Office of Civilian Human Resources

Grade Retention

What is Grade Retention?
An employee under a covered pay system* who is placed in a lower-graded position under the same or different covered pay system (e.g., as a result of a reduction in force or when his or her position is reduced in grade as a result of a reclassification) is entitled to retain the grade held immediately before the reduction for a period of 2 years.

A few exclusions to grade retention rules exist. An agency may not provide grade retention to an employee who 1) is reduced in grade for personal cause or at the employee's request; 2) was employed on a temporary or term basis immediately before the action causing the reduction in grade; or 3) moves between positions not under a covered pay system, from a position under a covered pay system to a position not under a covered pay system, or from a position not under a covered pay system to a position under a covered pay system. See 5 CFR 536.102(b) for additional exclusions.

Mandatory versus Optional Grade Retention

Mandatory grade retention occurs when an agency must provide grade retention to an employee who moves from a position under a covered pay system to a lower-graded position under a covered pay system as a result of 1) reduction in force procedures (as described in 5 CFR 536.201(c)); or 2) a reclassification process (as described in 5 CFR 536.201(d)). An employee is eligible for grade retention as a result of a reduction in force only if the employee has served for at least 52 consecutive weeks in one or more positions under a covered pay system at one or more grades higher than the grade of the position in which the employee is placed. An employee is eligible for grade retention based on a reclassification of his or her position only if, immediately before the reduction in grade, that position was classified at the existing grade or a higher grade for a continuous period of at least 1 year. (See 5 CFR 536.203.)

Optional grade retention occurs when an agency may provide grade retention to an employee moving from a position under a covered pay system to a lower-graded position under a covered pay system when 1) management announces a reorganization or reclassification decision in writing that may or would affect the employee; and 2) the employee moves to a lower-graded position (either at the employee's initiative or in response to a management offer) on or before the date the announced reorganization or reclassification is affected. An employee is eligible for optional grade retention only if, immediately before being placed in the lower grade, the employee has served for at least 52 consecutive weeks in one or more positions under a covered pay system at one or more grades higher than that lower grade. (See 5 CFR 536.202 and 536.203(c).)

Period of Grade Retention
An employee is entitled to retain the grade held immediately before the action that provides entitlement to grade retention for 2 years beginning on the date the employee is placed in the lower-graded position, unless grade retention is terminated.

*Covered pay system means the General Schedule pay system under 5 U.S.C. chapter 53, subchapter III; a prevailing rate system under 5 U.S.C. chapter 53, subchapter IV (including the Federal Wage System); or a special occupational pay system under 5 U.S.C. chapter 53, subchapter IX.