3 FAM 7540
DIRECT BENEFIT PAYMENTS
(CT:PER-891; 11-07-2017)
(Office of Origin: HR/OE)
3 FAM 7541 POLICY
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
a. Where feasible and consistent with 3 FAM 7512,
benefits which are customarily provided by employers in the post locality may
be provided directly to Locally employed staff
(LE staff).
b. In instances where it is not feasible to grant a
prevailing benefit directly, the cost or value of the benefit may be monetized
and included in employees pay in accordance with 3 FAH-2.
c. All direct benefits to LE staff require prior HR/OE and interagency approval (see 3 FAM 7513,
sections 3 FAM
7544.1 and 3 FAH-2.
3 FAM 7542 GENERAL PROCEDURES
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
See 3 FAH-2.
3 FAM 7543 DEVELOPMENT OF DIRECT
BENEFIT PLANS
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
a. If the Chief of Mission
(COM) or the designate determines that separate payment of a benefit is
desirable and feasible, this person should develop, jointly with other U.S.
Government agencies in the area, a plan for direct payment of the benefit
incorporating detailed rules for administering the plan.
b. Rules governing the administration of compensation
plans must be coordinated between all agencies at all posts within a country.
Such rules must adhere to these regulations, and conflicts are adjudicated by
the chief of mission.
c. The amount of payments and circumstances under which
employees become eligible for payments, as prescribed in the plan, should
conform to local law or custom, unless there are compelling reasons to the
contrary, including the contravention of U.S. law. Where such compelling
reasons exist, benefit plans may be developed which provide less than those
prescribed under local law or custom or which provide the benefit in a
different manner, but in no case may they exceed benefits under local law or
custom.
d. Procedures and guidelines are published in 3 FAH-2.
3 FAM 7544 SUBMISSION OF PLANS FOR
APPROVAL
3 FAM 7544.1 Submission of
Proposed New Plan
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
Missions should submit plans for direct payment of
benefits to the Department (HR/OE) for
interagency approval prior to installation, with the following:
(1) Full description of the benefit, including
translation of pertinent law, regulations, or ordinances upon which payment is
based;
(2) Joint interagency recommendation for and
concurrences in adoption of the benefit;
(3) Estimates by agency of the per annum increase in
costs or in personnel requirements, if any, which implementation will
necessitate;
(4) Estimate by agency of the percentage of increased
costs, if any, which can be met from each Agencys current allotment;
(5) Statement whether the local compensation plan now
includes an adjustment for the benefit and, if so, how much;
(6) Explanation and justification of any discrepancy
between the missions proposed plan and local law or custom; and
(7) An explanation of any legal, political, or other
problems that might arise through installation of the plan, or that might arise
if the plan is not installed.
3 FAM 7544.2 Submission of
Proposed Revision of Existing Benefit Plan
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
Proposed revisions of existing direct benefit plans should
be submitted to the Department (HR/OE)
with copies to other affected headquarters agencies) for approval prior to
implementation. Submit the following supporting documentation:
(1) A copy of the current benefit plan;
(2) A copy of the proposed benefit plan;
(3) An explanation of the change and the need therefore;
for example, to conform to new law or survey results;
(4) Documentation supporting change; for example, copy of
law or detailed survey results; and
(5) Estimate of increased annual cost by agency and
amounts which can be absorbed within current allotments.
3 FAM 7544.3 Submission of
Justification for Severance Plans With Immediate Annuity
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
Missions should submit justification for plans which
authorize severance payment for foreign national employees eligible for an
immediate annuity to the Department (HR/OE)
for interagency approval. The justification should be based on data developed
by the last full salary survey. Severance plans from posts which contain
justified provision for payment of severance and immediate annuity from a
retirement system to which the U.S. Government has contributed requires
interagency approval for installation, and will be reviewed during subsequent
full-scale salary surveys. The justification should include specific
information on the following:
(1) The various age and length of service provisions
of the host government systems for retirement eligibility, both for men and
women.
(2) A complete explanation of the benefits payable,
that is, annuities/lump-sum payments and the benefits provided (for example,
health and medical coverage after retirement).
(3) The supplemental retirement benefits, if any,
provided by local employers through company plans or private insurers, and
their costs.
(4) The amount of severance payments provided to
employees eligible for host government and/or private employer retirement
benefits.
(5) Copies (with English translation) of all pertinent
laws and implementing rules and regulations governing retirement and severance
pay benefits.
3 FAM 7545 REVIEW AND APPROVAL
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
Interested offices in the Department and other agencies
will review direct benefit plans and related material submitted by the
mission. HR/OE will review, approve, and
authorize implementation of these direct benefit plans and any revisions
thereto, subject to appropriate agency and regional bureau concurrence.
3 FAM 7545.1 Local Social Security
Systems
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
If HR/OE approves the
missions plan, HR/OE in consultation and
with the approval of affected headquarters agencies will authorize the mission
to enroll its LE staff who are not covered
by CSR under the host country social security system through normal social
security procedures. Previously, posts were required to negotiate an executive
agreement with the host government in order to participate in its insurance
system. This requirement no longer exists except in special circumstances, such
as the host government tending to exercise too much control over the posts LE staff.
3 FAM 7545.2 Local Insurance
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
Reputable local insurance carriers should be requested to
provide, for informational purposes only, sample policies and rates for the
types and scope of benefits specified in the outline as prevailing in the area.
The sample policies should be reviewed and the carrier offering the coverage
generally provided by other employers at the best price normally should be
selected (for special problems, see the Federal Acquisition Regulations and the
Department of State Acquisition Regulations (FAR and DOSAR). In no instance may
the benefits to be contracted for exceed the benefits generally provided by
other employers in the post locality. In some foreign areas, it is the general
practice of local employers to provide health protection to their employees by
means other than through private insurance carriers or the host government
social security system. For example, employers in some post localities may
contract with a doctor, a group of doctors, or a hospital for various medical
and hospitalization benefits. If a post located in such an area determines that
adoption of a similar benefit plan is feasible and desirable, it should conduct
a study of prevailing local practices, prepare a proposed contract, and submit
it to HR/OE for approval in accordance
with guidelines set forth in section 3 FAM 7549.2-3,
with appropriate modification for the difference in the means of obtaining the
benefit.
3 FAM 7546 INSTALLATION OF PLANS
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
a. A direct benefit payment plan approved in accordance
with 3 FAM
7513.3 may be installed as of the effective date authorized by the
Department and other affected agencies or on a later date as determined by
heads of overseas establishments.
b. The mission assures that distribution of the amended
or revised compensation plan is made according to 3 FAM 7525.8.
(1) One copy of the rules governing benefit payments
is submitted to the Department (HR/OE);
(2) One copy to the appropriate Departmental regional
bureau;
(3) One copy to
USAID; (USAID/OCHTM);
(4) One copy to
Commerce; (ITA/FCS/OPA);
(5) One copy to
Agriculture; (USDA/FAS/PD); and
(6) One copy to
Peace Corps: (Personnel Operations).
c. If an adjustment is included in the joint local
salary schedule for the value of the benefit to be adopted as a direct benefit
payment (see 3 FAH-2) the adjustment normally should be withdrawn as of the
date the direct plan is installed or not later than the effective date of the
next revision of the joint local salary schedule.
3 FAM 7547 ADMINISTRATION OF PLANS
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
a. A direct benefit payment plan is administered in
accordance with rules approved by headquarters agencies and the mission, and by
pertinent payrolling or other financial regulations.
b. Civil Service retirement deductions will not be made
from severance payments.
c. Employees should be informed of where a copy of the
approved regulations governing the benefit plan and of where procedures for
appealing direct benefit payment decisions may be examined. Should questions
arise as to the adequacy of the benefit received in relation to local law and
custom, overseas establishments may advise employees that, although the rules
governing the direct benefit plans conform to local law or custom to the
maximum extent practicable, the U.S. Government may only make payments
authorized by U.S. law (see 3 FAM 7224.)
d. Grievances concerning direct benefit payments should
be handled in accordance with LE staff grievance
procedures established under 3 FAM 7290.
3 FAM 7548 OVERSIGHT OF DIRECT BENEFIT
PLANS
(CT:PER-891; 11-07-2017)
(Uniform State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
Existing benefit plans are monitored periodically by
headquarters agencies to insure adherence to provisions of local law and/or
custom. Where the audit shows that the benefit plan varies from local law
and/or custom, a revised plan reflecting the more appropriate level of benefits
or benefit provision is developed by HR/OE in
consultation with the appropriate regional bureau and other headquarters
agencies for installation by the mission.
3 FAM 7549 SPECIFIC BENEFITS
3 FAM 7549.1 Severance Pay
3 FAM 7549.1-1 Policy
(CT:PER-779; 07-29-2015)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
A severance pay plan should prescribe appropriate rules
for administering the plan in strict compliance with local law and/or custom.
If local law and custom differ, a full explanation of the differences should be
given in the submission of a plan for approval as outlined in section 7544. The
rules should cover employee eligibility, creditable service, amount of payment,
notice period required for separation, and specific circumstances of separation
under which payment is or is not granted, as well as other provisions
applicable to prevailing practice in a given country.
3 FAM 7549.1-2 Creditable
Service
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
a. All periods of continuous service performed as a
direct-hire LE staff member are
creditable. True non-personal service provided under commercial contract with
an independent contractor licensed to do business in the host country who
provides services to other local organizations as well as the U.S. Mission is
not creditable. However, if local law requires that all periods of continuous
service with the same employer be compensated in one payment at the time of
separation and if the receiving state considers an in-house organization which
supplies services solely to the Embassy (e.g. recreation/commissary
association) to be an integral part of the Mission, the liability for severance
pay will be transferred from that entity when such so-called non-personal services
immediately precede employment with the Mission in a PSC or direct-hire
status. An employee must be on the rolls in either PSC or direct-hire status
on or after the effective date of the plan in order for prior continuous
service to be creditable. Service for which severance payment has already been
made is not creditable, and deposit may not be made to buy back such credit.
b. Periods of employment under a personal services
contract, which are not recognized as creditable by the Office of Personnel
Management in computation of an annuity under the Civil Service Retirement
(CSR) System, may be credited to an employee and appropriate severance payment
made at the time of separation, even when such separation results in an
immediate or deferred CSR annuity. Personal services contract periods must be
fully documented, and the separation document (e.g. SF-50 "Notification of Personnel Action" or
JF-62 "Personal Service Contracting
Action") must certify that severance payment was not previously
made.
3 FAM 7549.1-3 Transfers Between
Agencies
(CT:PER-779; 07-29-2015)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
Severance pay will not be paid to an employee transferring
between civilian U.S. Government agencies anywhere without a break in service.
Instead, at the time of final separation from such employment, severance
payments will be made by the agency of employment at time of separation and at
the rate in effect in the current plan. This procedure should be fully understood
by both the gaining and losing agency at the time of transfer. For transfer
involving military components, the interagency funding for such transfers is to
be resolved on a case-by-case basis.
3 FAM 7549.1-4 Severance Pay
With Immediate Annuity
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
a. Severance pay plans may not authorize severance
payment to an employee eligible for an immediate or deferred Civil Service
Retirement (CSR) annuity or other pension to which the U.S. Government has
contributed, unless it can be justified as fully compatible with the types and
levels of prevailing local benefit plan in the case of deferred annuity, if
paid, severance compensation may not exceed an amount corresponding to salary
from date of separation to date of deferred annuity eligibility based on rates
in effect at the time of separation. (See section 3 FAM 7544.3).
Severance payments to employees separating on immediate or deferred Civil
Service Retirement annuities, to cover personal service contract periods not
recognized as creditable by the Office of Personnel Management in annuity
computations under the Civil Service Retirement System, may be authorized in
accordance with section 3 FAM 7544.3.
b. As CSR is never local practice, justification of
severance pay will require a comparison of CSR benefits with a combination of
normal host country retirement benefits and severance payments as required by
local law and prevailing practice. Normally, approval will be granted only the
present value if host country retirement benefits together with severance
payments are shown to be greater than the present value of CSR benefits.
c. No new or revised severance pay plan will receive
headquarters approval if it is not in accord with these provisions. Existing
plans, which are not in accord and have not received explicit documented Washington approval, must be revised to reflect the above provisions. Where previously
approved plans providing severance payments to employees retiring with
immediate or deferred CSR annuities have been superseded by plans which do not
include such provisions, or have not been revised in accordance with the above
provisions, entitlements previously earned shall be frozen on or before December
20, 1987 for retention and documented by personnel action (e.g. SF-50, JF-62)
prepared as of the termination of the plan which made provision therefor stated
in local currency amounts based on the employees salary on that date. These
frozen severance pay amounts may be paid to the employees at the time of
retirement provided that the eligibility requirements of the severance plan in
effect the time of separation are met in all other respects.
3 FAM 7549.1-5 Documenting
Severance Payment
(CT:PER-779; 07-29-2015)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
Posts should document any payment for severance by entering
in the Remarks section of SF-50 or JF-62 documenting separation, the dates of
service for which the payment is being made, and the total amount of the
payment.
3 FAM 7549.2 Major Risk Benefits
3 FAM 7549.2-1 Policy
(CT:PER-891; 11-07-2017)
(Uniform State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
Under authority of section 408 of the Foreign Service Act of 1980, the Department of
State and other U.S. agencies may, on behalf of Locally
Employed staff (LE staff), if consistent with 3 FAM 7512,
authorize posts to
(1) Participate in host government social insurance
systems and
(2) Purchase medical and hospitalization insurance,
life insurance, and pension insurance through established procurement
procedures to protect LE staff from risks
associated with health, life, and old age.
3 FAM 7549.2-2 Host Government
Social Insurance
3 FAM 7549.2-2(A) Feasibility
of Participation
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
At a mission where participation in the host government
insurance system appears feasible, the chief of mission should direct a joint
interagency study of the countrys social security and related laws and
regulations to determine if participation is possible and submit a proposal to HR/OE.
3 FAM 7549.2-2(B) Required
Coverage Under Mission-Adopted Plan
(CT:PER-779; 07-29-2015)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
Once a mission installs a social insurance plan, coverage
is mandatory for all new direct-hire and personal service contract employees of
all participating agencies in the area, except as provided in 3 FAM
7549.2-2(C) for plans which include retirement benefits.
3 FAM 7549.2-2(C) Effect of
Mission-Adopted Plan on CSR Coverage
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
The U.S. Government cannot contribute to two retirement
systems simultaneously for the same employee, except where the total level of
retirement benefits provided is clearly justified by prevailing practice.
(1) If a mission installs a social insurance plan
which includes retirement benefits, an LE staff
member under CSR who wishes to be covered by the U.S. Government under
the local plan may be so covered provided the overseas establishment changes
the employees type of appointment so that he ceases contributing to CSR (See 3 FAM 7711).
An employee who ceases contributing to CSR to participate in a social insurance
plan may still be entitled to a retirement annuity under the Civil Service
Retirement System. (See 3 FAM 7711.4).
(2) If an employee elects to continue participating in
CSR, the overseas establishment should, if possible, cover employee in a manner
which will allow them to receive any appropriate benefits under the local plan
except retirement.
An employee may participate individually in a local
retirement plan while continuing to participate in CSR, if host government laws
and regulations permit, provided he contributes to the local plan both the
employers and employees share. The employee may make these contributions
through allotment of pay (4 FAM and USAID ADS
Chapter 495, "Foreign Service National Direct Hire Personnel
Administration".
3 FAM 7549.2-3 Private Insurance
Plans
3 FAM 7549.2-3(A) General
Guidelines
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
In countries having no host government social insurance
plan, or one in which participation is not feasible, or in the U.S. public
interest, or where prevailing practice is to supplement social insurance plans
or to provide such in lieu, a mission should consider the feasibility of
purchasing, through established procurement procedures, private medical,
pension, life, and other insurance coverage to the extent consistent with 3 FAM 7512.
Insurance coverage for illnesses and injuries should not overlap coverage under
the provisions of the Federal Employees Compensation Act (5 U.S.C. 8101-8150)
as administered by the Department of Labors Office of Workers Compensation
Program (OWCP)(see 3 FAM 7712 and 3 FAM 3630).
Policies should be in conformance with those stipulated in sections 3 FAM 7541-7548.
3 FAM 7549.2-3(B) Health
Insurance Plans
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
a. In consultation with other overseas establishments
in the country, the mission should conduct a survey of prevailing health
insurance practices among local employers as described in 3 FAH-2.
b. Based on prevailing practice an outline of the specific
types and scope of benefits generally provided by other employers should be
developed. The outline should exclude all those benefits generally provided to LE staff through the medical facilities at the
overseas establishments and under 5 U.S.C. 8101-8150 (formerly the Federal
Employees Compensation Act) (also see 3 FAM 7712).
3 FAM 7549.2-3(C) Other
Insurance Plans
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
Guidelines set forth in 3
FAH-2 relating to the adoption of health insurance plans generally apply
to other locally prevailing types of insurance (for example, life and pension)
for LE staff.
3 FAM 7549.2-3(D) Renewals of
Approved Insurance Contracts
(CT:PER-779; 07-29-2015)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
The authority is delegated to the heads of overseas
establishments to approve changes in the levels or types of benefits provided
under a renewal or an amendment of an approved insurance contract, subject to
the availability of funds. Such changes, however, must be made only upon a
joint determination of the heads of overseas establishments that the changes
are necessary to conform to new types of benefits or to new benefit levels
provided generally by other local employers.
3 FAM 7549.2-3(E) Change of
Insurer After Initial Contract Approval
(CT:PER-891; 11-07-2017)
(State/USAID/Commerce/Agriculture)
(Applies to Locally Employed Staff Only)
If, after approval and implementation of a contract under 3 FAM 7540, the
overseas establishment elects to obtain the protection through a different
insurance carrier, the contract shall be treated as a new proposal and
submitted to HR/OE for prior review and
approval.