Leave Without Pay (LWOP) is any approved absence from work for which you don’t receive pay. It sounds simple, but extended LWOP can have cascading effects on nearly every aspect of your postal employment — from your FERS pension and health insurance to your step increases and layoff protections. This guide covers exactly what happens, how much LWOP is safe, and what the key thresholds are.
When LWOP Happens
LWOP isn’t always a choice. Common situations include exhausting all annual and sick leave during an injury or illness, FMLA leave after paid leave runs out, suspensions pending investigation, caring for a family member, and military service beyond the paid leave period. Under the Employee and Labor Relations Manual (ELM) Section 514, LWOP is a temporary nonpay status that management may approve upon request.
Some LWOP is protected — FMLA leave, military service under USERRA, and OWCP-related absences all have specific legal protections. Other LWOP is at management’s discretion and can become an attendance issue if it accumulates.
Impact on FERS Retirement
This is where LWOP can hurt the most. Your FERS pension is calculated based on your years of creditable service and your High-3 average salary. LWOP affects both.
Creditable service: The first 6 months of LWOP in any calendar year are fully creditable toward retirement. After that, additional LWOP in the same year is not creditable. If you’re on LWOP for 8 months in a calendar year, only 6 months count toward your years of service. The other 2 months are lost permanently.
High-3 salary: LWOP periods don’t reduce your High-3 directly, because the High-3 is based on your highest average rate of basic pay over any consecutive 3-year period — not your actual earnings. Your pay rate stays the same while on LWOP. However, if LWOP delays a step increase, it could indirectly affect the timing of your High-3 peak.
Impact on Health Insurance (PSHB)
This catches most people off guard. When you’re on LWOP, your PSHB health insurance continues — but only for a limited time, and premiums still need to be paid.
Coverage continuation: Your PSHB enrollment continues for up to 365 days of LWOP in any one continuous period. After 365 days, coverage terminates unless you’re on LWOP for FMLA, military service, or OWCP (which have their own continuation rules).
Premium payments: During LWOP, you’re still responsible for your share of premiums. USPS will typically accumulate the debt and deduct it from your pay when you return. If you’re out for months, this can result in a significant paycheck reduction when you come back. You can choose to pay premiums directly while on LWOP to avoid the accumulated debt — contact the HR Shared Service Center to arrange this.
Impact on TSP
No pay = no contributions. While on LWOP, no TSP contributions are made — not your employee contributions, not the agency match, and not the automatic 1% agency contribution. Your existing TSP balance continues to grow or decline based on your fund allocations, but missed contributions mean lost matching money and lost compound growth. See our TSP fund guide for allocation strategies.
TSP loan payments: If you have an outstanding TSP loan, you’re still obligated to make payments during LWOP. You can set up direct payments through tsp.gov. If you miss payments beyond the allowed grace period, the loan may be declared a taxable distribution — creating an unexpected tax bill.
Impact on Step Increases
Step increases require a specified waiting period in pay status. LWOP is not pay status. Under ELM 422.13, LWOP beyond certain thresholds extends your step increase waiting period day-for-day:
| Step Range | Waiting Period | Allowable LWOP |
|---|---|---|
| Steps 1–4 | 96 weeks | Up to 2 weeks without delay |
| Steps 5–7 | 104 weeks | Up to 4 weeks without delay |
| Steps 8–12 | 56 weeks each | Up to 2 weeks without delay |
LWOP beyond the allowable amount extends your step date day-for-day. If your next step is worth $800–$1,500 per year, a 3-month LWOP period could delay that raise by nearly 3 months. See our step increase guide for step values by craft.
Impact on Leave Accrual
You do not earn annual or sick leave during LWOP. Under ELM 512, leave accrues when you’re in pay status. If you have at least 1 hour of paid time in a pay period, you still accrue leave for that period. But full pay periods of LWOP mean zero accrual. This is especially important for employees approaching the 15-year mark, where annual leave accrual increases from 6 to 8 hours per pay period.
Impact on Layoff Protections
Under the APWU contract (Article 6), layoff protection requires 6 years of continuous service with at least 1 hour or a call-in guarantee for 20 of the 26 pay periods each year. Extended LWOP can jeopardize this requirement. If you’re counting on Article 6 protections during a period of potential RIF activity, monitor how LWOP affects your qualifying pay periods carefully.
How to Minimize LWOP Damage
Use leave strategically. If an extended absence is coming, use annual and sick leave first. Even 1 hour of paid leave in a pay period keeps your leave accrual and step increase clock running.
Consider leave sharing. The USPS Leave Sharing program (ELM 519) allows employees facing a medical emergency to receive donated annual leave from coworkers, converting LWOP into paid status.
Pay health premiums directly. Don’t let them accumulate. Contact the HR Shared Service Center to set up direct payments during LWOP.
Keep making TSP loan payments. Set up direct payments through tsp.gov to avoid a taxable distribution.
Track your LWOP carefully. Know your accumulated LWOP hours per calendar year. The 6-month retirement credit threshold and step increase thresholds are hard cutoffs with no exceptions.
See how your years of service affect your retirement annuity.
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