Proper Rate of Pay for Employees Promoted While Receiving Saved Pay

B-197025: Jul 18, 1980

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An agency requested a decision on whether it may use the highest previous rate rule when promoting an employee who had previously been downgraded and found to be entitled to saved pay. Several employees accepted a change from grade GS-6, step 9, to GS-5, step 10, in order to enter an Upward Mobility Program, and were found to be entitled to saved pay for up to 2 years. After completion of 1 year in the program, the employees were promoted to grade GS-7. The highest previous rate rule was used to determine their pay at the GS-7 level, and their entitlement to saved pay was terminated. The agency questioned the usage of the highest previous rate rule under legislation which provides that an employee receiving saved pay is entitled, upon promotion, to basic pay two steps above the rate he would be receiving but for saved pay or his existing rate of basic pay, if higher. Since the employee's saved rate exceeded their rate of pay on promotion, the agency's legal office concluded that they should continue to receive their saved rate. GAO held that the statute established the minimum an employee on saved pay can receive upon promotion or transfer at either a two-step increase or the existing (saved) rate, whichever is higher. Neither the statute nor the implementing regulations precluded the use of the highest previous rate rule. Accordingly, the agency's action in considering the highest previous rate was consistent with applicable laws and regulations.

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