OPM Guidance on Agency Reduction in Force (RIF)

TL;DR

🔹 Understanding RIF & TOF

1️⃣ RIF Defined: A Reduction in Force (RIF) occurs when agencies abolish positions due to reorganization, budget cuts, or workforce reshaping, leading to separation, downgrading, or reassignment of employees.

2️⃣ TOF Defined: A Transfer of Function (TOF) happens when a function moves from one competitive area to another, potentially allowing employees to transfer instead of being subject to RIF procedures.

3️⃣ Legal Basis: RIF regulations are governed by 5 CFR Part 351, while TOF is covered under 5 U.S.C. § 3503. Agencies must follow strict OPM guidelines to ensure fair treatment of employees.

🔹 Agency Responsibilities in RIF

4️⃣ Agencies Have Full Authority Over RIF Decisions: They determine which positions are eliminated but must follow OPM’s retention regulations to ensure fairness.

5️⃣ Reassignments Can Prevent RIF: Agencies may offer employees vacant positions at the same grade level to avoid separation.

6️⃣ Competitive & Commuting Areas Define RIF Scope: Employees only compete within their defined “competitive area” and commuting area during a RIF.

🔹 Retention Standing & Employee Classification

7️⃣ Retention Standing Determines Who Stays: Employees are ranked on retention registers based on tenure, veterans’ preference, service length, and performance ratings.

8️⃣ Tenure Groups Impact RIF Outcomes: Career employees (Group I) are retained over career-conditional (Group II) and term employees (Group III).

9️⃣ Veterans’ Preference Provides Higher Retention Status: Subgroup AD veterans (30%+ disabled) receive the highest priority, followed by Subgroup A (other preference-eligible veterans) and Subgroup B (non-veterans).

🔟 Performance Ratings Matter: High performance scores grant additional service credit, boosting retention standing.

🔹 RIF Procedures & Employee Impact

1️⃣1️⃣ RIF Competition Happens in Two Rounds:

First Round: Employees are ranked for separation in their competitive levels.
Second Round: Eligible employees may bump (displace lower-standing employees) or retreat (return to a previously held position).

1️⃣2️⃣ Employees May Have “Bump” or “Retreat” Rights: Senior employees can displace junior employees, provided they meet job qualifications.

1️⃣3️⃣ Separation Notices Come with Appeals Rights: Employees can appeal RIF decisions to the MSPB if they believe rules weren’t followed.

🔹 Employee Benefits During RIF

1️⃣4️⃣ Grade Retention Lasts for Two Years: Downgraded employees retain their original grade for up to two years if they served 52+ consecutive weeks at that grade.

1️⃣5️⃣ Severance Pay Can Provide a Financial Cushion: Eligible employees receive one week of pay per year of service (up to 52 weeks), with bonus pay for employees over 40.

1️⃣6️⃣ Unemployment Benefits Are State-Dependent: Employees should apply for unemployment through their state’s workforce office.

1️⃣7️⃣ Annual Leave is Paid Out in a Lump Sum: Employees receive a one-time payout for any unused annual leave upon separation.

1️⃣8️⃣ Unused Sick Leave Can Boost Retirement Credit: Under CSRS and FERS, sick leave counts toward total service time.

🔹 Employee Benefit Programs Affected by RIF

1️⃣9️⃣ FEHBP Continues for 31 Days for Free: Employees can extend coverage for up to 18 months by paying the full premium + 2% admin fee.

2️⃣0️⃣ FEGLI Offers a 31-Day Grace Period: Employees can convert their FEGLI life insurance into a private policy within 31 days.

2️⃣1️⃣ TSP Withdrawal Options: Employees can leave funds in TSP, roll them over, or withdraw, but early withdrawals before age 59½ may result in tax penalties.

2️⃣2️⃣ Retirement Benefits Differ by Service Length:

Deferred Annuity is available at age 62 for employees with at least five years of service.
Immediate Annuity is available for CSRS and FERS employees who meet age and service requirements.

🔹 Reemployment & Retraining Programs

2️⃣3️⃣ Reemployment Priority List (RPL) Gives Hiring Preference: Employees separated due to RIF get priority for hiring within their former agency.

2️⃣4️⃣ ICTAP Offers Special Hiring Consideration Across Agencies: Employees separated by RIF receive priority for federal jobs on USAJOBS.

2️⃣5️⃣ CTAP Provides Internal Hiring Priority: Agencies must consider CTAP-eligible employees before hiring externally.

2️⃣6️⃣ Government-Funded Retraining is Available: Programs like WIOA provide career transition services for displaced federal workers.

🔹 Transfer of Function (TOF) Considerations

2️⃣7️⃣ Employees Can Transfer With Their Function: If an entire function moves to a new competitive area, employees may transfer instead of being subject to RIF.

2️⃣8️⃣ Declining a TOF Transfer May Lead to Adverse Action Separation: Employees who refuse to relocate may be removed rather than placed in a RIF.

2️⃣9️⃣ Canvass Letters Gauge Employee Interest in Transferring: Employees must respond to canvass letters to indicate their willingness to transfer.

3️⃣0️⃣ Agencies May Allow Volunteers to Transfer Instead: Employees can opt in to move with the function, reducing mandatory TOF assignments.

🔹 Workforce Reshaping & Strategic Considerations

3️⃣1️⃣ OPM’s Workforce Reshaping Operations Handbook Provides Guidance: Agencies must develop strategic plans to minimize workforce disruptions.

3️⃣2️⃣ Hiring Freezes Help Reduce RIFs: Agencies can slow hiring to avoid surplus employees.

3️⃣3️⃣ Voluntary Early Retirement (VERA) & Buyouts (VSIP) Offer Alternatives to RIF:

VERA allows early retirement at age 50+ with 20 years or any age with 25 years.
VSIP provides financial incentives (up to $25,000) for voluntary departures.

3️⃣4️⃣ Reassignments and Retraining Help Retain Talent: Agencies can retrain employees for new positions instead of separating them.

3️⃣5️⃣ Detailing Employees Temporarily Can Delay RIF Actions: Assigning employees to short-term positions may buy time to find long-term solutions.

Understanding Reduction in Force (RIF) in Federal Agencies

The federal government, like any large organization, periodically undergoes structural and budgetary changes that necessitate workforce adjustments. A Reduction in Force (RIF) is a formal process used by federal agencies to reorganize, downsize, or eliminate positions due to budget constraints, lack of work, reorganization, or other operational needs. Unlike private-sector layoffs, federal RIFs follow strict regulatory guidelines established by the U.S. Office of Personnel Management (OPM) to ensure fairness, transparency, and compliance with federal laws.

This guide provides an in-depth look at how RIFs are conducted, the legal and regulatory framework governing these processes, the rights and benefits available to affected employees, and the role of OPM in overseeing RIF policies.

Overview of Reduction in Force (RIF) in Federal Agencies

A Reduction in Force (RIF) is the official term used in the federal government when an agency abolishes positions, downgrades employees, or separates personnel due to specific organizational or financial reasons. RIF actions can be triggered by various factors, including:

Budget cuts or funding shortfalls that force agencies to reduce payroll expenses.
Agency reorganizations that result in redundant positions.
Lack of work in a particular department or office.
Legislative or policy changes affecting agency missions or staffing needs.
Insufficient personnel ceilings that require adjustments to workforce size.
Transfer of function where work is moved from one agency or office to another.

A RIF is not based on an employee’s performance or conduct; rather, it is driven by agency needs and regulatory requirements. Employees affected by a RIF may be reassigned, downgraded, transferred, or separated from federal service, but agencies must follow structured guidelines to determine who remains and who is impacted.

Role of OPM in RIF Regulations and Employee Protections

The U.S. Office of Personnel Management (OPM) plays a crucial role in setting and enforcing federal Reduction in Force (RIF) regulations. OPM’s primary responsibilities in RIF actions include:

Developing RIF Policies and Regulations
- OPM establishes guidelines that agencies must follow when conducting RIF actions.
- These regulations are outlined in Title 5, Code of Federal Regulations, Part 351.
Ensuring Fairness and Legal Compliance
- Agencies must adhere to OPM’s procedural safeguards to prevent arbitrary terminations.
- OPM ensures RIF decisions comply with federal laws protecting employees’ rights.
Providing Guidance to Federal Agencies
- OPM offers workforce reshaping handbooks, training materials, and advisory services.
- It helps agencies develop RIF strategies that minimize negative workforce impacts.
Overseeing Employee Rights and Benefits
- OPM ensures that employees affected by RIF receive proper notifications, benefits, and reassignment opportunities.
- This includes severance pay, unemployment benefits, reemployment programs, and retirement options.
Administering Veterans’ Preference and Tenure Protections
- OPM enforces veterans’ preference laws, ensuring that eligible veterans receive priority retention in RIF decisions.
- It provides guidelines for agencies to classify employees based on tenure, service length, and performance.

By enforcing these regulations, OPM helps agencies conduct RIF actions in a lawful, systematic, and fair manner, while also providing support for employees facing job loss or reassignment.

Legal Framework: Title 5, Code of Federal Regulations, Part 351

The legal foundation for RIF actions is set forth in Title 5, Code of Federal Regulations (CFR), Part 351, which outlines mandatory procedures that agencies must follow when conducting RIFs. Key aspects of the RIF regulatory framework include:

Employee Retention Factors (5 CFR § 351.501)

Agencies must rank employees for retention based on four key factors:

Tenure of employment (permanent career employees receive higher retention priority).
Veterans’ preference (eligible veterans are given priority retention status).
Total length of creditable federal service (longer service provides higher standing).
Performance ratings (recent performance evaluations impact retention ranking).

Competitive Areas and Competitive Levels (5 CFR §§ 351.402-351.404)

Agencies must define competitive areas (geographic and organizational boundaries within which RIFs occur).
Employees are grouped into competitive levels based on their grade, classification, and duties.

Bumping and Retreat Rights (5 CFR §§ 351.701-351.704)

Employees subject to separation or demotion may have bumping or retreat rights to other positions.
Higher-standing employees may displace lower-standing employees in certain cases.

RIF Notices and Appeal Rights (5 CFR §§ 351.801-351.807)

Agencies must provide employees with at least 60 days of written notice before a RIF action takes effect.
Employees have the right to appeal RIF actions to the Merit Systems Protection Board (MSPB).

Key Factors Determining RIF Decisions

When a RIF is conducted, employees are ranked and retained based on four key factors, as required under 5 CFR Part 351:

Tenure of Employment

Employees are categorized into three tenure groups:

Group I: Career employees (highest retention priority).
Group II: Career-conditional employees (less retention priority than Group I).
Group III: Term or temporary employees (lowest retention priority).

Veterans' Preference

Veterans are given priority standing in a RIF.
Three veterans’ preference subgroups apply:
- Subgroup AD: Veterans with a 30% or more service-connected disability.
- Subgroup A: Other veterans eligible for preference.
- Subgroup B: Non-veterans and those not eligible for preference.

Total Length of Creditable Federal Service

Employees with longer continuous service receive higher retention priority.
Creditable service includes both federal civilian and uniformed service time.

Performance Ratings

Agencies use the last three annual performance ratings to assign additional retention service credit:
- Outstanding ratings (Level V): 20 additional years of service credit.
- Exceeds Fully Successful (Level IV): 16 additional years of service credit.
- Fully Successful (Level III): 12 additional years of service credit.
Employees with poor performance ratings receive no additional service credit.

‘Pro-Tip’

1️⃣ Know Your Rights: Employees impacted by a RIF or TOF should review OPM regulations in 5 CFR Part 351 to understand their rights.

Overview of Reduction in Force (RIF)

A Reduction in Force (RIF) is a formal process in the federal government used to downsize, reorganize, or eliminate positions due to budget constraints, lack of work, reorganization, or other operational changes. Unlike private-sector layoffs, RIFs in federal agencies follow strict legal and procedural guidelines established by the U.S. Office of Personnel Management (OPM) to ensure fairness, transparency, and compliance with federal regulations.

This section provides an in-depth look at what constitutes a RIF, its legal foundation, the primary reasons for conducting a RIF, and the types of employment actions covered under RIF regulations.

What is a RIF?

A Reduction in Force (RIF) occurs when a federal agency must eliminate, reorganize, or modify positions due to factors such as budget reductions, reorganization, or workload changes. A RIF can result in an employee being:

Separated from federal employment.
Demoted to a lower-grade position.
Reassigned to a different job within the agency.
Placed on furlough for more than 30 days.

Agencies must follow OPM regulations when conducting a RIF, ensuring that retention decisions are based on objective criteria, including:

Tenure of employment (career employees receive higher retention priority).
Veterans’ preference (eligible veterans are given priority consideration).
Total length of federal service (longer service provides higher retention standing).
Performance ratings (employees with higher recent ratings may receive additional retention credit).

Difference Between RIF and Adverse Actions

While a RIF is based on organizational needs, an adverse action is based on an individual employee’s conduct or performance. Understanding the distinction is important because adverse actions have different legal standards and appeal processes.

Aspect	Reduction in Force (RIF)	Adverse Action
Cause	Based on agency needs such as reorganization, lack of funds, or downsizing.	Based on individual misconduct, poor performance, or disciplinary reasons.
Legal Authority	Governed by Title 5, CFR Part 351 (RIF regulations).	Governed by Title 5, CFR Part 752 (adverse actions).
Employee Rights	Employees may have bumping or retreat rights to another position.	Employees typically have no bump or retreat rights.
Notice Period	Requires at least 60 days’ notice.	May vary but often requires 30 days’ notice.
Appeal Rights	Appeals can be made to the Merit Systems Protection Board (MSPB) based on procedural errors.	Employees can appeal based on due process violations.

A furlough of 30 or fewer days is considered an adverse action, while a furlough of more than 30 days is considered a RIF action.

‘Pro-Tip’

2️⃣ Stay Informed: Regularly check with your agency’s HR office and OPM’s website for updates on RIF and TOF policies.

Legal Basis for RIF

Federal agencies must follow statutory and regulatory requirements when implementing a RIF. The key legal authorities governing RIFs are:

Veterans' Preference Act of 1944

The Veterans’ Preference Act of 1944 (now codified in 5 U.S.C. 3501-3503) grants preference in retention during RIFs to eligible veterans. This law ensures that veterans who have served in the U.S. Armed Forces receive priority consideration when agencies determine who remains in a federal position.

Under this law:

Veterans are placed into higher retention subgroups based on their service status.
Disabled veterans (30% or more) receive the highest retention preference.
Non-veterans are ranked lower in retention priority than eligible veterans.

Title 5, U.S. Code §§ 3501-3503

The legal framework for RIFs is established under Title 5, U.S. Code, Sections 3501-3503, which outlines:

How federal agencies must rank employees during RIF decisions.
The order of retention standing, factoring in tenure, veterans’ preference, length of service, and performance.
Agencies’ responsibility to follow due process, ensuring that RIFs are carried out lawfully and equitably.

These laws are further implemented through OPM regulations in Title 5, Code of Federal Regulations (CFR), Part 351, which provides detailed procedural guidance on conducting RIFs.

‘Pro-Tip’

3️⃣ Understand Competitive Areas: Agencies define competitive areas based on organization and geography, which determine RIF competition pools.

Reasons for RIF

A federal agency may initiate a RIF due to several organizational and operational factors. The most common reasons include:

Reorganization

When agencies restructure their workforce due to new policies, changing missions, or operational efficiency initiatives.
Positions may be consolidated, relocated, or eliminated to improve efficiency.
Some employees may have the right to transfer with their function if a reorganization moves work to another competitive area.

Budget Cuts

Congressional funding reductions may force agencies to eliminate positions to stay within budget limits.
Agencies may determine which programs or positions must be downsized based on funding priorities.
Employees impacted by budget-driven RIFs may be offered reassignment, demotion, or separation.

Insufficient Personnel Ceiling

Federal agencies have limits on the number of positions they can fund and staff (known as personnel ceilings).
When ceilings are lowered, agencies must reduce their workforce, often through a RIF.
Agencies may choose to eliminate vacant positions first before conducting employee separations.

Restoration Rights for Reemployed Individuals

Some employees have statutory reemployment rights after military service or extended leave.
If a returning employee reclaims their position, another employee may be displaced through a RIF.
Agencies must reintegrate these employees, even if it results in the demotion or separation of another worker.

‘Pro-Tip’

4️⃣ Know the Legal Basis: RIF decisions follow Title 5, U.S. Code §§ 3501-3503, while TOF is governed by 5 U.S.C. § 3503.

Actions Covered Under RIF Regulations

A RIF is not limited to terminations; it can also include demotions, reassignments, and extended furloughs. The following actions are covered under OPM’s RIF regulations:

Separation, Demotion, or Reassignment

Employees affected by a RIF may be:
- Separated (removed from federal employment).
- Demoted (placed in a lower-grade position).
- Reassigned (moved to a different role).
Employees may have bumping or retreat rights, allowing them to move into positions held by employees with lower retention standing.

Furloughs Exceeding 30 Days

A furlough (temporary unpaid leave) lasting more than 30 calendar days or more than 22 discontinuous workdays is classified as a RIF action.
Agencies must follow RIF regulations for these extended furloughs.
Short-term furloughs (30 days or fewer) are considered adverse actions, not RIFs.

‘Pro-Tip’

5️⃣ Competitive Levels Matter: Employees are grouped into competitive levels based on grade, classification, and tour of duty, which impact RIF standing.

Agency Responsibilities in RIF

When a Reduction in Force (RIF) occurs, federal agencies must follow strict guidelines to ensure fair and legally compliant workforce restructuring. Agencies have significant decision-making power but must also adhere to U.S. Office of Personnel Management (OPM) regulations to protect employee rights and avoid legal challenges.

This section outlines agency responsibilities, including how agencies decide which positions to eliminate, options for reassigning employees, and defining competitive areas for RIF competition.

Agency’s Authority

Federal agencies have the authority to determine when a RIF is necessary and which positions will be impacted. However, these decisions must be made based on mission needs, budget constraints, and operational efficiency rather than individual employee performance or conduct.

Agencies have the power to:

Decide whether a RIF is required based on budget, restructuring, or workload changes.
Determine which programs, offices, or functions will be downsized or eliminated.
Establish which positions will be affected and how the workforce will be restructured.

Once an agency identifies which positions will be eliminated, it must use OPM’s regulatory framework to determine which employees are impacted.

Compliance with OPM Regulations

Agencies must follow OPM’s RIF procedures, which are governed by Title 5, Code of Federal Regulations (CFR), Part 351. These regulations ensure that:

RIFs are conducted fairly and lawfully, with decisions based on objective retention factors rather than favoritism or discrimination.
Employees receive advance notice (at least 60 days) before their position is eliminated.
Veterans’ preference, tenure, service length, and performance are properly applied in retention decisions.
Employees are considered for bump and retreat rights to other positions before being separated.

If an agency fails to comply with OPM regulations, affected employees may appeal RIF decisions to the Merit Systems Protection Board (MSPB), potentially leading to legal challenges and reversals.

‘Pro-Tip’

6️⃣ Tenure is Key: Permanent (career) employees have higher retention standing than career-conditional or temporary employees.

Employee Reassignment Rights

Options to Avoid RIF Through Reassignments

Before separating employees, agencies must explore reassignment options to minimize the impact of a RIF. Reassignment refers to moving an employee to a different position within the agency to prevent separation. Agencies can reassign employees to positions at the same grade and pay without using RIF procedures.

Ways Agencies Can Avoid RIF Separations:

Reassignment to Vacant Positions
- If vacant positions exist, agencies can reassign employees at the same grade level without a RIF action.
- Employees must meet the qualifications for the new position.
Voluntary Downgrade
- Employees may accept a lower-grade position voluntarily to avoid separation.
- Employees who accept a downgrade may be eligible for pay retention benefits.
Job Sharing and Alternative Work Schedules
- Agencies may offer reduced-hour schedules or job-sharing arrangements instead of terminations.
Interagency Transfers and Detail Assignments
- Employees may be offered positions at other federal agencies.
- Temporary detail assignments may also be considered as an option.

Agency’s Right to Reassign Employees

Agencies have broad authority to reassign employees to alternative positions within their organization. This authority allows agencies to avoid RIF separations whenever possible.

However, employees do not have the right to refuse reassignment unless:

The reassignment involves a geographic relocation beyond their commuting area.
The new position is more than two grades lower than their current role.
They do not meet the qualifications for the reassigned position.

Employees who decline reassignment that meets these conditions may lose their rights to severance pay and unemployment benefits.

‘Pro-Tip’

7️⃣ Veterans’ Preference Gives an Edge: Veterans fall into three preference subgroups (AD, A, and B), which impact retention ranking.

Competitive Areas and Local Commuting Areas

In a RIF, agencies must establish “Competitive Areas”—the geographic and organizational boundaries within which employees compete for retention. The competitive area defines who is included in the RIF competition.

Key Rules for Competitive Areas:

Minimum Competitive Area:
- Must include at least one organization in a local commuting area.
- Must be separate from other agency organizations based on work function, staff, and personnel administration.
Size of Competitive Area:
- Agencies may define larger competitive areas but cannot make them smaller than the legal minimum.
- Competitive areas may be nationwide or even global for agencies with international operations.

Competitive Areas vs. Competitive Levels

A Competitive Area defines who is competing for retention.
A Competitive Level groups employees based on similar positions, job series, and pay grade.
Employees only compete within their competitive level in the defined competitive area.

Defining Local Commuting Areas

The local commuting area defines the geographic scope of competition within a RIF. Agencies must determine which commuting areas apply when conducting RIF actions.

Key Rules for Local Commuting Areas:

A commuting area includes a single population center (such as a city or metropolitan area) where employees normally travel to work.
OPM does not set a mileage limit, but reasonable travel distances must be considered.
If a competitive area moves to a different commuting area, employees may be required to relocate or decline the transfer and face RIF separation.

Why Competitive and Commuting Areas Matter in a RIF

Employees only compete for retention within their competitive area and level.
Employees do not compete across different commuting areas unless explicitly defined.
If an agency redefines a competitive area within 90 days of a RIF, it must obtain OPM approval.

‘Pro-Tip’

8️⃣ Service Length Counts: The longer your creditable federal service (civilian + military), the higher your retention standing.

Retention Standing and Employee Classification

In a Reduction in Force (RIF), retention standing determines the order in which employees are affected by separation, reassignment, or downgrading. Federal agencies must evaluate employees based on objective factors, ensuring that RIF decisions are fair, legally compliant, and aligned with federal regulations.

OPM’s Title 5, Code of Federal Regulations (CFR), Part 351 establishes the criteria that agencies must use to rank employees for retention. This section covers the process of establishing competitive levels, retention registers, and determining retention standing.

Establishing Competitive Levels

Before conducting a RIF, agencies must categorize employees into “competitive levels” to ensure that only employees in similar positions compete against each other.

A Competitive Level is a group of positions within a competitive area that share:

The same grade and classification series (e.g., GS-343-12 for Management Analysts).
Similar duties, responsibilities, and required qualifications so that employees can perform the work with minimal training (typically within 90 days).
The same tour of duty (e.g., full-time, part-time, seasonal, intermittent).

Competitive Level Rules

Each competitive level includes interchangeable positions—employees should be able to move between jobs without significant training or difficulty.
Different appointment types require separate competitive levels:
- Permanent positions (career and career-conditional) are in separate levels from temporary or term positions.
- Competitive service positions are separate from excepted service positions.
Trainee or developmental positions are grouped separately from fully trained positions.

For example, a GS-12 Management Analyst (full-time) will be in a different competitive level from a GS-12 Management Analyst (part-time) or a GS-12 Management Analyst (excepted service appointment).

Why Competitive Levels Matter in RIF

Employees only compete within their assigned competitive level for retention.
The lowest-ranked employees within a competitive level are subject to RIF actions first.
Bump and retreat rights only apply within a defined competitive level.

‘Pro-Tip’

9️⃣ Performance Ratings Affect RIF Standing: High ratings increase retention credit, making it essential to maintain strong performance evaluations.

Establishing Retention Registers

Ranking Employees Based on RIF Criteria

Once competitive levels are established, agencies create Retention Registers to rank employees based on retention standing. These registers determine the order in which employees are affected by a RIF.

Retention registers must be created for each competitive level within a competitive area and rank employees according to the four retention factors:

Tenure of Employment (permanent, conditional, or temporary status).
Veterans’ Preference (priority given to eligible veterans).
Total Creditable Federal Service (length of government service).
Performance Ratings (recent evaluations influence ranking).

Employees with the highest retention standing remain in their positions, while those with the lowest ranking may be separated, demoted, or reassigned.

Retention Register Order

Employees are listed in descending order within each competitive level, meaning those with the highest standing are ranked first.

Example of a Retention Register for a GS-12 Management Analyst Competitive Level:

Retention Standing	Employee Name	Tenure Group	Veterans' Preference	Service Computation Date (SCD)	Performance-Based Retention Credit
1	John Smith	Career (Group I)	30% Disabled Veteran (AD)	10/15/1978	+20 years
2	Sarah Adams	Career (Group I)	Veteran (A)	06/20/1983	+16 years
3	David Lee	Career-Conditional (Group II)	Non-Veteran (B)	02/11/1990	+12 years
4	Lisa Johnson	Term Appointment (Group III)	Non-Veteran (B)	05/14/1995	0 years

Employees lowest on the retention register are released first if a RIF occurs.

Why Retention Registers Matter in RIF

Agencies must use retention registers to determine RIF outcomes.
Employees ranked higher on the list are less likely to be separated.
Agencies must provide employees with access to their retention standing upon request.

‘Pro-Tip’

🔟 Understand Retention Registers: Agencies create retention registers ranking employees by tenure, preference, service length, and performance.

Determining Retention Standing

To determine who remains in federal employment and who is subject to RIF actions, agencies rank employees based on four key factors.

Tenure of Employment

Employees are grouped into three tenure categories, with career employees receiving the highest retention priority.

Tenure Groups

Group	Description	Priority in RIF
Group I	Career employees who have completed their probationary period	Highest priority for retention
Group II	Career-conditional employees serving a probationary period	Lower retention priority than Group I
Group III	Employees with term, temporary, or excepted appointments	Lowest retention priority

Employees in Group I are retained before those in Groups II or III during a RIF.

Veterans' Preference

Veterans receive preferential treatment in RIF retention decisions and are placed into one of three veterans’ preference subgroups.

Veterans' Preference Subgroups

Subgroup	Eligibility	Impact in RIF
Subgroup AD	30% or more disabled veterans	Highest priority for retention
Subgroup A	Veterans without a 30% disability	Higher retention than non-veterans
Subgroup B	Non-veterans or those not eligible for preference	Lowest priority in retention

Veterans in Subgroup AD have the highest priority within each tenure group.

‘Pro-Tip’

1️⃣1️⃣ Two Rounds of Competition: Employees may “bump” (displace a lower-standing employee) or “retreat” (return to a previous position) in a RIF.

Total Creditable Federal Service

Employees with longer service receive higher retention standing. This includes:

Federal civilian service (time worked in government agencies).
Military service (if the employee qualifies for veterans’ preference).

Example:

A career employee with 25 years of service has a higher retention ranking than a career-conditional employee with 5 years.

‘Pro-Tip’

1️⃣2️⃣ Separation Notices Come with Appeal Rights: If separated due to a RIF, you can appeal the decision to MSPB (Merit Systems Protection Board).

Performance Ratings Impact

Recent performance ratings can increase an employee’s retention standing. Agencies calculate extra service credit based on the last three performance ratings within a four-year period.

Performance Rating	Additional Retention Credit
Outstanding (Level V)	+20 years
Exceeds Fully Successful (Level IV)	+16 years
Fully Successful (Level III)	+12 years
Below Fully Successful	0 years (no additional credit)

Example Calculation:
An employee with:

One “Outstanding” (20 years)
Two “Exceeds Fully Successful” (16 years each)
Total additional service credit: (20 + 16 + 16) ÷ 3 = 17.3 years (rounded up to 18 years).

Employees with higher performance-based credit have stronger retention standing.

‘Pro-Tip’

1️⃣3️⃣ Know Grade Intervals for Bumping/Retreating: Employees can bump/retreat to positions up to three grades lower.

RIF Procedures: Employee Impact and Rights

A Reduction in Force (RIF) affects federal employees by determining who retains their position, who is reassigned, and who is separated or demoted. Federal agencies must follow structured procedures to ensure fair and lawful decision-making based on retention standing rather than subjective criteria.

RIF actions involve a two-round competition process, employee bump and retreat rights, and specific ranking procedures for separation. This section outlines the key steps of the RIF process and the rights employees have when impacted by a RIF.

Two Rounds of RIF Competition

First Round: Identifying Employees for Release

In the first round of RIF competition, agencies apply the four retention factors (tenure, veterans’ preference, service length, and performance) within each competitive level to determine which employees must be released from their current positions.

Steps in First-Round Competition:

Employees are ranked on the retention register for their competitive level.
The lowest-ranking employees (based on retention standing) are identified for release.
Employees with higher retention standing remain in their positions.
Employees identified for release enter the second round of competition to determine if they can bump or retreat into other positions.

Second Round: Bump and Retreat Rights

After an employee is released from their competitive level, they may have the right to bump or retreat to another position within the agency.

Bumping Rights allow a higher-standing employee to displace a lower-standing employee in a different competitive level.
Retreating Rights allow an employee to return to a previously held position within the agency.

If no bump or retreat options exist, the employee is separated from federal service.

‘Pro-Tip’

1️⃣4️⃣ Review All RIF Notices Carefully: Ensure your service time, performance ratings, and veterans’ preference are correct on retention registers.

Release from Competitive Level

Process of Ranking Employees for Separation

When an agency conducts a RIF, employees are released in the reverse order of their retention standing within each competitive level.

Order of Release from Competitive Level

Temporary and term employees (Group III) are released first.
Career-conditional employees (Group II) are released next.
Career employees (Group I) are released last.

Within each tenure group, employees are released in the following order:

Subgroup B (Non-Veterans) are released first.
Subgroup A (Veterans) are released next.
Subgroup AD (30% or more disabled veterans) are released last.

Sample Retention Register: GS-12 Management Analyst Competitive Level

Retention Standing	Employee Name	Tenure Group	Veterans' Preference	Service Computation Date (SCD)	Performance Credit	Action
1	John Smith	Group I	30% Disabled Veteran (AD)	10/15/1978	+20 years	Retained
2	Sarah Adams	Group I	Veteran (A)	06/20/1983	+16 years	Retained
3	David Lee	Group II	Non-Veteran (B)	02/11/1990	+12 years	Released
4	Lisa Johnson	Group III	Non-Veteran (B)	05/14/1995	0 years	Released

Once employees are released from their competitive level, they may have bump or retreat rights before being separated.

‘Pro-Tip’

1️⃣5️⃣ Ask About Assignment to Vacant Positions: Agencies may offer vacant positions before releasing employees from their competitive levels.

Bump and Retreat Rights

Bumping: Displacing a Lower-Ranking Employee

Bumping occurs when a higher-standing employee displaces a lower-standing employee within the same agency. Employees in higher tenure groups or preference subgroups may bump into another position as long as:

The displaced employee is in a lower retention subgroup.
The position is within three grade levels of the employee’s current grade.
The employee meets all qualifications for the position.

Example of Bumping:

A GS-12 employee in Tenure Group I, Subgroup A (Veteran) may bump a GS-11 employee in Tenure Group II, Subgroup B (Non-Veteran).
The lower-standing GS-11 employee is displaced and may enter retreat rights or be separated.

Retreating: Returning to a Previously Held Position

Retreating allows an employee to return to a position they previously held at a lower grade level. This option is available only if:

The employee held the position on a permanent basis at some point in their federal career.
The employee has higher retention standing than the person currently in the position.
The position is within five grade intervals of the employee’s current position.

Example of Retreating:

A GS-12 employee previously held a GS-9 position.
If no bumping options exist, they may retreat to a GS-9 position if it is available.
The GS-9 employee with the lowest retention standing is displaced.

Employees with veterans’ preference in Subgroup AD can retreat to a position up to five grades lower, while non-veterans may only retreat up to three grades lower.

Limitations on Bump and Retreat Rights

Excepted service employees generally do not have bump or retreat rights unless the agency grants them these rights.
An employee cannot bump or retreat into a temporary or term position.
Employees must have a current “Minimally Successful” or higher performance rating to exercise bump or retreat rights.

‘Pro-Tip’

1️⃣6️⃣ Grade Retention Lasts Two Years: If downgraded in a RIF, you may retain your previous grade for up to two years.

Grade Intervals in Assignment Rights

An employee’s ability to bump or retreat is restricted by grade intervals, which determine how many grades lower an employee can move in a RIF.

One-Grade vs. Multi-Grade Intervals

One-Grade Occupations: Employees can bump or retreat one grade lower at a time (e.g., GS-5 → GS-4).
Multi-Grade Occupations: Employees can bump or retreat to the next grade interval (e.g., GS-12 → GS-9 if the career ladder is GS-5-7-9-11-12).

Grade Intervals for Bumping and Retreating

Current Grade	Eligible Retreat Grade (Non-Veteran)	Eligible Retreat Grade (Veteran with 30% Disability)
GS-12	GS-9	GS-7
GS-11	GS-8	GS-6
GS-10	GS-7	GS-5
GS-9	GS-6	GS-4
GS-8	GS-5	GS-3

Veterans in Subgroup AD (30% disabled veterans) receive more favorable grade intervals, allowing them to retreat up to five grades lower.

‘Pro-Tip’

1️⃣7️⃣ Pay Retention Can Extend Benefits: After grade retention ends, pay retention prevents sudden salary loss.

Employee Benefits During RIF

A Reduction in Force (RIF) can have a significant impact on federal employees, but various benefits and protections exist to mitigate financial loss and provide career transition assistance. Employees who are downgraded (demoted to a lower-grade position) may be eligible for grade and pay retention, while those who are separated may qualify for severance pay, unemployment compensation, and payments for unused leave.

This section outlines the key benefits available to affected employees and how they apply during a RIF.

Benefits for Downgraded Employees

Grade and Pay Retention

When an employee is downgraded due to a RIF, they may qualify for grade and/or pay retention to help ease the financial impact.

Retaining a Higher Grade for Up to Two Years

Employees who are placed in a lower-graded position due to a RIF are entitled to retain their higher grade for up to two years if they:

Have completed at least 52 consecutive weeks at the higher grade.
Are downgraded as a direct result of RIF procedures or accept a lower-graded position instead of separation.

During this two-year period, employees:

Continue receiving pay and benefits as if they still held their higher-grade position.
Remain eligible for promotions based on their retained grade.
Maintain eligibility for within-grade increases (step increases) at the higher grade level.

Pay Retention Rules and Limitations

After grade retention expires, employees may still qualify for pay retention if:

Their basic pay from the higher grade exceeds the maximum pay rate for the new lower-grade position.

Under pay retention rules:

The employee’s pay is frozen at their current rate if it is higher than the new grade’s pay range.
If the retained rate exceeds 150% of the maximum rate for the lower grade, it may be adjusted downward.
Future salary increases are limited to 50% of the annual pay adjustment until the lower grade’s maximum pay catches up.

Impact on Future RIFs

Grade retention does not apply in future RIF competitions. For example:

If a GS-12 employee is downgraded to GS-9, they retain GS-12 pay and benefits for two years.
However, in a future RIF, they compete as a GS-9 employee, not as a GS-12.

Repromotion Consideration

Employees downgraded due to a RIF may receive priority repromotion consideration.

Agencies may have internal placement programs that prioritize employees for re-promotion.
Employees may be placed on reemployment priority lists (RPLs) for positions at their former grade level.
Repromotion is not guaranteed and depends on agency vacancies and qualifications.

Regulatory Reference: Grade and pay retention benefits are covered under 5 CFR Part 536.

‘Pro-Tip’

1️⃣8️⃣ Severance Pay is Available: If you’re separated involuntarily and meet eligibility, you may receive up to one year’s salary in severance pay.

Benefits for Separated Employees

Severance Pay

Severance pay provides financial assistance to employees separated through no fault of their own due to a RIF.

Eligibility Criteria and Exclusions

To be eligible for severance pay, an employee must:
✅ Be involuntarily separated due to a RIF.
✅ Have at least 12 months of continuous federal service.
✅ Not have declined a reasonable offer (same commuting area, same agency, and no more than two grades lower).
✅ Not be eligible for an immediate annuity from a federal civilian retirement system.

Employees excluded from severance pay include those who:
❌ Qualify for immediate federal retirement benefits.
❌ Decline a valid reassignment offer.
❌ Receive workers’ compensation for wage loss due to injury.

Computation Formula with Age Adjustment Factors

Severance pay is calculated using the following formula:

Basic Severance Pay = 1 week of pay per year of service (for the first 10 years) + 2 weeks of pay per year of service (beyond 10 years)

✅ Additional age adjustment factor: Employees over 40 years old receive 2.5% extra pay per quarter-year above 40.

Severance Pay Example Calculation

Employee age 52 with 18 years of service
Annual salary: $73,619
Weekly rate: $1,411
Severance Pay Calculation:
1. First 10 years: 10 weeks × $1,411 = $14,110
2. Remaining 8 years: 8 × 2 weeks = 16 weeks × $1,411 = $22,576
3. Age factor (2.5% per quarter after age 40):
  - Age 52 → 2.2 multiplier (based on severance pay charts)
  - Total Adjusted Severance = $36,686 × 2.2 = $80,709
4. 1-year cap (52 weeks):
  - Maximum severance = $73,372 (capped at 52 weeks)

Severance payments are distributed biweekly and stop if an employee is rehired into a federal job.

Severance Pay Estimation Worksheets

Employees can estimate their severance using severance pay estimation worksheets provided by OPM. HR specialists can also provide exact calculations.

Unemployment Compensation

Separated employees may be eligible for unemployment benefits, which:

Provide weekly payments for a limited time.
Are administered by state governments (not federal agencies).

How to Apply for Unemployment Benefits

To apply for unemployment benefits, employees must:
✅ Visit their state’s unemployment office or apply online.
✅ Provide a copy of their RIF separation notice (SF-50 form).
✅ Meet state eligibility requirements, such as actively searching for work.

Variations by State

Benefit amounts and durations vary by state.
Some states offer extended benefits during economic downturns.
Employees may be required to attend reemployment workshops.

More information is available on the Department of Labor’s website.

Unused Annual and Sick Leave

Employees separated due to a RIF receive compensation for their unused leave.

Lump Sum Payment for Annual Leave

✅ Employees receive a lump sum payment for any unused annual leave.
✅ Payment is based on the employee’s final hourly rate.
✅ Annual leave cannot be used to extend employment beyond the RIF date.

Credit for Sick Leave in Retirement Eligibility

Unused sick leave is NOT paid out but is credited toward retirement eligibility for employees under:
- Civil Service Retirement System (CSRS) (full credit).
- Federal Employees Retirement System (FERS) (50% credit before 2014, 100% credit after).
Employees who return to federal service can have their sick leave restored.

Example of Sick Leave Credit for Retirement:

1,000 hours of unused sick leave → 5 months of additional service credit for annuity calculations.

‘Pro-Tip’

1️⃣9️⃣ Age and Service Impact Severance Pay: Employees over 40 receive additional severance pay multipliers.

Employee Benefit Programs Affected by RIF

A Reduction in Force (RIF) can impact an employee’s access to federal benefit programs, including health insurance, life insurance, retirement plans, and the Thrift Savings Plan (TSP). Understanding how these programs function after separation or downgrading is crucial for making informed financial and healthcare decisions.

This section outlines the effects of a RIF on Federal Employees Health Benefits (FEHBP), Federal Employees Group Life Insurance (FEGLI), Thrift Savings Plan (TSP), and retirement benefits.

Federal Employees Health Benefits Program (FEHBP)

The Federal Employees Health Benefits Program (FEHBP) allows employees to continue health insurance coverage after separation due to a RIF.

31-Day Automatic Continuation

Employees automatically receive 31 days of free FEHBP coverage after separation.
Coverage includes all dependents enrolled in the plan.

Temporary Coverage Extension for Up to 18 Months

Employees who do not qualify for immediate retirement but wish to maintain their FEHBP coverage can:

Enroll in Temporary Continuation of Coverage (TCC) for up to 18 months.
Pay the full premium (including the agency’s share) plus a 2% administrative fee.

Dependents may be eligible for up to 36 months of extended coverage under TCC.

Conversion Options to Private Insurance

Instead of TCC, employees can choose to convert to an individual (non-group) private plan with:

No medical examination required.
Higher premium rates, depending on the insurer.

To apply for TCC or private coverage, employees must notify their agency within 60 days of separation.

‘Pro-Tip’

2️⃣0️⃣ Unemployment Benefits Differ by State: File for unemployment benefits through your state’s employment office—eligibility rules vary.

Federal Employees Group Life Insurance (FEGLI)

The Federal Employees Group Life Insurance (FEGLI) program provides basic and optional life insurance coverage for federal employees.

31-Day Free Coverage Post-Separation

Employees are automatically covered under FEGLI for 31 days after separation at no cost.
If the employee is rehired within this period, their FEGLI coverage continues without interruption.

Option to Convert to an Individual Policy

Separated employees may convert their FEGLI coverage into a private individual policy without:

A medical examination or health assessment.
Limitations on pre-existing conditions.

Employees must apply for conversion within 31 days of separation. The new policy is a private transaction between the employee and the insurance company, and the employee pays the full premium.

‘Pro-Tip’

2️⃣1️⃣ Get a Lump Sum for Unused Annual Leave: Separated employees receive a payout for accrued annual leave.

Thrift Savings Plan (TSP)

The Thrift Savings Plan (TSP) is a retirement savings program similar to a 401(k) for federal employees.

Options for Withdrawing, Transferring, or Leaving Funds in TSP

After separation due to a RIF, employees have several options:

Leave funds in TSP
- Employees can keep their savings in TSP indefinitely.
- The account will continue to accrue earnings but no new contributions can be made.
Transfer funds to an Individual Retirement Account (IRA) or another retirement plan
- Avoids immediate tax penalties.
- Keeps retirement savings growing tax-deferred.
Withdraw funds as a lump sum or installments
- Immediate access to funds but may incur tax penalties.

Tax Implications and Early Withdrawal Penalties

If an employee withdraws funds before age 59½, a 10% early withdrawal penalty may apply.
Taxes must be paid on any withdrawal that is not rolled over into another retirement plan.

The TSP Service Office provides guidance on withdrawal options and potential tax consequences.

‘Pro-Tip’

2️⃣2️⃣ Sick Leave Can Boost Retirement Credit: Under CSRS and FERS, unused sick leave adds to retirement service time.

Retirement Benefits

Refunds

Employees who leave federal service before retirement eligibility may request a refund of their retirement contributions.

Refund of Retirement Deductions and Reinstatement Options

Refunds include only employee contributions, not agency matching funds.
If an employee returns to federal service, they can repay the refunded amount plus interest to restore their prior service credit.

Deferred Annuity

Employees with at least 5 years of creditable federal service but not eligible for immediate retirement may choose a deferred annuity, which provides benefits at a later date.

Eligibility for Deferred Annuity at Age 62

Employees with at least 5 years of service can apply for a deferred annuity at age 62.
If covered under Federal Employees Retirement System (FERS), employees may qualify for an annuity before age 62 under certain conditions.
No retirement contributions can be withdrawn if the employee wants to receive deferred annuity benefits.

Using Annual Leave to Qualify for Retirement

Employees close to retirement eligibility can use their accumulated annual leave to extend their service date and qualify for retirement benefits.

Example: If an employee lacks 30 days to qualify for retirement, they can use accrued annual leave to reach the required service date.
Annual leave cannot be used to extend service beyond the RIF separation date.

Immediate Annuity for CSRS and FERS Employees

Employees who meet the minimum age and service requirements can retire immediately and receive annuity payments.

Eligibility Based on Age and Service Years

Retirement Type	Minimum Age	Minimum Service Years
CSRS Optional Retirement	55	30
CSRS Optional Retirement	60	20
CSRS Optional Retirement	62	5
FERS Optional Retirement	62	5
FERS Optional Retirement	60	20
FERS Minimum Retirement Age (MRA) + 10	55-57	10 (with annuity reduction)

CSRS retirees under age 55 receive a 2% annuity reduction per year under 55.
FERS employees retiring before age 62 may face a 5% annuity reduction per year under 62 unless they meet special conditions.

Discontinued Service Retirement

Employees separated involuntarily due to a RIF or other agency downsizing may qualify for Discontinued Service Retirement (DSR).

Eligibility Criteria for Involuntary Separations

CSRS and FERS employees qualify for immediate annuity if they:
- Have 20 years of service and are at least age 50.
- Have 25 years of service at any age.
No early withdrawal penalties apply, and FERS retirees under 62 receive a special annuity supplement.

‘Pro-Tip’

2️⃣3️⃣ FEHBP Continues for 31 Days for Free: After separation, health insurance remains active for one month at no cost.

Reemployment and Retraining Programs

Employees affected by a Reduction in Force (RIF) may qualify for reemployment assistance and retraining programs designed to help them transition into new federal or private-sector jobs. The federal government provides priority hiring programs, special selection rights, and retraining opportunities to support displaced workers in securing employment.

This section outlines reemployment programs, interagency transition assistance, and retraining opportunities available to employees separated due to a RIF.

Reemployment Programs

Career Transition Assistance Plans (CTAP)

Career Transition Assistance Plans (CTAP) help displaced federal employees find new positions within their current agency.

How CTAP Works

Agencies provide job placement assistance to eligible employees facing separation due to a RIF.
CTAP offers career counseling, resume writing workshops, interview preparation, and access to internal job postings.
Employees receive priority consideration for vacant positions within their agency before external candidates.

CTAP Eligibility

Must be a current career or career-conditional employee affected by a RIF or other involuntary separation.
Must have a current performance rating of at least “Minimally Successful” or equivalent.

Priority Placement Program (PPP) (Department of Defense-Specific)

The Priority Placement Program (PPP) is a Department of Defense (DoD) initiative that helps displaced DoD employees find new federal jobs.

How PPP Works

Employees facing separation register in PPP and receive priority consideration for DoD vacancies.
DoD agencies are required to hire PPP registrants before considering external applicants.
Employees are matched to positions based on grade, series, and qualifications.

PPP Eligibility

Must be a DoD civilian employee impacted by a RIF.
Must be qualified for the available position.

For more information, employees should contact their DoD Civilian Assistance and Re-Employment (CARE) Office.

Reemployment Priority List (RPL)

The Reemployment Priority List (RPL) provides priority hiring for separated employees within their former agency.

How RPL Works

Agencies must offer RPL-registered employees priority consideration before hiring externally.
Employees can register for RPL within their agency’s commuting area.

RPL Eligibility

Must have been separated by a RIF or received a Certificate of Expected Separation (CES).
Must be in tenure Group I (career) or Group II (career-conditional).
Must have a performance rating of at least “Minimally Successful”.

Employees should apply for RPL through their agency’s human resources office.

‘Pro-Tip’

2️⃣4️⃣ Temporary Health Coverage Extension is Available: You can extend FEHBP for up to 18 months by paying the full premium + 2% fee.

Interagency Career Transition Assistance Plan (ICTAP)

The Interagency Career Transition Assistance Plan (ICTAP) helps RIF-affected employees find jobs in other federal agencies.

How ICTAP Works

ICTAP provides special selection priority for federal positions outside the employee’s original agency.
Eligible employees receive priority over external candidates for jobs posted on USAJOBS.
Agencies must select a well-qualified ICTAP applicant before considering external candidates.

Access to USAJOBS Listings

ICTAP-eligible employees can search for vacancies on USAJOBS using the “Federal Employees – Competitive Service” filter.
Job announcements that include ICTAP eligibility will state:
- “Federal employees who meet ICTAP eligibility will be considered before other candidates.”

Eligibility and Proof Requirements

To qualify for ICTAP selection priority, employees must:

✅ Be a career or career-conditional competitive service employee (GS-15 or below).
✅ Have received a specific RIF separation notice or notice of proposed removal.
✅ Have a performance rating of at least “Minimally Successful” (Level II) or higher.

Required Documentation for ICTAP Consideration:
📌 A copy of the RIF separation notice or Certificate of Expected Separation (CES).
📌 A copy of the last performance appraisal with at least a “Minimally Successful” rating.
📌 A Standard Form 50 (SF-50) showing separation or demotion due to RIF.

Employees must apply for jobs through USAJOBS and submit all required documentation to receive ICTAP selection priority.

‘Pro-Tip’

2️⃣5️⃣ Convert FEGLI to Private Insurance: If you’re separated, you can convert your FEGLI life insurance into an individual policy within 31 days.

Retraining Opportunities

Employees separated due to a RIF may be eligible for government-funded training programs to help them transition into new career fields.

Government-Funded Training Programs for Displaced Workers

The Workforce Innovation and Opportunity Act (WIOA) provides funding for job training and career development for displaced workers.

Available Training Programs May Include:
✅ Computer skills training
✅ Project management certification
✅ Healthcare, IT, and skilled trade programs
✅ Resume writing and job search workshops

State Employment Services for Skill Development

Employees impacted by a RIF can access state employment services for:

Career counseling and retraining programs.
Access to job fairs and networking events.
Tuition assistance for eligible training programs.

How to Apply for Retraining Programs

Visit the nearest state employment office or apply online.
Provide proof of separation (SF-50 or RIF notice).
Meet eligibility requirements based on state-specific funding availability.

U.S. Department of Labor Dislocated Worker Program

The Dislocated Worker Program provides retraining, career counseling, and job placement services for workers separated due to layoffs or RIFs.

Provides funding for retraining and job placement services.
Offers resume workshops and networking opportunities.
Helps connect displaced workers with new career opportunities.

For more information, visit the U.S. Department of Labor’s website or contact the local Workforce Development Board.

‘Pro-Tip’

2️⃣6️⃣ TSP Withdrawals Have Tax Implications: If you withdraw funds before age 59½, a 10% early withdrawal penalty may apply.

Learning About Transfer of Function

A Transfer of Function (TOF) occurs when a specific function within a federal agency moves from one competitive area to another, affecting the employees who perform that function. In certain cases, employees have the right to transfer with their work instead of facing separation or downgrading through a Reduction in Force (RIF).

This section provides a comprehensive overview of the legal basis, types of transfers, employee rights, and agency responsibilities during a Transfer of Function.

What is a Transfer of Function?

A Transfer of Function (TOF) occurs when:

A function ceases to exist in one competitive area and moves to one or more new competitive areas.
The gaining competitive area performs the function using federal employees rather than contractors or military personnel.
The transfer is not part of a routine internal reorganization within a single competitive area.

Agency and Employee Rights During Transfers

✅ Agencies Have the Right to:

Determine which functions will transfer and the timing of the transfer.
Select which employees move with the function (following OPM’s retention rules).
Offer reassignment to affected employees instead of transferring them.

✅ Employees Have the Right to:

Transfer with their function if the alternative is separation or demotion under RIF rules.
Compete under RIF procedures if they do not transfer.
Decline the transfer, though doing so may lead to adverse action separation.

Legal Basis for Transfer of Function

The legal framework governing TOF is outlined in:

📜 Section 3503 of Title 5, U.S. Code (5 U.S.C. § 3503) – Defines employee rights in TOF situations.

📜 Subpart C, Part 351 of Title 5, Code of Federal Regulations (5 CFR 351.301-351.403) – Implements TOF policies, ensuring that employees affected by transfers are treated fairly under federal workforce reshaping regulations.

Types of Transfers of Function

Transfer Due to Organizational Change

Occurs when a specific function moves between competitive areas within an agency.
The function no longer exists in the losing competitive area.
The gaining area must use federal employees to perform the function (not contractors).

Transfer Due to Competitive Area Relocation

Happens when an entire competitive area relocates to a new commuting area.
All employees in the affected competitive area are eligible to transfer with the function.

Interagency Transfers

Occur when a function moves from one agency to another.
Intra-agency transfers do not require congressional approval, while interagency transfers require specific statutory authorization.
Agencies must follow OPM’s TOF and RIF regulations to determine employee retention.

Modifying Transfer of Function Rights

Congress has the authority to:

Exempt certain transfers from TOF regulations.
Modify employee transfer rights through specific legislative actions.
Limit agency discretion in workforce reshaping decisions.

Agencies must comply with any congressional modifications to TOF procedures.

Employee’s Right to Transfer With a Function

Employees can transfer with their function if the alternative is separation or downgrading due to RIF.

✅ Employees Have the Right to Transfer When:

Their function is eliminated in the losing competitive area.
They meet the qualification requirements for the position in the gaining area.

🚫 Employees Do NOT Have the Right to Transfer When:

The function remains in the losing competitive area (not a TOF situation).
The agency offers them reassignment instead.
The gaining area uses contractors or military personnel to perform the function.

How a Transfer of Function Can Result in a RIF

A TOF may trigger a RIF when:

The gaining area has more employees than necessary, resulting in a surplus.
Employees who transfer compete for positions under RIF procedures.
A function is transferred for liquidation, meaning it will cease within 60 days at the gaining location.

Employees affected by TOF-related RIFs follow standard RIF retention rules.

Transfer of Function Canvass Letters

📌 Purpose:

Used to determine employee interest in relocating with a function.
Helps the agency identify potential vacancies and reduce involuntary separations.

📌 Impact of Declining a Transfer:

Employees who decline are not entitled to RIF competition in the losing area.
Employees who initially accept but later decline may face adverse action separation.

Adverse Action Separation for Declining a Transfer

If an employee declines a geographic transfer, they may be separated under adverse action procedures unless:

The losing competitive area includes them in a concurrent RIF.

Benefits Eligibility for Separated Employees

Employees separated due to declining a TOF may still qualify for:

Unemployment compensation
Severance pay
Retirement benefits (if eligible)

Identifying Employees for Transfer

Agencies use two methods to determine which employees transfer with a function:

📌 Identification Method One:

Employees are identified for transfer if they perform the function at least 50% of the time.
Employees whose duties control their grade level are also eligible.

📌 Identification Method Two:

Used when Method One does not apply.
Employees are ranked on a retention register and the lowest-standing employees transfer.

Volunteers for Transfer

📌 Agencies may allow employees to volunteer for TOF instead of forcing the lowest-standing employees to move.

📌 Volunteers must meet all qualifications and cannot displace higher-standing employees.

Transfer of Function Appeals

Employees may appeal TOF-related actions through the Merit Systems Protection Board (MSPB) if they:
✅ Are separated or demoted under RIF due to TOF.
✅ Believe the agency violated OPM’s TOF regulations.

Employees CANNOT appeal a TOF decision if:
🚫 The function remains in the losing area.
🚫 The gaining area uses contractors instead of federal employees.
🚫 The employee declines the transfer and is separated under adverse action procedures.

Realignment Actions That Are Not a Transfer of Function

📌 Employees do NOT have a right to transfer when:

The function continues to exist in the losing area.
The gaining area already performs the function.
The transfer is part of an internal reorganization within a single competitive area.

In these cases, employees compete under normal RIF procedures instead.

Additional Information from the Agency

Employees affected by TOF can seek guidance from:

Their agency’s Human Resources Office for specific TOF policies.
The Office of Personnel Management (OPM) for regulatory guidance.
The Merit Systems Protection Board (MSPB) for appeal rights and procedures.

Available Benefits for TOF-Affected Employees:

✅ Career transition assistance (CTAP, ICTAP, RPL, PPP)
✅ Relocation allowances (if required to move)
✅ Severance pay and retirement options (if separated)

‘Pro-Tip’

2️⃣7️⃣ Consider Rolling Over TSP Funds: Transferring your TSP balance to an IRA or another retirement plan avoids penalties.

Workforce Reshaping and Strategic Considerations

Agencies undergoing restructuring must develop strategic workforce reshaping plans to minimize involuntary separations and ensure an effective transition for both employees and operations. The Office of Personnel Management (OPM) provides comprehensive guidance to help agencies navigate workforce changes while adhering to federal employment laws and regulations.

This section explores workforce reshaping strategies, including OPM’s Workforce Reshaping Operations Handbook, proactive workforce planning, and alternative approaches to reduce the impact of RIFs.

Workforce Reshaping Operations Handbook

OPM Guidance on Agency Restructuring

The Workforce Reshaping Operations Handbook, published by OPM, serves as a strategic guide for federal agencies on:

✅ Restructuring operations efficiently while ensuring compliance with federal regulations.
✅ Using RIF procedures properly when position reductions are necessary.
✅ Minimizing the impact of involuntary separations through workforce reshaping strategies.

Key Strategies for Minimizing Involuntary Separations

To reduce the number of employees affected by RIF separations, agencies can implement the following measures:

Hiring Freezes – Suspend or limit hiring to avoid overstaffing.
Attrition Management – Allow natural employee turnover to reduce workforce size gradually.
Voluntary Early Retirement Authority (VERA) – Encourage eligible employees to retire early.
Voluntary Separation Incentive Payments (VSIP, or Buyouts) – Offer financial incentives for voluntary resignations or retirements.
Reassignments and Retraining – Move employees into other positions within the agency where possible.
Work Schedule Adjustments – Implement job-sharing programs or part-time schedules to reduce personnel costs.

Agencies are encouraged to consult with OPM to ensure workforce reshaping efforts align with federal policies.

Proactive Workforce Planning

Proactive workforce planning helps agencies avoid or lessen the impact of RIFs through early interventions and alternative strategies.

Voluntary Early Retirement Options

To encourage voluntary departures, agencies can use:

Voluntary Early Retirement Authority (VERA)

Allows agencies to offer early retirement to employees age 50+ with at least 20 years of service or any age with 25+ years of service.
Employees receive an immediate annuity with no early retirement penalty under CSRS or FERS.

Voluntary Separation Incentive Payments (VSIP, or Buyouts)

Agencies offer financial incentives (up to $25,000) to encourage voluntary resignations or retirements.
Employees accepting a VSIP cannot return to federal service for five years unless they repay the incentive.

Using VERA and VSIP together allows agencies to downsize with minimal disruption while giving employees more options.

Alternative Strategies to Reduce RIF Impact

📌 Internal Job Reassignments

Instead of separating employees, agencies identify vacant positions where displaced employees can be reassigned.
Employees may need to undergo retraining for new job roles.

📌 Cross-Agency Transfers

Agencies can coordinate with other federal agencies to place employees into available positions rather than letting them go.

📌 Retraining and Reskilling Programs

Employees affected by RIFs may be offered career transition services, technical training, or certification programs to prepare for new roles.

📌 Temporary Work Assignments (Detailing Employees)

Agencies can temporarily assign employees to different projects or agencies until a permanent position becomes available.

Disclaimer: The content provided on this webpage is for informational purposes only and is not intended to be a substitute for professional advice. While we strive to ensure the accuracy and timeliness of the information presented here, the details may change over time or vary in different jurisdictions. Therefore, we do not guarantee the completeness, reliability, or absolute accuracy of this information. The information on this page should not be used as a basis for making legal, financial, or any other key decisions. We strongly advise consulting with a qualified professional or expert in the relevant field for specific advice, guidance, or services. By using this webpage, you acknowledge that the information is offered “as is” and that we are not liable for any errors, omissions, or inaccuracies in the content, nor for any actions taken based on the information provided. We shall not be held liable for any direct, indirect, incidental, consequential, or punitive damages arising out of your access to, use of, or reliance on any content on this page.

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