---
kind: "section"
citation: "5 U.S.C. § 5363"
title: "5"
title_heading: "Government Organization and Employees"
number: "5363"
heading: "Pay retention"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/5/5363"
units:
  - "Part III — Employees"
  - "Subpart D — Pay and Allowances"
  - "Chapter 53 — Pay Rates and Systems"
  - "Subchapter VI — Grade and Pay Retention"
---

# §5363. Pay retention

- (a) Any [employee](/usc/5/5361.md?p=1)—
  - (1) who ceases to be entitled to the benefits of [section 5362 of this title](/usc/5/5362.md) by reason of the expiration of the 2-year period of coverage provided under such section;
  - (2) who is in a [position subject to this subchapter](/usc/5/5361.md?p=6) and who is subject to a reduction or termination of a special rate of [pay](/usc/5/7511.md?p=a-4) established under [section 5305 of this title](/usc/5/5305.md) (or corresponding prior provision of this title);
  - (3) who is in a [position subject to this subchapter](/usc/5/5361.md?p=6) and who (but for this section) would be subject to a reduction in [pay](/usc/5/7511.md?p=a-4) under circumstances prescribed by the [Office](/usc/5/5402.md?p=3) of Personnel Management by regulation to warrant the application of this section; or
  - (4) who is in a [position subject to this subchapter](/usc/5/5361.md?p=6) and who is subject to a reduction or termination of a rate of [pay](/usc/5/7511.md?p=a-4) established under subchapter IX of [chapter 53](/usc/5/chptIII/sptD/ch53.md);

  is entitled to a [rate of basic pay](/usc/5/5361.md?p=4) in accordance with regulations prescribed by the [Office](/usc/5/5402.md?p=3) of Personnel Management in conformity with the provisions of this section.

- (b)
  - (1)
    - (A) If, as a result of any event described in [subsection (a)](#a), the [employee](/usc/5/5361.md?p=1)’s former [rate of basic pay](/usc/5/5361.md?p=4) is less than or equal to the maximum [rate of basic pay](/usc/5/5361.md?p=4) payable for the [grade](/usc/5/5102.md?p=a-5) of the [employee](/usc/5/5361.md?p=1)’s [position](/usc/5/5102.md?p=a-3) immediately after the occurrence of the event involved, the [employee](/usc/5/5361.md?p=1) is entitled to [basic pay](/usc/5/8401.md?p=4) at the lowest [rate of basic pay](/usc/5/5361.md?p=4) payable for such [grade](/usc/5/5102.md?p=a-5) that equals or exceeds such former [rate of basic pay](/usc/5/5361.md?p=4).
    - (B) This section shall cease to apply to an [employee](/usc/5/5361.md?p=1) to whom [subparagraph (A)](#b-1-A) applies once the appropriate [rate of basic pay](/usc/5/5361.md?p=4) has been determined for such [employee](/usc/5/5361.md?p=1) under this paragraph.
  - (2)
    - (A) If, as a result of any event described in [subsection (a)](#a), the [employee](/usc/5/5361.md?p=1)’s former [rate of basic pay](/usc/5/5361.md?p=4) is greater than the maximum [rate of basic pay](/usc/5/5361.md?p=4) payable for the [grade](/usc/5/5102.md?p=a-5) of the [employee](/usc/5/5361.md?p=1)’s [position](/usc/5/5102.md?p=a-3) immediately after the occurrence of the event involved, the [employee](/usc/5/5361.md?p=1) is entitled to [basic pay](/usc/5/8401.md?p=4) at a rate equal to the lesser of—
      - (i) the [employee](/usc/5/5361.md?p=1)’s former [rate of basic pay](/usc/5/5361.md?p=4); or
      - (ii) 150 percent of the maximum [rate of basic pay](/usc/5/5361.md?p=4) payable for the [grade](/usc/5/5102.md?p=a-5) of the [employee](/usc/5/5361.md?p=1)’s [position](/usc/5/5102.md?p=a-3) immediately after the occurrence of the event involved,

      as adjusted by [subparagraph (B)](#b-2-B).

    - (B) A rate to which an [employee](/usc/5/5361.md?p=1) is entitled under this paragraph shall be increased at the time of any increase in the maximum [rate of basic pay](/usc/5/5361.md?p=4) payable for the [grade](/usc/5/5102.md?p=a-5) of the [employee](/usc/5/5361.md?p=1)’s [position](/usc/5/5102.md?p=a-3) by 50 percent of the dollar amount of each such increase.
  - (3) For purposes of this subsection, the term “former [rate of basic pay](/usc/5/5361.md?p=4)”, as used with respect to an [employee](/usc/5/5361.md?p=1) in connection with an event described in [subsection (a)](#a), means the [rate of basic pay](/usc/5/5361.md?p=4) last received by such [employee](/usc/5/5361.md?p=1) before the occurrence of such event.
- (c)
  - (1) Notwithstanding any other provision of this section, in the case of an [employee](/usc/5/5361.md?p=1) who—
    - (A) moves to a new official duty station, and
    - (B) in conjunction with such move, becomes subject to both a different [pay](/usc/5/7511.md?p=a-4) schedule and (disregarding this subsection) the preceding provisions of this section,

    this section shall be applied—

    - (i) first, by determining the rate of [pay](/usc/5/7511.md?p=a-4) to which such [employee](/usc/5/5361.md?p=1) would be entitled at the new official duty station based on such [employee](/usc/5/5361.md?p=1)’s [position](/usc/5/5102.md?p=a-3), [grade](/usc/5/5102.md?p=a-5), and step (or relative [position](/usc/5/5102.md?p=a-3) in the [pay](/usc/5/7511.md?p=a-4) range) before the move, and
    - (ii) then, by applying the provisions of this section that would apply (if any), treating the rate determined under [clause (i)](#c-1-i) as if it were the rate last received by the [employee](/usc/5/5361.md?p=1) before the application of this section.
  - (2) A reduction in an [employee](/usc/5/5361.md?p=1)’s [rate of basic pay](/usc/5/5361.md?p=4) resulting from a determination under [paragraph (1)(ii)](#c-1-ii) is not a basis for an entitlement under this section.
  - (3) The [rate of basic pay](/usc/5/5361.md?p=4) for an [employee](/usc/5/5361.md?p=1) who is receiving a [retained rate](/usc/5/5361.md?p=8) at the time of moving to a new official duty station at which different [pay](/usc/5/7511.md?p=a-4) schedules apply shall be subject to regulations prescribed by the [Office](/usc/5/5402.md?p=3) of Personnel Management consistent with the purposes of this section.
- (d) A [retained rate](/usc/5/5361.md?p=8) shall be considered part of [basic pay](/usc/5/8401.md?p=4) for purposes of this subchapter and for purposes of subchapter III of [chapter 83](/usc/5/chptIII/sptG/ch83.md), chapters [84](/usc/5/chptIII/sptG/ch84.md) and [87](/usc/5/chptIII/sptG/ch87.md), subchapter V of [chapter 55](/usc/5/chptIII/sptD/ch55.md), [section 5941](/usc/5/5941.md), and for such other purposes as may be expressly provided for by law or as the [Office](/usc/5/5402.md?p=3) of Personnel Management may by regulation prescribe. The [Office](/usc/5/5402.md?p=3) shall, for any purpose other than any of the purposes referred to in the preceding sentence, prescribe by regulation what constitutes [basic pay](/usc/5/8401.md?p=4) for [employees](/usc/5/5361.md?p=1) receiving a [retained rate](/usc/5/5361.md?p=8).
- (e) This section shall not apply, or shall cease to apply, to an [employee](/usc/5/5361.md?p=1) who—
  - (1) has a break in [service](/usc/5/8401.md?p=26) of 1 workday or more;
  - (2) is entitled, by operation of this subchapter, chapter [51](/usc/5/chptIII/sptD/ch51.md) or [53](/usc/5/chptIII/sptD/ch53.md), or any other provision of law, to a [rate of basic pay](/usc/5/5361.md?p=4) which is equal to or higher than, or declines a reasonable offer of a [position](/usc/5/5102.md?p=a-3) the [rate of basic pay](/usc/5/5361.md?p=4) for which is equal to or higher than, the [retained rate](/usc/5/5361.md?p=8) to which the [employee](/usc/5/5361.md?p=1) would otherwise be entitled; or
  - (3) is demoted for personal cause or at the [employee](/usc/5/5361.md?p=1)’s request.

## Source credit

(Added Pub. L. 95–454, title VIII, § 801(a)(1), Oct. 13, 1978, 92 Stat. 1219; amended Pub. L. 101–509, title V, § 529 [title I, §§ 101(b)(3)(B), 105(b)(2)], Nov. 5, 1990, 104 Stat. 1427, 1439, 1448; Pub. L. 103–89, § 3(b)(1)(L), Sept. 30, 1993, 107 Stat. 982; Pub. L. 108–411, title III, § 301(a)(5), Oct. 30, 2004, 118 Stat. 2316.)

## Notes

### Editorial Notes

### Prior Provisions

A prior section 5363, Pub. L. 89–554, Sept. 6, 1966, 80 Stat. 473, which related to limitation on pay fixed by administrative action, was renumbered section 5373 of this title by Pub. L. 95–454, title VIII, § 801(a)(3)(A)(ii), Oct. 13, 1978, 92 Stat. 1221.

### Amendments

2004—Subsec. (a). Pub. L. 108–411, § 301(a)(5)(A), inserted concluding provisions and struck out former concluding provisions which read as follows: “is entitled to basic pay at a rate equal to (A) the employee’s allowable former rate of basic pay, plus (B) 50 percent of the amount of each increase in the maximum rate of basic pay payable for the grade of the employee’s position immediately after such reduction in pay if such allowable former rate exceeds such maximum rate for such grade.”

Subsecs. (b) to (e). Pub. L. 108–411, § 301(a)(5)(B), added subsecs. (b) to (e) and struck out former subsecs. (b) and (c) which read as follows:

“(b) For the purpose of subsection (a) of this section, ‘allowable former rate of basic pay’ means the lower of—

“(1) the rate of basic pay payable to the employee immediately before the reduction in pay; or

“(2) 150 percent of the maximum rate of basic pay payable for the grade of the employee’s position immediately after such reduction in pay.

“(c) The preceding provisions of this section shall cease to apply to an employee who—

“(1) has a break in service of one workday or more;

“(2) is entitled by operation of this subchapter or chapter 51 or 53 of this title to a rate of basic pay which is equal to or higher than, or declines a reasonable offer of a position the rate of basic pay for which is equal to or higher than, the rate to which the employee is entitled under this section; or

“(3) is demoted for personal cause or at the employee’s request.”

1993—Subsec. (c)(2). Pub. L. 103–89 substituted “chapter 51 or 53” for “chapter 51, 53, or 54”.

1990—Subsec. (a)(2) to (4). Pub. L. 101–509 substituted “5305 of this title (or corresponding prior provision of this title);” for “5303 of this title; or” in par. (2), inserted “or” at end of par. (3), and added par. (4).

### Statutory Notes and Related Subsidiaries

### Effective Date of 2004 Amendment

Pub. L. 108–411, title III, § 301(d), Oct. 30, 2004, 118 Stat. 2317, provided that: Effective date.—This section [amending this section, sections 4505a, 5302, 5305, 5334, 5361, and 5365 of this title, and provisions set out as a note under section 5305 of this title] shall take effect on the first day of the first applicable pay period beginning on or after the 180th day after the date of the enactment of this Act [Oct. 30, 2004].Conversion rules.— Individuals receiving a retained rate or a rate greater than the maximum rate for the grade.—Subject to any regulations the Office of Personnel Management may prescribe, an employee under a covered pay schedule who, on the day before the effective date of this section, is receiving a retained rate under section 5363 of title 5, United States Code, or is receiving under similar authority a rate of basic pay that is greater than the maximum rate of basic pay payable for the grade of the employee’s position shall have that rate converted as of the effective date of this section, and the employee shall be considered to be receiving a retained rate under section 5363 of such title (as amended by this section). The newly applicable retained rate shall equal the formerly applicable retained rate as adjusted to include any applicable locality-based payment under section 5304 of title 5, United States Code, or similar provision of law. Definition.—For purposes of this paragraph, the term ‘covered pay schedule’ has the meaning given such term by section 5361 of title 5, United States Code.”

### Effective Date of 1993 Amendment

Amendment by Pub. L. 103–89 effective Nov. 1, 1993, see section 3(c) of Pub. L. 103–89, set out as a note under section 3372 of this title.

### Effective Date of 1990 Amendment

Amendment by Pub. L. 101–509 effective on such date as the President shall determine, but not earlier than 90 days, and not later than 180 days, after Nov. 5, 1990, see section 529 [title III, § 305] of Pub. L. 101–509, set out as a note under section 5301 of this title.