Lump Sum | Off-Cycle | Deferred

In order to ensure that there is flexibility in how the annual merit pool is distributed among staff, managers/department administrative officers will have the option to grant a lump sum merit payment in addition to or in lieu of adding a merit to base. The term "lump-sum" is to be used exclusively for annual review allocations and not for other types of one-time payments.

Lump sum merit payments may occur for one of the following reasons:

• An employee's base pay may already be high relative to current market data, as determined by Human Resources and the department
  
• An employee's base pay is high relative to other employees with similar responsibilities, or relative to the level or grade maximum
  
• An employee's pay would exceed the salary maximum if a full merit were given to base
  
• An employee's base pay is already at the maximum for their level or grade.
  
  

An example of why and how a partial merit might be paid in the form of a lump sum is as follows:

An employee is a top performer, but his/her base is already high in relation to:

• the maximum of his/her salary level or grade; i.e. close to the maximum, but not at the maximum,
  
• current market data, and/or
  
• salaries of his/her peers.
  

For one of these reasons, a manager/department administrative officer may choose to provide a partial merit to base and an additional amount in the form of a lump sum. For example, an employee's salary is $50,000. The manager/department administrative officer wants to recognize the employee's superior performance with a significant increase (perhaps 5%) but, for reasons stated above, is hesitant to give the employee the entire amount to base. Therefore, the employee might get 3.0% to base (new base salary is $51,500) and the additional 2.0% ($1,000) would be given to the employee in the form of a lump sum merit payment.

Lump sum merit payments are considered part of an employee's normal pay and are therefore subject to pension and taxes.

effective August 1, 2001