Following is the portion of recent guidance from OPM on “reshaping” agency workforces that lists options available to them, including early retirement and buyout incentives, as a way to avoid the need for RIFs—or to reduce their scope if they prove to be unavoidable.
There are numerous ways to minimize the need for a RIF as a result of management’s reshaping efforts. This section describes different options to minimize or even avoid RIF separations, reassignments and downgrades as a result of reshaping. They are not in order of preference.
Detail Employees to Other Agencies on a Reimbursable Basis. A reimbursable detail to a different agency allows management to retain its skilled workforce even though the employees may temporarily be surplus. The employee on an interagency detail retains the same rights and benefits based on the employee’s official position of record in the agency from which the employee was detailed because a detail does not change the employee’s official position of record. This option works well when another agency has a temporary need for the specific skills of the surplus employees. An interagency reimbursable detail may also assist the agency in permanently placing the surplus employee in the different agency. An interagency reimbursable detail may not be a viable option if the employee’s present agency is faced with budgetary constraints, an immediate downsizing (such as a closure), or finds that the employee’s position will likely continue to be surplus in the future.
Freeze Hiring and Promotion Actions. If the agency finds that its reshaping plan will result in surplus or displaced employees, the agency may freeze personnel actions to best fit its individual situation rather than automatically adopting a blanket freeze on all personnel actions. In a mid- or long-term implementation of its reshaping plan, the agency may adopt a freeze on a ratio or a percentage basis, such as filling one position for every two vacated positions.
In general, a freeze on internal promotions (if the agency adopts that option) requires more attention from the human resources office than a blanket freeze on external or even internal hires. For example, the agency will need to determine whether to freeze:
• All promotions, only promotions for certain positions, only promotions at certain grade levels, or some combination of these;
• All career ladder promotions; and
• Optional promotions based on accretion of duties.
If budgetary factors are driving the reshaping effort, an immediate freeze on filling all new positions is one way to stabilize personnel costs. When combined with continuing attrition within the agency, a freeze on filling new positions will reduce personnel costs, particularly over a longer period of time, thereby potentially avoiding the need for a RIF.
On the down side, a freeze on filling new positions may eventually restrict the capacity of the agency to perform its work, especially if continuing attrition reduces the number of available employees below a critical mission level. Further, the agency should consider whether freezing promotions will affect the morale of the workforce. The agency may be required to implement at least a partial freeze of personnel actions since the Career Transition Assistance Plan (CTAP) provides the agency’s surplus or displaced competitive service employees with intra-agency non-promotion selection priority to competitive service vacancies in the employees’ local commuting areas.
Regardless of the extent of a freeze on personnel actions, the agency policy should include a “safety valve” policy permitting exceptions to the freeze. This allows the agency to fill essential positions if an unexpected situation develops (e.g., additional reimbursable work unexpectedly is available, or a natural disaster occurs), while still maintaining the general intent of the agency’s freeze. The agency’s freeze policy should specify the agency official with authority to approve an exception to the freeze.
Furlough. An agency may temporarily reduce personnel costs by furloughing employees.
A furlough is the placement of an employee in a temporary nonduty, nonpay status because of lack of work or funds, or other nondisciplinary reasons.
A furlough that is expected to last more than 30 continuous calendar days or 22 discontinuous workdays (e.g., one workday per week for 25 weeks) is effected under 5 CFR part 351 (RIF) procedures. A furlough expected to last less than 30 continuous calendar days or 22 discontinuous workdays (e.g., one workday per week for 25 weeks) is carried out under 5 CFR part 752 (adverse action) procedures.
The agency should discuss its furlough plans with employees, managers, supervisors, and union officials to explain that the temporary measure of a furlough is a better alternative for both the agency and its employees than involuntarily separating employees by RIF.
In general, an agency must give each covered employee a written notice at least 30 days before the effective date of an adverse action furlough. When some but not all employees in a given competitive level are being furloughed, the notice must state the basis for selecting a particular employee for furlough, as well as the reasons for the furlough. A shorter notice period is an option in an emergency situation (e.g., a natural disaster such as hurricane or tornado). An agency must give each competing employee a minimum 60- day specific written notice before the effective date of a RIF furlough. The same notice periods apply whether the furlough is continuous or discontinuous.
Furlough is not a viable option if the agency finds it is faced with a continuing, rather than temporary, lack of work and/or funds. For example, an agency may furlough an employee under RIF regulations only when the agency plans to recall the employee to duty within 1 year in the position the employee held when furloughed.
Modify or Waive Qualifications. An agency may modify or even waive minimum qualification requirements if the agency finds an employee has the capacity, adaptability, and special skills needed to perform the duties of a vacant position. An agency may modify or waive qualification requirements when reassigning an employee to another position, or when offering an employee a voluntary change to lower grade.
OPM’s Operating Manual, Qualification Standards for General Schedule Positions contains general information on waiving or modifying qualification requirements when placing employees as in-service placement actions apart from the RIF regulations. The agency may not waive minimum positive education requirements under the RIF regulations or under Qualification Standards for General Schedule Positions.
Reassign Surplus Employees to Other Positions. An agency may reassign an employee to another position at the same grade, as long as the agency has a legitimate management need for the employee in the position to which reassigned. This option is often the best tool for avoiding involuntary separations and downgrades. If the agency has a pool of vacancies (particularly after freezing positions), the agency may be able to maintain continuity of operations and retain its investment in its current employees by using the reassignment option when possible.
An agency may reassign an employee without regard to the RIF regulations when the vacant position is at the same grade or rate of pay (i.e., if the movement is between pay systems) as the employee’s present position. The position to which the employee is reassigned may be located in the same or a different competitive level, competitive area, or local commuting area. An agency may not reassign an employee to a position with more promotion potential unless the agency fills the position through merit competition.
The agency may make the reassignment without regard to the employee’s RIF retention standing, including veterans’ preference status. At its discretion, an agency may limit its basic right to reassign by using impartial considerations such as retention standing, creditable service with the agency or within the organization (such as a division or branch), length of service in the present position, length of service in the present organization, etc.
An employee has no right to be in RIF competition unless the employee is faced with separation or downgrading for a reason such as reorganization, lack of work, shortage of funds, etc. Reassignment to a position in a different local commuting area does not provide the right to compete for a position in the present competitive area under the RIF regulations even if the employee declines the reassignment and the agency subsequently separates the employee under the adverse action regulations.
If an agency separates an employee for declining reassignment to a position in a different local commuting area, the employee qualifies for most of the benefits available to an employee who is separated by RIF (e.g., severance pay or discontinued service retirement, certain placement assistance programs). However, the employee is not eligible for the agency’s Reemployment Priority List (RPL).
Separate Temporary Employees. A competitive service temporary employee serves at the will of the agency and can be terminated without regard to the RIF regulations agency and, regardless of type of appointment, can be terminated without regard to the RIF regulations. In some situations the termination of a reemployed annuitant will both reduce the agency’s payroll costs and free up a continuing position for a surplus employee. If the agency does not separate the reemployed annuitant prior to the RIF effective date, the reemployed annuitant competes in the RIF on the same basis as other employees holding the same type of appointment.
Train Employees for Other Positions. An agency may train (or retrain) employees for placement into vacant positions as an alternative to minimize involuntary separations and downgrades by RIF. An agency may train its employees for placement in another agency, if the head of the agency determines that this is in the Government’s interest.
Such a determination should be part of an agency’s training policy. An agency may use its appropriated funds for training or retraining surplus or displaced employees for positions outside the Federal Government only when specifically authorized by legislation.
Training helps employees better perform their current positions, while retraining prepares employees for different careers, or teaches them how to perform in other occupational fields.
Retraining as a tool to increase the voluntary attrition of employees in excess positions to other positions includes training and development to close skills gaps and to give an employee the knowledge and skills leading to another occupation. By retraining these proven employees into a related or even a new line of work, the agency may be able to most efficiently resolve significant present or projected skills gaps in its workforce.
Added retraining benefits include minimizing disruption to the work environment and building workforce morale, particularly when the agency uses retraining as an alternative to involuntary separations and demotions from downsizing.
Retraining programs generally concentrate on the basic competencies an employee needs to successfully perform a new or redesigned position. Retraining generally does not aim to provide advanced-level technical skills in a new line of work.
Voluntary Change to Lower Grade. An agency may offer an employee a voluntary change to lower grade without using RIF procedures. Employees have the right to compete for retention under the RIF regulations before involuntary separation or downgrade due to a reason such as reorganization, lack of work, or shortage of funds. In some situations, a voluntary change to lower grade allows an agency to staff a vacancy with a proven employee, while providing continued employment to a surplus employee without forcing RIF actions. Most organizational changes meet the definition of “reorganization,” which can affect one position, many positions, and/or reporting relationships in an organization. An agency may provide an otherwise eligible employee with grade retention when making a management-initiated offer of a lower-graded position to an employee during a reorganization announced in writing. The agency has three potential options, which include offering (1) grade retention, (2) pay retention, or (3) neither grade retention nor pay retention.
Voluntary Early Retirement Authority. Voluntary Early Retirement Authority (VERA) allows permanent employees to retire early if their organization is undergoing a RIF, reorganization, transfer of function or other workforce shaping. VERA is a valuable tool that helps an agency create placement opportunities for employees who would otherwise be involuntarily separated or downgraded, and by avoiding displacements in actual RIFs.
Agencies, except for the Department of Defense (DoD), must request approval from OPM for VERA authority. DoD components must request approval from the Secretary of Defense. Agencies may make decisions relative to which employees will be covered by VERA, how long to open the window for VERA, and how many employees may retire under VERA. The agency decides which employees are covered by VERA, based on nonpersonal factors related to the employee’s position (e.g., grade, series, title, organization, duty location).
Before requesting VERA from OPM, agencies should consider other RIF avoidance alternatives such as furlough, hiring freezes, reassignments, etc. An agency should not use VERA as a quick fix for a short-term problem, such as to achieve short-term budgetary savings for the remainder of the fiscal year.
An agency may submit a VERA request to OPM once it is signed by the head of the agency, or by a specific agency designee with delegated authority. After OPM approves a VERA authority, the agency, based on management considerations, may subsequently modify the closing date for the VERA window period and/or revise the number of employees who may retire under the authority. OPM’s approval letter to the agency authorizing VERA covers options to manage the early retirements.
Voluntary Reduction of Hours. The agency may consider a policy that allows employees to voluntarily reduce their scheduled work hours for a period of time (e.g., take one day a week or one day a pay period in a voluntary nonpay status), or even to convert from a permanent full-time to a permanent part-time work schedule. A reduction in an employee’s scheduled work time will result in an immediate reduction in personnel costs, but may also result in a loss of organizational productivity.
A temporary or permanent change in work schedule will provide an employee with greater flexibility to participate in non-work-related needs (e.g., family, educational, volunteer groups, medical, elder care). When considering this option, the agency should survey employees to determine the level of interest, particularly if the agency is faced with a short-term shortage of work or funds. However, before adopting this option, the agency should first consider whether a formal policy is needed covering how to select employees while maintaining continuity of agency operations. This option may depend on the scope of the agency’s reshaping efforts The agency should advise employees concerning the implications of the reduction in hours. For example, an employee who converts from a permanent full-time to a permanent part-time schedule follows a different formula to calculate health benefit costs and retirement deductions. Similarly, an employee who is in a voluntary or involuntary leave without pay status may have a reduction in the leave credit that the employee would have earned had the employee been in a full-time pay and duty status. The agency should advise its employees to consult with the agency’s human resources office when considering a change to work schedule.
Voluntary Separation Incentive Payment. The VSIP (or buyout) option allows an agency to offer a permanent employee a lump-sum payment up to $25,000 if the employee voluntarily retires or resigns. An agency must have specific legislative authority in order to offer a buyout. Many agencies are covered under the buyout authority provided for in the Chief Human Capital Officers (CHCO) Act of 2003. Agencies covered under the Act must have OPM approval before paying any buyouts. Agencies with prior VSIP authority reported that buyouts were a successful tool that notably increased voluntary attrition, particularly for VERA retirements of employees in excess positions.