL GOVERNMENT OR THE GOVERNMENT OF THE DISTRICT OF COLUMBIA IS SEPARATED FROM THE SERVICE OR ELECTS TO BE PAID COMPENSATION FOR LEAVE IN ACCORDANCE WITH THE ACT OF AUGUST 1, 1941, AS AMENDED BY THE ACT OF APRIL 7, 1942, OR SECTION 4 OF THE ACT OF JUNE 23, 1943, HE SHALL BE PAID COMPENSATION IN A LUMP SUM FOR ALL ACCUMULATED AND CURRENT ACCRUED ANNUAL OR VACATION LEAVE TO WHICH HE IS ENTITLED UNDER EXISTING LAW. SUCH LUMP-SUM PAYMENT SHALL EQUAL THE COMPENSATION THAT SUCH EMPLOYEE WOULD HAVE RECEIVED HAD HE REMAINED IN THE SERVICE UNTIL THE EXPIRATION OF THE PERIOD OF SUCH ANNUAL OR VACATION LEAVE: PROVIDED, THAT IF SUCH EMPLOYEE IS REEMPLOYED IN THE FEDERAL SERVICE OR IN OR UNDER THE GOVERNMENT OF THE DISTRICT OF COLUMBIA UNDER THE SAME LEAVE SYSTEM PRIOR TO THE EXPIRATION OF THE PERIOD COVERED BY SUCH LEAVE PAYMENT, HE SHALL REFUND TO THE EMPLOYING AGENCY AN AMOUNT EQUAL TO THE COMPENSATION COVERING THE PERIOD BETWEEN THE DATE OF REEMPLOYMENT AND THE EXPIRATION OF SUCH LEAVE PERIOD, AND THE AMOUNT OF LEAVE REPRESENTED BY SUCH REFUND SHALL BE CREDITED TO HIM IN THE EMPLOYING AGENCY. IN THE CASE OF REEMPLOYMENT IN THE FEDERAL SERVICE THE SUM SO REFUNDED SHALL BE COVERED INTO THE TREASURY AS " MISCELLANEOUS RECEIPTS," AND IN CASE OF REEMPLOYMENT IN OR UNDER THE GOVERNMENT OF THE DISTRICT OF COLUMBIA THE SUM SO REFUNDED SHALL BE COVERED INTO THE TREASURY TO THE CREDIT OF THE DISTRICT OF COLUMBIA: PROVIDED FURTHER, THAT THE LUMP-SUM PAYMENT HEREIN AUTHORIZED SHALL NOT BE REGARDED, EXCEPT FOR PURPOSES OF TAXATION, AS SALARY OR COMPENSATION AND SHALL NOT BE SUBJECT TO RETIREMENT DEDUCTIONS.

IN DECISION OF JANUARY 1, 1945, B-46403 (LAST PARAGRAPH) IT WAS HELD:

THE ACT OF DECEMBER 21, 1944, PUBLIC LAW 525, PROVIDING FOR LUMP-SUM PAYMENTS FOR ACCUMULATED AND CURRENT ACCRUED ANNUAL OR VACATION LEAVE UPON SEPARATION FROM THE SERVICE, IS NOT RETROACTIVELY EFFECTIVE AND, THEREFORE, HAS NO APPLICATION TO EITHER OF THE CASES HERE PRESENTED.

THE CASES CONSIDERED IN THAT DECISION WERE OFFICERS OF THE DEPARTMENT OF STATE WHO WERE IN A TERMINAL ANNUAL LEAVE STATUS PRIOR TO DECEMBER 21, 1944, THE EFFECTIVE DATE OF THE ABOVE-QUOTED STATUTE, THEIR SERVICES OTHERWISE HAVING BEEN TERMINATED PRIOR THERETO. YOUR FIRST QUESTION IS ANSWERED IN THE NEGATIVE.

THE ANSWER TO QUESTION 2 INVOLVES A CONSIDERATION OF WHETHER THE STATUTE PERMITS ANY EXCEPTION TO THE REQUIREMENT THEREIN FOR A LUMP SUM PAYMENT COVERING TERMINAL ANNUAL LEAVE. WHILE THE STATUTE DOES NOT APPLY UNTIL AN EMPLOYEE "IS SEPARATED FROM THE SERVICE" AND WHILE NOTHING APPEARS THEREIN SPECIFICALLY TO PRECLUDE THE GRANTING OF ANNUAL OR VACATION LEAVE OF ABSENCE IMMEDIATELY PRIOR TO SEPARATION, NEVERTHELESS THE STATUTE DOES PROVIDE SPECIFICALLY THAT AN EMPLOYEE "SHALL BE PAID COMPENSATION IN A LUMP SUM FOR ALL ACCUMULATED AND CURRENT ACCRUED ANNUAL OR VACATION LEAVE.' THE EVIDENT PURPOSE OF THE STATUTE IS TO REQUIRE PAYMENT IN A LUMP SUM, RATHER THAN IN PERIODIC PAYMENTS OVER A NUMBER OF PAY PERIODS FOR ALL ACCRUED ANNUAL OR VACATION LEAVE WHICH HAD NOT BEEN TAKEN BY AN EMPLOYEE PRIOR TO THE ACCEPTANCE OF HIS RESIGNATION OR OTHER TERMINATING ACTION. THE LEGISLATION APPEARS TO HAVE BEEN PREDICATED UPON THE DEFINITE REPRESENTATION THAT EMPLOYEES WOULD BE SEPARATED FROM THE SERVICE EFFECTIVE UPON COMPLETION OF THE LAST DAY OF ACTIVE DUTY. IN THAT CONNECTION, THERE IS FOR NOTING THE FOLLOWING STATEMENT APPEARING IN HOUSE OF REPRESENTATIVES REPORT NO. 1836 AND IN SENATE REPORT NO. 1300, ON H.R. 4918 WHICH BECAME THE ACT HERE INVOLVED:

THIS BILL WOULD PROVIDE MANY BENEFITS SUCH AS ELIMINATION OF THE PROBLEM OF DUAL COMPENSATION; STOP SERVICE CREDIT ON THE LAST DAY OF ACTIVE DUTY; PERMIT IMMEDIATE RECRUITMENT OF A SUCCESSOR TO A SEPARATED EMPLOYEE; WOULD MAKE FUNDS AVAILABLE TO EMPLOYEES LEAVING THE SERVICE AFTER THE WAR, ENABLING THEM TO RETURN TO THEIR HOMES OR REESTABLISH THEMSELVES IN OTHER EMPLOYMENT; WOULD SIMPLIFY AND EXPEDITE CLEARANCE OF RECORDS IN CLOSING OUT FIELD INSTALLATIONS; WOULD ELIMINATE CONSIDERABLE PAPER WORK FOR PAY- ROLL SECTIONS, AND WOULD SAVE EXPENSES TO THE GOVERNMENT. (ITALICS SUPPLIED.)

SEE, ALSO, THE FOLLOWING STATEMENTS MADE IN DEBATES ON THE FLOOR OF THE SENATE DECEMBER 14, 1944 (QUOTING FROM THE CONGRESSIONAL RECORD OF THAT DATE, PAGE 9569):

MR. TAFT. I SHOULD LIKE TO KNOW WHAT THE BILL PROVIDES FOR EMPLOYEES THAT THEY DO NOT NOW RECEIVE.

MR. DOWNEY. IT MERELY MEANS THAT THEY WILL RECEIVE IN A LUMP SUM UPON THEIR DISCHARGE FROM THE CIVIL SERVICE ANY PAYMENT WHICH IS DUE THEM BECAUSE OF ACCRUALS, OR BECAUSE OF NOT HAVING TAKEN VACATIONS. DOES THE SENATOR WISH TO HAVE THE REPORT READ? IT IS VERY BRIEF.

MR. TAFT. AM I TO UNDERSTAND THAT TODAY IF AN EMPLOYEE IS DISCHARGED, AND HAS ACCUMULATED LEAVE, HE IS PERMITTED TO REMAIN ON THE PAY ROLL FOR 3 OR 4 WEEKS UNTIL HE IS PAID?

MR. DOWNEY. THAT IS CORRECT.

MR. TAFT. WITHOUT PERFORMING ANY SERVICE?

MR. DOWNEY. THAT IS CORRECT.

WHILE I AM NOT UNMINDFUL OF THE FACT THAT SITUATIONS MAY ARISE WHICH WOULD MAKE IT DESIRABLE SO FAR AS THE EMPLOYEES ARE CONCERNED TO TAKE THEIR ANNUAL OR VACATION LEAVE IN THE USUAL MANNER IMMEDIATELY PRIOR TO SEPARATION FROM THE SERVICE, RECEIVING PERIODIC PAYMENTS DURING THE PERIOD COVERED BY THE LEAVE WITH RETIREMENT DEDUCTIONS AND SERVICE CREDITS--- PARTICULARLY IN RETIREMENT CASES WHERE AN EMPLOYEE DESIRES TO COUNT THE PERIOD OF LEAVE FOR RETIREMENT PURPOSES--- NEVERTHELESS, I THINK IT CLEARLY WAS THE INTENT OF THE LAW THAT THE PRACTICE BE UNIFORM IN ALL BRANCHES OF THE SERVICE AND AS TO ALL EMPLOYEES WITHOUT REGARD TO THE PREFERENCE OF INDIVIDUAL EMPLOYEES. TO ALLOW A DISCRETION IN THE MATTER BASED UPON THE PERSONAL PREFERENCE OF THE EMPLOYEE WOULD TEND TO NULLIFY THE BENEFITS INTENDED FOR THE GOVERNMENT BY THE ENACTMENT SUCH AS THOSE MENTIONED IN THE ABOVE QUOTATION FROM THE REPORT ON THE BILL. IN VIEW THEREOF, AND CONSIDERING THE TERMS OF THE STATUTE IN THE LIGHT OF ITS LEGISLATIVE HISTORY, I AM CONSTRAINED TO HOLD THAT THE STATUTE IS MANDATORY AND THAT TERMINAL ANNUAL OR VACATION LEAVE MAY NOT BE GRANTED IMMEDIATELY PRIOR TO SEPARATION FROM THE SERVICE IN ANY CASE WHERE IT IS KNOWN IN ADVANCE THAT THE EMPLOYEE IS TO BE SEPARATED FROM THE SERVICE. HENCE, QUESTION 2 IS ANSWERED IN THE AFFIRMATIVE.

REFERRING TO QUESTION 3, THE REFUND REQUIRED BY THE FIRST PROVISO TO SECTION 1 OF THE STATUTE SHOULD BE MADE AT THE SALARY RATE UPON THE BASIS OF WHICH THE LUMP SUM PAYMENT FOR LEAVE WAS COMPUTED--- THAT IS, AT THE RATE RECEIVED AT THE AGENCY FROM WHICH THE EMPLOYEE WAS SEPARATED.

THE FIRST PART OF QUESTION 4 IS ANSWERED IN THE AFFIRMATIVE. SUBQUESTIONS (1) AND (2) UNDER THIS QUESTION, IT IS UNDERSTOOD YOU REFER-- - FOR INCOME-TAX PURPOSES--- TO A PERIOD IN ONE OR TWO CALENDAR YEARS AFTER SEPARATION OVER WHICH THE LUMP-SUM PAYMENT FOR LEAVE WAS COMPUTED. IF THAT IS CORRECT, THE QUESTIONS PROPERLY ARE FOR ANSWERING BY THE COMMISSIONER OF INTERNAL REVENUE AND NOT BY THIS OFFICE.

QUESTION 5 IS NOT ENTIRELY CLEAR, BUT, AS UNDERSTOOD, IT MAY BE STATED THAT THE LAST DAY OF ACTIVE SERVICE OF AN EMPLOYEE RECEIVING A LUMP-SUM PAYMENT FOR LEAVE WILL BE THE DATE OF SEPARATION FROM THE SERVICE AND ANY PERIOD BETWEEN THAT DATE AND THE DATE OF REEMPLOYMENT, EITHER IN THE SAME OR A DIFFERENT AGENCY, MUST BE REGARDED AS A BREAK IN SERVICE FOR THE PURPOSE OF DETERMINING RIGHTS TO WITHIN-GRADE PROMOTIONS, TRANSFER OF SICK LEAVE AND REEMPLOYMENT BENEFITS, EVEN THOUGH THE PERIOD USED AS THE MEASURE FOR COMPUTING THE LUMP-SUM PAYMENT FOR LEAVE OTHERWISE WOULD BRIDGE OVER THE BREAK IN SERVICE IN WHOLE OR IN PART.