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Department of Veterans Affairs		February 2011
Payroll: Awards and Incentives		Volume XV – Chapter 3
VA Financial Policies and Procedures
Payroll: Awards and Incentives
CHAPTER 3
0301	OVERVIEW	2
0302	POLICIES	2
0303	AUTHORITY AND REFERENCES	6
0304	ROLES AND RESPONSIBILITIES	7
0305	PROCEDURES	9
0306	DEFINITIONS	10
0307	RESCISSIONS	14
0308	QUESTIONS	14
APPENDIX A: AUTHORIZATION OF AWARDS		15
APPENDIX B: AWARDS		17
Figure B-1: Award Gross Up-Calculation Workbook		22
Figure B-2: Hire-Fire Workbook		22
Figure B-3: Gross-Up Transaction Examples		24
Figure B-4: Hire-Fire Example		26
APPENDIX C: INCENTIVES		29

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Department of Veterans Affairs	February 2011
Payroll: Awards and Incentives	Volume XV – Chapter 3
0301 OVERVIEW

This chapter establishes the Department of Veterans Affairs (VA) financial policies and procedures relating to the considerations of awards and incentives for VA employees, former employees, volunteers and participants of the “without compensation” program in recognition for their contributions and achievements to VA and the Federal Government.

The awards and incentives included in this chapter are those awards covered under the Government Employees‟ Incentive Awards Act (GEIAA) and incentives for recruitment,

relocation and retention, used to help recruit and retain employees in hard-to-fill positions and voluntary separation incentive.

For guidance on the VA Awards Program, refer to VA Directive and Handbook 5017, Employee Recognition and Awards, and VA Office of Human Resources Management‟s

(OHRM) Employee Relations and Performance Management Website. These references provide guidance on VA‟s Human Resources (HR) policies and procedures

to follow in nominating an employee or group of employees for special recognition and in processing the proper documentation to support awards. Refer to VA Directive and Handbook 5007, Pay Administration, for additional guidance on qualifications for recruitment, relocation and retention incentives.

For financial guidance on awards and any accompanying ceremony, refer to VA Office of Financial Policy (OFP) Volume II, Chapter 4, Awards, Ceremonies, Food or Refreshments, Gifts or Mementos.

0302 POLICIES

030201 AWARDS. VA may recognize an employee or a group of employees through the approved use of monetary, on-the-spot, time-off, honorary or other non-monetary awards for any special contribution, act, service or achievement that benefits VA or the Federal Government in accordance with the guidelines in VA Handbook 5017. VA may also pay awards to residents; without compensation, fee basis, purchase and hire employees; volunteers; and former employees, as recognition for their achievements when authorized and approved.

A.Monetary (cash or cash equivalent) awards will be treated as taxable income (e.g., monetary award paid through payroll processing, gift card/certificate).

B.Non-monetary (non-cash) awards may be taxed; taxation is dependent upon the fair market value/purchase price. Exceptions may include „length of service‟ (career) awards and awards considered as “de minimis,” whose fair market value or purchase price does not exceed $100 and are not given frequently. For example, tickets for theater or sporting events may qualify as de minimis if the market value/purchase price is less than $100 and meets the definition of de minimis. It is the responsibility of the

approving official to determine the fair market value for tax purposes. Approving

officials may choose to “gross up” taxable non-monetary awards in order to cover the employee‟s taxes on an award.

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Department of Veterans Affairs	February 2011
Payroll: Awards and Incentives	Volume XV – Chapter 3

030201.01 MONETARY AWARDS. VA may provide monetary awards that are authorized and approved in accordance with HR policy and guidance. Local payroll staff will release automated transactions received from local HR office staff for award processing. Federal and State1 income taxes will be withheld from the award payment at the supplemental tax rates; local taxes will be withheld at the applicable rates as authorized by local taxing authorities. When requested, local payroll staff will calculate and provide required tax withholding amounts to be included in the total “gross up” amount of the award on VA Form 4659, Incentive Awards Recommendation and Approval. VA will follow HR policy and guidance in limiting award totals based on the type of award.

030201.02 NON-MONETARY AWARDS. VA may provide non-monetary awards to VA employees, former employees, volunteers and participants of the without compensation program when applicable. These awards include non-monetary awards other than time off awards.

030201.03 TIME OFF AWARDS. VA employees who are covered under a leave system may be granted Time Off Awards from 4 to 40 hours (or 1 to 5 days for VHA full-time physicians, dentists, optometrists and podiatrists) in recognition of a specific contribution. Time off awards are taxable; see Appendix B-4, Types of Awards, for detailed information. SES employees and equivalents appointed under title 5 are ineligible to receive time off awards.

030201.04 COMBINATION AWARDS. VA may process authorized combinations of awards to include monetary and honorary; time off and honorary; monetary and time off; and in extraordinary cases, monetary and a Quality Step Increase (QSI) or time off and a QSI. To ensure compliance with applicable laws and regulations, VA Directive and Handbook 5017 guidelines will be adhered to when granting combination awards.

030202 INCENTIVES. VA may recognize an employee or a group of employees through the approved use of various incentive payments that are intended to recruit, retain or relocate employees for the benefit of the Department. VA may also pay voluntary separation incentives when authorized by the Office of Personnel Management (OPM).

030202.01 RECRUITMENT AND RELOCATION INCENTIVE. VA may pay recruitment and/or relocation incentives as a lump sum payment at the beginning and/or end of the

service period and/or as installment payments during the agreed upon service period. Local HR staff will enter the incentive into VA‟s automated system and provide local

payroll staff with a copy of the Recruitment or Relocation Incentive service agreement.

030202.02 RETENTION INCENTIVE. VA may pay a retention incentive to an employee in installments after completion of a specified period(s) of service

1The common flat rate percentage for State taxes will be used, where applicable.

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Payroll: Awards and Incentives	Volume XV – Chapter 3

(e.g., biweekly, quarterly, semi-annually) or in a single lump sum payment at the end of the full period of service required by the agreement. Retention incentives may not be paid as an initial lump sum at the start of a service period or in advance of completing the service period for which the incentive is being paid. Local HR staff will enter the incentive into VA‟s automated system and provide local payroll staff with a copy of the retention service agreement. However, a service agreement is not required for biweekly payments.

030202.03 HOME MARKETING INCENTIVE PROGRAM. VA may pay a Home

Marketing Incentive (HMI) award to an employee who sells his or her home as part of the Department‟s Relocation Services Program. Employees must first be approved to

use the Guaranteed Home Buyout Option (GHBO) Program; once approved, it is the employee‟s option of whether to participate in the HMI award program.

030202.04 STUDENT LOAN REPAYMENT INCENTIVE. VA may pay Federally insured student loans as an incentive for candidates or current employees of the agency to attract and/or retain highly qualified employees. If the local HR management office approves a student loan repayment, the local payroll staff will receive a signed copy of the service agreement and specific information (payment address, loan amount, etc.)

regarding each loan to be repaid. These documents will serve as authorization to make the repayment and will be filed in the employee‟s payroll folder. After receipt of the

initial authorization, the payroll office should obtain certification from the approving official that funds are available prior to disbursing repayments in subsequent fiscal years.

030202.05 SUPERVISORY DIFFERENTIAL INCENTIVE. VA may pay Supervisory Differential to a supervisor who is in a GS position and is regularly responsible for providing direct technical and administrative supervision of the work of one or more non-GS employees if any of the subordinates would, in the absence of a supervisory differential, be paid more than the supervisor. A supervisory differential is not considered part of the supervisor's rate of basic pay for any purpose.

030202.06 VOLUNTARY SEPARATION INCENTIVE PAYMENTS. When authorized by OPM, VA may pay a voluntary separation incentive payment to employees who are in surplus positions or have skills that are no longer needed in the workforce and volunteer to separate by resignation, optional retirement or by voluntary early retirement. The authority under 5 U.S.C. Chapter 35, Subchapter II, also known as buyout authority, allows agencies that are downsizing or restructuring to offer employees lump-sum payments up to $25,000 as an incentive to voluntarily separate only when authorized by OPM.

030202.07 EXTENDED ASSIGNMENT INCENTIVE. VA has not authorized payment of extended assignment incentives under 5 C.F.R. 575.

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Payroll: Awards and Incentives	Volume XV – Chapter 3

030203 AUTHORIZATION AND APPROVAL OF AWARDS.

030203.01 AUTHORIZATION. VA Directive and Handbook 5017, Employee Recognition and Awards, and VA Office of Human Resources Management‟s (OHRM)

Employee Relations and Performance Management Website provide specific guidance on the authorizations, limitations and any restrictions applicable to awards. Refer to Appendix A, Authorization of Awards, for general guidance as published in the directive and handbook.

A.A monetary award will be an amount determined appropriate by the Secretary, but may not be more than $10,000. However, if the Secretary determines that exceptional performance by an employee justifies such an award, the Secretary may request approval from OPM for a monetary award equal to an amount exceeding $10,000, up to $25,000.

B.The amount of any group award will generally not exceed the amount (up to $10,000 per employee) that could be authorized if the contribution had been made by one individual. Special approval will be obtained, along with any reason for an exception, for any amount that exceeds the individual employee limitation.

030203.02 APPROVAL. VA will approve awards in accordance with provisions described in VA Handbook 5017, Employee Recognition and Awards. Awards recommended will be agreed to by an appropriate official in the employing organization. VA Administrations will use the guidance on approval authority contained in the handbook.

A.All awards will be approved at a higher management level than the recommending level. However, key officials, including the Secretary and Deputy Secretary, may act as both the recommending and approving official on all awards within their delegated approval authority.

B.Under Secretaries, Assistant Secretaries and other Central Office organization heads may approve special contribution, superior performance and productivity/gain sharing awards up to and including $7,500 for individual employees under their jurisdiction, awards of up to and including $10,000 for individuals as suggestion awards, and special group contribution awards of up to $25,000 provided no member of the group receives more than $7,500. This authority may be re-delegated.

C.The Secretary may approve individual monetary awards up to $10,000 and may approve group awards in excess of $10,000 providing no one group member receives more than $10,000.

D.VA will obtain approval from OPM, as applicable, for any monetary award of $10,000 to $25,000 to an individual employee for superior accomplishment (e.g., suggestion, invention). When the anticipated award amount is expected to be more than $25,000 to

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an individual employee, OPM will review the recommendation and submit it (if approved) to the President for final approval.

030204 RECORDS AND REPORTS.

030204.01 VA will document, file and report on awards in accordance with OPM and VA requirements.

030204.02 VA will submit its distribution of SES performance awards, the total amount of awards and the aggregate payroll or average rate of basic pay to OPM no later than 14 days after the date the performance awards are approved.

030204.03 VA will prepare an annual Departmental report on Recruitment/Relocation and Retention Incentives given during the previous fiscal year, based on facility reports submitted by field stations.

030204.04 VA will retain documentation, as prescribed by the General Services

Administration‟s General Records Schedule 1.

0303 AUTHORITY AND REFERENCES

030301 5 U.S.C. Chapter 35, Subchapter II - Voluntary Separation Incentive Payments

030302 5 U.S.C. Chapter 43, Performance Appraisal

030303 5 U.S.C. Chapter 45, Subchapter I - Awards for Superior Accomplishments

030304 5 U.S.C. 4505a, Performance-Based Cash Awards

030305 5 U.S.C. 4509, Prohibition of Cash Award to Executive Schedule officers

030306 5 U.S.C. 5307, Limitation on Certain Payments

030307 5 U.S.C. 5382, Establishment of Rates of Pay for the Senior Executive Service

030308 5 U.S.C. 5384, Performance Awards in the Senior Executive Service

030309 5 U.S.C. 5753, Recruitment and Relocation Bonuses

030310 5 U.S.C. 5754, Retention Bonuses

030311 5 U.S.C. 5756, Home Marketing Incentive Payment

030312 38 U.S.C. Chapter 73, Veterans Health Administration - Organization and Functions

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Department of Veterans Affairs	February 2011
Payroll: Awards and Incentives	Volume XV – Chapter 3

030313 38 U.S.C. Chapter 74, Veterans Health Administration - Personnel

030314 5 C.F.R. 451, Subpart A, Agency Awards

030315 5 C.F.R. Part 530, Subpart B, Aggregate Limitation on Pay

030316 5 C.F.R. 534.405, Performance Awards

030317 5 C.F.R. 575, Recruitment, Relocation and Retention Incentives; Supervisory Differentials; and Extended Assignment Incentives

030318 5 C.F.R. 576, Voluntary Separation Incentive Payments

030319 38 C.F.R. 1.650-1.666, Inventions by Employees of the Department of Veterans Affairs

030320 VA Directive and Handbook 5017, Employee Recognition and Awards

030321 VA Handbook 5007, Part VI, Recruitment, Relocation and Retention Incentives

030322 VA Office of Financial Policy (OFP), Volume II, Chapter 4, Awards, Ceremonies, Food or Refreshments, Gifts or Mementos

030323 VA OGC Advisory Opinion, VAOPGCADV 6-99, Applicability of the Employee Recognition and Awards Program to Residents and to Fee Basis, Without Compensation and Purchase and Hire Employees (April 5, 1999)

030324 VA Office of Human Resources Management‟s Employee Relations and Performance Management Website

0304 ROLES AND RESPONSIBILITIES

030401 The Secretary or Deputy Secretary will ensure that effective and efficient financial policies and systems for payroll administration are established.

030402 The Assistant Secretary for Management/Chief Financial Officer (CFO) oversees all financial management activities relating to the Department‟s programs and

operations, as required by the Chief Financial Officers Act of 1990 and 38 U.S.C. 309.

Responsibilities include the direction, management and provision of policy guidance and oversight of VA‟s financial management personnel, activities and operations. The CFO

establishes financial policy, systems and operating procedures for all VA financial entities and provides guidance on all aspects of financial management.

030403 The Assistant Secretary for Human Resources and Administration will (through the Deputy Assistant Secretary for Human Resources Management) advise Under Secretaries, Assistant Secretaries, Other Key Officials, and field station managers and

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supervisors of legal and policy requirements and authorities relating to employee pay, leave, allowances, and deductions, excluding taxes.

030404 Under Secretaries, Assistant Secretaries, and Other Key Officials (through Chief Financial Officers) will provide and/or arrange for training for Fiscal/Finance Office staff and timekeepers in policy and procedures relating to automated and manual systems for employee pay, leave, allowances, and deductions.

030405 Chief Financial Officers in VA Administrations will ensure that appropriate levels of training and advisory services are provided to ensure VA policy and procedures relating to payroll administration are carried out as effectively and efficiently as possible.

030406 The Employees Accounts Section is commonly referred to as Local Payroll. A brief summary of responsibilities for this section includes: ensuring facility training and support is provided to timekeepers and supervisors for time and attendance (T&A) reporting, ensuring biweekly T&A data and daily master record update transactions are transmitted timely, and ensuring employees receive appropriate pay and leave entitlements. Specific responsibilities for the Employee Accounts Section are extensive and are specifically outlined in Volume XV, Chapter 1: Payroll: Overview.

030407 The Director, Austin Information Technology Center (AITC), or designee

specified in writing by name and position, will ensure transmission of VA timecard data to VA‟s payroll provider, creation of payroll reports, and storage of payroll data/reports.

Required accounting/payroll processing documents (e.g. for retirement corrections) will be prepared, as needed, in accordance with applicable laws, regulations, and VA or Treasury Department policy.

030408 The Director, Financial Services Center (FSC), or designee specified in writing by name and position, will ensure that payroll activity is generated and processed as needed, to include Tier 1 payroll support services. Accounting/payroll processing documents will be prepared, as needed, in accordance with applicable laws, regulations, and VA or Treasury Department policy.

030409 The Defense Finance and Accounting Service (DFAS), one of four e-Payroll service providers, is VA‟s designated payroll service provider. DFAS processes payroll

and makes all employee deductions and disbursements, generates leave and earnings statement file and W-2s (Wage and Tax Statement), charges VA appropriations and cost centers and reports all payroll-related financial information to the Treasury on the behalf of VA.

030410 Facility Directors will ensure appropriate local controls, policies, and procedures are established and followed to ensure compliance with all laws, regulations, and policy covering payroll and related human resources issues.

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030411 Chiefs, Human Resources Management Service will provide appropriate levels of advice and assistance to employees, beneficiaries, supervisors, and other key officials regarding laws, regulations, and policy covering human resources issues, including interpretation of rules relating to hours of duty, pay, leave, and authorization of deductions from pay. They will also ensure human resources data is accurately and timely entered into automated human resources systems which integrate with payroll systems.

030412 Facility Agent Cashiers will follow established VA policy and procedures for payroll-related collections not made through payroll deduction. Facility Agent Cashiers will receive and distribute employee salary checks as directed by payroll, and will follow established VA policy and procedures for returning any unclaimed salary checks.

030413 Service/Division Chiefs will designate an adequate number of unit timekeepers and alternates by memorandum to the Fiscal/Finance Officer indicating names (position is not sufficient for this purpose), status (timekeeper or alternate or removal from timekeeper function), and effective date.

030414 Supervisors and other leave-approving officials, as authorized in VA Directive 5011, section 3 f, and VA Handbook 5011, Part III, Leave, Chapter 1, section 2b, are accountable for the work time and absence of employees for whom they are responsible, including leave approval and certification of attendance through appropriate time and attendance collection procedures or automated systems.

030415 Timekeepers will prepare and maintain time and attendance reports for each affected employee whose record has been assigned to their jurisdiction. Timekeepers remain under the administrative supervision of the supervisor of their own organizational element while performing the "additional duties" relating to preparation and maintenance of time and attendance reports. However, timekeepers are under the technical supervision of the Employee Accounts Section with regard to time and attendance reporting requirements affecting employee leave and pay entitlements. Additional responsibilities for timekeepers are specifically outlined in the Payroll Policy Volume XV, Chapter 1, Payroll: Overview.

0305 PROCEDURES

030501 General Processing for Monetary Awards and Incentives. VA local HR staff will enter approved incentive and award transactions in HR‟s automated processing system. Upon receipt of the HR transaction, local payroll staff will release the transaction to VA‟s payroll provider for processing. VA‟s payroll provider will include the award/incentive in the employee‟s salary payment.

030502 Additional/Special Processing. VA local payroll staff will follow the processing information outlined in the following appendices for additional guidance for monetary awards/incentives which do not automatically process and/or for awards and/or incentives which require additional action to complete payment processing.

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A. Appendix B: Awards

Appendix B-1: Types of Awards

Appendix B-2: Monetary Awards Processing

Appendix B-3: Non-Monetary Awards Processing

Appendix B-4: Time-Off Awards

B. Appendix C: Incentives

Appendix C-1: Types of Incentives

Appendix C-2: Calculating Recruitment/Relocation and Retention Incentives

Appendix C-3: Calculating Debt for Breached (Recruitment/Relocation Incentive) Agreements

Appendix C-4: Incentive Payment Illustrations

Appendix C-5: Home Marketing Incentive

Appendix C-6: Student Loan Repayment Incentive

Appendix C-7: Supervisory Differential

Appendix C-8: Voluntary Separation Incentive Payment (VSIP)

0306 DEFINITIONS

030601 Award. A generic reference to the entire range of rewards available to recognize an employee under VA‟s Employee Recognition and Awards Program

including monetary, non-monetary, honorary and time off awards. (Unless otherwise

noted, those Title 38 employees covered under part V of VA Handbook 5017, Employee Recognition and Awards, are also covered under VA‟s Employee Recognition and

Awards Program.)

030602 Award Program. Specific procedures and requirements established by an agency or a component of an agency for granting awards under proper authority.

030603 De Minimis. Concept of value which considers both the value of the item and the frequency with which it is provided is so small as to make accounting for it unreasonable or impractical. An essential element is that it is considered occasional or unusual in frequency. It must not be disguised as a form of compensation. (IRS Chief Counsel Advice 200108042, Dec 20, 2000, ruled that items with a value exceeding

$100 would not be considered de minimis, even in unusual circumstances.) For additional information refer to section 030201B of this chapter and the IRS‟ website at:

http://www.irs.gov/govt/fslg/article/0,,id=184791,00.html.

030604 Employee. For purposes of the VA Employee Recognition and Awards Program, an employee means an individual who meets the definition as identified in VA Handbook 5017, Employee Recognition and Awards, Part I, General Provisions, paragraph 2b. For additional guidance, refer to VA OGC Advisory Opinion,

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