---
kind: "section"
citation: "5 U.S.C. § 5754"
title: "5"
title_heading: "Government Organization and Employees"
number: "5754"
heading: "Retention bonuses"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/5/5754"
units:
  - "Part III — Employees"
  - "Subpart D — Pay and Allowances"
  - "Chapter 57 — Travel, Transportation, and Subsistence"
  - "Subchapter IV — Miscellaneous Provisions"
---

# §5754. Retention bonuses

- (a)
  - (1) This section may be applied to—
    - (A) [employees](/usc/5/5701.md?p=2) covered by the General Schedule [pay](/usc/5/7511.md?p=a-4) [system](/usc/5/8401.md?p=29) established under subchapter III of [chapter 53](/usc/5/chptIII/sptD/ch53.md); and
    - (B) [employees](/usc/5/5701.md?p=2) in a category approved by the [Office](/usc/5/5402.md?p=3) of Personnel Management at the request of the head of an [Executive agency](/usc/5/6501.md?p=2).
  - (2) A bonus may not be paid under this section to an individual who is appointed to or who holds—
    - (A) a [position](/usc/5/5102.md?p=a-3) to which an individual is appointed by the President, by and with the advice and consent of the Senate, excluding [members](/usc/5/8401.md?p=20) of the Foreign [Service](/usc/5/8401.md?p=26) other than chiefs of mission and ambassadors at large;
    - (B) a [position](/usc/5/5102.md?p=a-3) in the [Senior Executive](/usc/5/3132.md?p=a-3) [Service](/usc/5/8401.md?p=26) as a [noncareer appointee](/usc/5/3132.md?p=a-7) (as such term is defined under [section 3132(a)](/usc/5/3132.md?p=a)); or
    - (C) a [position](/usc/5/5102.md?p=a-3) which has been excepted from the competitive [service](/usc/5/8401.md?p=26) by reason of its confidential, policy-determining, policy-making, or policy-advocating character.
  - (3) In this section, the term “[employee](/usc/5/5701.md?p=2)” has the meaning given that term in [section 2105](/usc/5/2105.md), except that such term also includes an [employee](/usc/5/5701.md?p=2) described in [subsection (c)](/usc/5/2105.md?p=c) of that section.
- (b) The [Office](/usc/5/5402.md?p=3) of Personnel Management may authorize the head of an [agency](/usc/5/5701.md?p=1) to [pay](/usc/5/7511.md?p=a-4) a retention bonus to an [employee](/usc/5/5701.md?p=2) if—
  - (1) the unusually high or unique qualifications of the [employee](/usc/5/5701.md?p=2) or a special need of the [agency](/usc/5/5701.md?p=1) for the [employee](/usc/5/5701.md?p=2)’s [services](/usc/5/8401.md?p=26) makes it essential to retain the [employee](/usc/5/5701.md?p=2); and
  - (2) the [agency](/usc/5/5701.md?p=1) determines that, in the absence of a retention bonus, the [employee](/usc/5/5701.md?p=2) would be likely to leave—
    - (A) the [Federal service](/usc/5/8521.md?p=a-1); or
    - (B) for a different [position](/usc/5/5102.md?p=a-3) in the [Federal service](/usc/5/8521.md?p=a-1) under conditions described in regulations of the [Office](/usc/5/5402.md?p=3).
- (c) The [Office](/usc/5/5402.md?p=3) may authorize the head of an [agency](/usc/5/5701.md?p=1) to [pay](/usc/5/7511.md?p=a-4) retention bonuses to a group of [employees](/usc/5/5701.md?p=2) in 1 or more categories of [positions](/usc/5/5102.md?p=a-3) in 1 or more geographic areas, subject to the requirements of [subsection (b)(1)](#b-1) and regulations prescribed by the [Office](/usc/5/5402.md?p=3), if there is a high risk that a significant portion of [employees](/usc/5/5701.md?p=2) in the group would be likely to leave in the absence of retention bonuses.
- (d)
  - (1) Payment of a retention bonus is contingent upon the [employee](/usc/5/5701.md?p=2) entering into a written [service](/usc/5/8401.md?p=26) agreement with the [agency](/usc/5/5701.md?p=1) to complete a period of employment with the [agency](/usc/5/5701.md?p=1).
  - (2)
    - (A) The agreement shall include—
      - (i) the length of the required [service](/usc/5/8401.md?p=26) period;
      - (ii) the amount of the bonus;
      - (iii) the method of payment; and
      - (iv) other terms and conditions under which the bonus is payable, subject to the requirements of this section and regulations of the [Office](/usc/5/5402.md?p=3).
    - (B) The terms and conditions for paying a bonus, as specified in the [service](/usc/5/8401.md?p=26) agreement, shall include—
      - (i) the conditions under which the agreement may be terminated before the agreed-upon [service](/usc/5/8401.md?p=26) period has been completed; and
      - (ii) the effect of the termination.
  - (3)
    - (A) Notwithstanding [paragraph (1)](#d-1), a written [service](/usc/5/8401.md?p=26) agreement is not required if the [agency](/usc/5/5701.md?p=1) [pays](/usc/5/7511.md?p=a-4) a retention bonus in biweekly installments and sets the installment payment at the full bonus percentage rate established for the [employee](/usc/5/5701.md?p=2) with no portion of the bonus deferred.
    - (B) If an [agency](/usc/5/5701.md?p=1) [pays](/usc/5/7511.md?p=a-4) a retention bonus in accordance with [subparagraph (A)](#d-3-A) and makes a determination to terminate the payments, the [agency](/usc/5/5701.md?p=1) shall provide written notice to the [employee](/usc/5/5701.md?p=2) of that determination. Except as provided in regulations of the [Office](/usc/5/5402.md?p=3), the [employee](/usc/5/5701.md?p=2) shall continue to be paid the retention bonus through the end of the [pay](/usc/5/7511.md?p=a-4) period in which such written notice is provided.
  - (4) A retention bonus for an [employee](/usc/5/5701.md?p=2) may not be based on any period of such [service](/usc/5/8401.md?p=26) which is the basis for a recruitment or relocation bonus under section 5753.
- (e)
  - (1) Except as provided in [subsection (f)](#f), a retention bonus, which shall be stated as a percentage of the [employee](/usc/5/5701.md?p=2)’s [basic pay](/usc/5/8401.md?p=4) for the [service](/usc/5/8401.md?p=26) period associated with the bonus, may not exceed—
    - (A) 25 percent of the [employee](/usc/5/5701.md?p=2)’s [basic pay](/usc/5/8401.md?p=4) if paid under [subsection (b)](#b); or
    - (B) 10 percent of an [employee](/usc/5/5701.md?p=2)’s [basic pay](/usc/5/8401.md?p=4) if paid under [subsection (c)](#c).
  - (2)
    - (A) A retention bonus may be paid to an [employee](/usc/5/5701.md?p=2) in installments after completion of specified periods of [service](/usc/5/8401.md?p=26) or in a single lump sum at the end of the full period of [service](/usc/5/8401.md?p=26) required by the agreement.
    - (B) An installment payment is derived by multiplying the amount of [basic pay](/usc/5/8401.md?p=4) earned in the installment period by a percentage not to exceed the bonus percentage rate established for the [employee](/usc/5/5701.md?p=2).
    - (C) If the installment payment percentage established for the [employee](/usc/5/5701.md?p=2) is less than the bonus percentage rate established for the [employee](/usc/5/5701.md?p=2), the accrued but unpaid portion of the bonus is payable as part of the final installment payment to the [employee](/usc/5/5701.md?p=2) after completion of the full [service](/usc/5/8401.md?p=26) period under the terms of the [service](/usc/5/8401.md?p=26) agreement.
    - (D) For purposes of this paragraph, the bonus percentage rate established for an [employee](/usc/5/5701.md?p=2) means the bonus percentage rate established for such [employee](/usc/5/5701.md?p=2) in accordance with [paragraph (1)](#e-1) or [subsection (f)](#f), as the case may be.
  - (3) A retention bonus is not part of the [basic pay](/usc/5/8401.md?p=4) of an [employee](/usc/5/5701.md?p=2) for any purpose.
- (f) Upon the request of the head of an [agency](/usc/5/5701.md?p=1), the [Office](/usc/5/5402.md?p=3) may waive the limit established under [subsection (e)(1)](#e-1) and permit the [agency](/usc/5/5701.md?p=1) head to [pay](/usc/5/7511.md?p=a-4) an otherwise [eligible](/usc/5/4701.md?p=a-3) [employee](/usc/5/5701.md?p=2) or category of [employees](/usc/5/5701.md?p=2) retention bonuses of up to 50 percent of [basic pay](/usc/5/8401.md?p=4), based on a critical [agency](/usc/5/5701.md?p=1) need.
- (g) The [Office](/usc/5/5402.md?p=3) shall require that, before paying any bonuses under this section, an [agency](/usc/5/5701.md?p=1) shall establish a plan for the payment of any such bonuses, subject to regulations prescribed by the [Office](/usc/5/5402.md?p=3).
- (h) The [Office](/usc/5/5402.md?p=3) may prescribe regulations to carry out this section.

## Source credit

(Added Pub. L. 108–411, title I, § 101(a)(1), Oct. 30, 2004, 118 Stat. 2307; amended Pub. L. 114–323, title IV, § 412(2), Dec. 16, 2016, 130 Stat. 1932.)

## Notes

### Editorial Notes

### References in Text

The General Schedule, referred to in subsec. (a)(1)(A), is set out under section 5332 of this title.

### Prior Provisions

A prior section 5754, added Pub. L. 101–509, title V, § 529 [title II, § 208(a)], Nov. 5, 1990, 104 Stat. 1427, 1459, which related to retention allowances, was repealed by Pub. L. 108–411, title I, § 101(a)(1), Oct. 30, 2004, 118 Stat. 2305.

### Amendments

2016—Subsec. (a)(2)(A). Pub. L. 114–323 inserted “, excluding members of the Foreign Service other than chiefs of mission and ambassadors at large” before semicolon at end.

### Statutory Notes and Related Subsidiaries

### Effective Date

Section effective on the first day of the first applicable pay period beginning on or after the 180th day after Oct. 30, 2004, with exception for payment of certain retention allowances, see section 101(d) of Pub. L. 108–411, set out as a note under section 5753 of this title.