Starting a Civilian Job While on Terminal Leave

Transition · Updated September 2026 · 17 min read

Terminal leave lets you start a civilian job before your separation date, but you are still on active duty the whole time. That one fact drives every rule in this guide: which employers you can work for, which government posts have to wait, what you can and cannot do for a new employer, and which ethics limits start the day you leave. Before you accept an offer, get a written opinion from the ethics counselor for the command you are leaving.

Terminal leave means you are still on active duty

DoD Instruction 1327.06 (August 7, 2025) defines terminal leave as annual leave charged to your leave account to help you with personal affairs as you separate. It is also called retirement, separation or transition leave. To take it without returning to the separation site, you must have your retirement, separation or release orders in your possession and must have completed all administrative processing before you depart. Your retirement or separation date then falls at the end of the authorized leave.

Until that date you have not left the service. In a 2016 opinion, the Justice Department's Office of Legal Counsel (OLC) put it plainly: an officer on terminal leave is considered to be on active duty status. You stay subject to the Uniform Code of Military Justice: Article 2 (10 U.S.C. 802(a)(1)) covers members of a regular component, expressly including those awaiting discharge after their enlistment ends. DoD's leave instruction also provides for members on authorized leave being recalled to duty for military necessity (DoDI 1327.06, paragraph 5.1.d). That is one reason a civilian start date needs some room to move.

You are still covered by the ethics rules as well. The executive branch Standards of Ethical Conduct say an employee's status "is unaffected by pay or leave status" (5 CFR 2635.102(h)). Those standards apply to officers directly. They do not apply to enlisted members on their own terms (5 CFR 2635.103), but DoD's Joint Ethics Regulation (JER) makes enlisted members subject to them (JER paragraph 2-101).

Every rule in this guide follows from that status. Some limits apply only while you are on terminal leave and fall away on your separation date. Others, the post-government employment rules, start on that date.

• Terminal leave starts only after you have your orders in hand and have finished out-processing.
• Your separation or retirement date falls at the end of terminal leave.
• Until that date you are on active duty: the UCMJ, the ethics rules and your command's outside-employment rules all still apply.
• The post-government employment rules start on your separation or retirement date, not on the first day of leave.

Private-sector jobs: allowed, with ethics strings attached

Private work during terminal leave is nothing new. When Congress passed the 1945 law that became 5 U.S.C. 5534a, the House committee report noted that members on terminal leave could already accept private employment without forfeiting the pay and allowances due for that leave, as the 2016 OLC opinion recounts. Today the limits come mainly from the ethics rules and your command's outside-employment policy, because a job that starts before your separation date is outside employment for someone still in federal service. Officers also have a statute to consider: 10 U.S.C. 973(a) bars an officer on active duty from accepting employment that requires separation from their organization, branch or unit, or that interferes with the performance of their military duties. That is one more reason to keep the start date flexible in case you are recalled.

Report the job before you start it. Under JER paragraph 2-502, your agency designee (for most members, a supervisor in your chain of command in grade O-4 or GS-13 or above, acting with an ethics official) may require you to report outside employment before you begin, and the head of your organization or your supervisor may prohibit it if it would create a conflict of interest that recusal cannot fix, detract from readiness or pose a security risk. If you file a financial disclosure report (OGE Form 450 or 278e), DoD's supplemental ethics rule requires approval before you take compensated outside employment with a prohibited source (5 CFR 3601.106). A prohibited source includes a person or company that seeks official action from your agency, does business or seeks to do business with it, conducts activities it regulates, or has interests your official duties could substantially affect (5 CFR 2635.203(d)). For this rule, DoD treats your own component, such as your military department, as the agency (5 CFR 3601.102 and 3601.106).

The job hunt has its own rules, and they start before any offer. You are seeking employment once you have negotiated with an employer, sent it an unsolicited résumé, or answered its approach with anything other than a rejection (5 CFR 2635.603(b)). From then on, unless you receive a written waiver or an authorization from your agency designee, you may not work personally and substantially on a particular matter that you know would directly and predictably affect that employer's financial interests (5 CFR 2635.604 and 2635.605). There is a narrow exception: if your only contact is an unsolicited résumé and the employer has not responded with interest, you may still work on a matter that does not involve specific parties (5 CFR 2635.604(a)(2)). The regulation's own example is a military officer who has accepted a job with a defense contractor: for the rest of their government service, the officer may not work on that contractor's contract without a written waiver (5 CFR 2635.606). Enlisted members are held to the same recusal rule: without advance authorization from the Designated Agency Ethics Official, an enlisted member may not participate personally and substantially in an official matter that would affect the financial interests of an organization they are negotiating with or have an arrangement with for future employment (JER paragraph 5-101).

If you file a public financial disclosure report (OGE Form 278e), you must also notify an agency ethics official in writing within three business days after you start negotiating for employment (5 CFR 2635.607). Procurement officials have one more rule. If you are working personally and substantially on a federal procurement for a contract above the simplified acquisition threshold, and a bidder or offeror in that procurement contacts you about a job or you contact it, you must promptly report the contact in writing to your supervisor and to your agency's Designated Agency Ethics Official or a designee. Then you must either reject the possibility of employment or step out of that procurement until the agency authorizes you to resume (41 U.S.C. 2103).

Do not represent the new employer to the federal government before your separation date. For officers, 18 U.S.C. 205 bars acting as agent or attorney for anyone before a federal department, agency or court in connection with a covered matter in which the United States is a party or has a direct and substantial interest, and 18 U.S.C. 203 bars accepting compensation for representational services on such matters while you are a federal officer. The exemption for retired officers in 18 U.S.C. 206 applies only while the retiree is not on active duty, so it does not begin until your retirement date. The JER states that sections 203, 205 and 207 do not apply to enlisted members (paragraph 5-201), though the other rules above still do.

Check for any foreign government link before you accept. The JER tells ethics officials advising departing members to address the Constitution's Emoluments Clause, which bars receiving compensation from a foreign government or a foreign government-controlled entity without prior approval (JER paragraph 7-101). The consent Congress gave in 37 U.S.C. 908 covers retired members and reserve component members who are not on active duty orders of more than 30 days. It does not cover a member on terminal leave, who is still on active duty. So while you are on terminal leave, you cannot take pay from a foreign government or an entity it controls. Once you retire, or once you are a reserve component member not on active duty orders of more than 30 days, you may do so only after your service secretary and the Secretary of State approve it (37 U.S.C. 908). File the request early.

• Report the job to your command before you start. Get approval first if you file an OGE 450 or 278e and the employer is a prohibited source.
• Recuse from any official matter affecting a company you are talking to about a job.
• Officers: no job that requires leaving your unit or interferes with your military duties, including after a recall (10 U.S.C. 973(a)).
• Officers: do not represent the new employer to federal agencies until your separation date.
• Procurement officials on a contract above the simplified acquisition threshold: report any job contact with a bidder or offeror in writing, then reject the job or step out of that procurement (41 U.S.C. 2103).
• Foreign government or foreign government-controlled employer: no pay from it while you are on terminal leave. After you retire, or as a reservist not on active duty orders of more than 30 days, only with approval (37 U.S.C. 908).

Federal civilian jobs: both paychecks under 5 U.S.C. 5534a

A federal job is the one case with its own statute. Under 5 U.S.C. 5534a, a member who has performed active service and is on terminal leave pending separation from, or release from active duty in, that service under honorable conditions may accept a civilian office or position in the federal government, its territories or possessions, or the government of the District of Columbia. The member is entitled to the pay of that position in addition to military pay and allowances for the unexpired portion of the terminal leave. The same section says the member earns annual leave in the civilian job in the manner 5 U.S.C. 6303(a) specifies for a retired member of a uniformed service, so ask the agency's human resources office how your military service will count toward your leave rate.

The rule is not limited to people separating short of retirement. The 2016 OLC opinion recounts earlier Justice Department advice that officers placed on terminal leave pending retirement could accept federal appointments under this statute and its 1945 predecessor. If you are retiring and the job is a civil service position in or under DoD, including a nonappropriated fund instrumentality, also check 5 U.S.C. 3326. During the 180 days immediately after retirement, that statute allows the appointment only if the service secretary or a designee authorizes it (with OPM approval for a competitive service position), or if the minimum rate of basic pay for the position has been increased under 5 U.S.C. 5305. The 180 days run from your retirement date, so ask the hiring office how it handles a start during terminal leave.

You also do not need a DD-214 to be treated as a veteran for competitive service hiring. Under 5 U.S.C. 2108a, you are treated as a veteran, disabled veteran or preference eligible for appointment purposes if you meet the definition except for the discharge itself and you submit a certification that you are expected to be discharged or released from active duty under honorable conditions no later than 120 days after you submit it. Ask the hiring agency what form of certification it accepts.

One edge case for officers. 10 U.S.C. 973(b)(2)(A) bars regular officers, and certain other officers on active duty such as retired and reserve officers on orders of more than 270 days, from holding a federal civil office that is elective, requires presidential appointment with Senate confirmation, or sits on the Executive Schedule, "except as otherwise authorized by law." In 2016 OLC concluded that 5 U.S.C. 5534a is such an authorization, so an officer on terminal leave may hold one of those offices. The opinion also records that DoD read the two statutes the other way. Few people face this, but if you do, get the answer in writing before you are sworn in.

• Federal, territorial or District of Columbia job, honorable conditions: both paychecks until terminal leave ends (5 U.S.C. 5534a).
• Retiring into a DoD civilian job: the 180-day rule in 5 U.S.C. 3326 runs from your retirement date.
• Veterans' preference before the DD-214: the 120-day certification in 5 U.S.C. 2108a.

State and local government: the civil office limits

5 U.S.C. 5534a does not reach state, county or city government, which comes under the civil office rules instead. Under 10 U.S.C. 973(b)(3), a regular officer on the active-duty list may not hold or exercise, by election or appointment, the functions of a civil office in the government of a state or any political subdivision of a state, except as otherwise authorized by law. For these rules the District of Columbia and the territories, possessions and commonwealths count as states (10 U.S.C. 973(b)(6)). A District of Columbia or territorial civil office can therefore come under both this rule and 5 U.S.C. 5534a. If that is your case, get the answer in writing. DoD Directive 1344.10 (February 19, 2008) states the rule for regular members in general, not just officers (paragraph 4.5.2), and violations of the directive are punishable under Article 92 of the UCMJ (paragraph 4.6.4).

What counts as a civil office? DoD defines it as a non-military office involving the exercise of the powers or authority of civil government, including elective and appointed offices in a state, county, municipality or official subdivision. The definition excludes a non-elective position as a regular or reserve member of civilian law enforcement, fire or rescue squad (DoDD 1344.10, enclosure 2). An elected seat such as a city council or county board is a civil office, and appointed posts that carry government authority can be too. Ordinary state or city employment is less clear-cut, and that is exactly the question to put to your ethics counselor in writing, with the position description attached.

There are narrow exceptions. Any enlisted member on active duty may seek, hold and exercise the functions of a nonpartisan civil office as a notary public or member of a school board, neighborhood planning commission or similar local agency, as long as the office is held in a non-military capacity and does not interfere with military duties (DoDD 1344.10, paragraph 4.2.4.1). Officers have a narrower exception, for an independent school board located exclusively on a military reservation (10 U.S.C. 973(c)).

Running for office has its own rule. A regular member may not be a nominee or candidate for these offices without permission from the Secretary concerned, who may not delegate that decision (DoDD 1344.10, paragraph 4.2.2). If a local race or appointment is part of your plan, do not file as a candidate or accept a nomination while you are on active duty unless you have that permission in writing. Even with it, take the oath only after your separation date unless one of the exceptions above covers the office: permission to run does not authorize activity on active duty that other rules prohibit, including holding the office (DoDD 1344.10, paragraph 4.2.2.2). Retired regular and Reserve Component members on orders of more than 270 days follow a different rule: they may hold, but not exercise the functions of, a state or local office if state law allows it and, under the directive, the Secretary concerned grants permission (DoDD 1344.10, paragraph 4.5.3; for officers, also 10 U.S.C. 973(b)(4)).

• Elected or appointed state or local office: wait for your separation date unless an exception covers you.
• Enlisted: nonpartisan posts such as notary public, school board or neighborhood planning commission are allowed.
• Running while on active duty needs the Secretary's permission, and that permission does not let you hold the office before your separation date.

Post-government employment rules: what starts on your separation date

The main post-employment statute, 18 U.S.C. 207, restricts what you do after the termination of your government service. For a service member that is the separation or retirement date at the end of terminal leave. Section 207 does not stop you from accepting a job with any employer. It limits certain services you may provide on someone else's behalf (5 CFR 2641.101). Among service members it covers officers, not enlisted members (5 CFR 2641.104; JER paragraph 5-201). The restrictions that matter most to a departing officer:

The procurement rule works differently from section 207. Under 41 U.S.C. 2104, a former official may not accept compensation from a contractor within one year after serving as the procuring contracting officer, source selection authority, a member of the source selection evaluation board or the chief of a financial or technical evaluation team when that contractor was selected for a contract over $10 million; after serving as program manager, deputy program manager or administrative contracting officer on its contract over $10 million; or after personally making certain decisions over $10 million for that contractor, such as awarding a contract or settling a claim. It does not bar compensation from a division or affiliate that does not produce the same or similar products or services.

DoD adds a paperwork step for senior officers and acquisition officials. Officers in grade O-7 and above, and officials subject to 41 U.S.C. 2104, must request a written post-government employment opinion if they expect compensation from a defense contractor within two years of leaving DoD and, in their last two years, participated personally and substantially in an acquisition over $10 million (JER paragraph 7-102). Contractors whose contracts include DFARS clause 252.203-7000 may not knowingly compensate a covered former DoD official within two years of leaving DoD service without first determining that the official has sought and received a written opinion, or has not received one 30 days after asking.

• Permanently, for the life of the matter: no communicating with or appearing before a federal agency or court, on behalf of anyone else and with intent to influence, on a particular matter involving specific parties that you worked on personally and substantially (18 U.S.C. 207(a)(1); 5 CFR 2641.201).
• For two years: the same bar for particular matters involving specific parties that you know or reasonably should know were pending under your official responsibility in your last year of service, even if you did not work on them yourself (18 U.S.C. 207(a)(2)).
• For one year, officers serving in pay grade O-7 or above: no communications to or appearances before your former department or agency seeking official action on behalf of anyone else, on any matter (18 U.S.C. 207(c)).
• For one year after serving in certain acquisition roles on contracts over $10 million: no compensation from that contractor (41 U.S.C. 2104).

Get a written opinion from your installation ethics counselor

Do this before you accept an offer, and ideally before you start talking to any company your unit deals with. The JER says current and former DoD personnel may request a written opinion on post-government employment restrictions from the ethics official of the command or organization they are leaving (paragraph 7-100), and it tells ethics officials advising current and former service members to specifically address the restrictions that apply during terminal or transition leave (paragraph 7-101). Your installation legal office can connect you with the right ethics counselor.

Submit the request with a DD Form 2945 and enough facts to decide the question: your duties, the future employer, the position and the duties you will perform there. The ethics official is to provide the written opinion within 30 days of a complete request, and an incomplete request does not start the clock (JER paragraph 7-104). Officials covered by the DoD contractor rule above file online through the After Government Employment Advisory Repository. With a 30-day turnaround, file well before you plan to accept and before terminal leave begins.

The written opinion protects you. Under 5 CFR 2635.107(b), you will not be disciplined under the ethics standards for conduct taken in good faith reliance on an ethics official's advice, as long as you disclosed all relevant circumstances when you asked. For criminal statutes such as 18 U.S.C. 207, reliance cannot guarantee you will not be prosecuted, but good faith reliance is a factor the Justice Department may consider (5 CFR 2641.105(c)). Two cautions: the ethics official represents the government, so there is no attorney-client relationship (JER paragraph 7-100), and an opinion covers only the facts you gave. If the job changes, ask again. You may share the written opinion with a current or prospective employer.

Bring these to the meeting or put them in the request:

• Your duties over the last two years, including any contracts, programs, source selections or claims you worked on.
• The employer's name, the job title and a description of what you will do, including any contact with federal agencies.
• Your grade, whether you file an OGE 450 or 278e, and any foreign government connection the employer has.
• Your terminal leave start date, your separation or retirement date, and the start date the employer wants.

For employers: start dates and what to accept before the DD-214 arrives

You can hire someone who is on terminal leave. The details that matter are the start date and the paperwork. Ask the candidate for two dates: the first day of terminal leave and the separation or retirement date. DoD requires members to have their separation or retirement orders in hand, and to finish out-processing, before terminal leave begins (DoDI 1327.06), so the candidate can show you the orders that fix the end date. Ask them to redact their Social Security number and DoD ID number before they share a copy.

Set the start date on or after the first day of terminal leave, not before, and leave room for it to move: members on authorized leave can be recalled for military necessity (DoDI 1327.06, paragraph 5.1.d). Until the separation date your new hire is still a service member. Do not let that delay or cost them the offer. USERRA bars denying initial employment to someone on the basis of their membership in, service in, or obligation to serve in a uniformed service (38 U.S.C. 4311(a)).

For Form I-9, do not ask for a DD-214. The employee chooses which acceptable documents to present, and the DD-214 is not on the lists (USCIS). The ID card issued to active-duty military personnel is a List B identity document, which the employee pairs with a List C document such as an unrestricted Social Security card. Section 2 is due within 3 business days of the first day of work for pay.

The DD-214 records the discharge or release itself, and federal law says a member may not be discharged or released until the discharge certificate or certificate of release is ready for delivery (10 U.S.C. 1168(a)). Do not make the start date, payroll or benefits enrollment wait for it. If a specific program needs proof of service, collect it once the new hire has it. If nothing needs it, do not ask: it carries personal data you would then have to protect.

Veteran programs run on the separation date, not the start date. For the Work Opportunity Tax Credit, the statute's definition of a veteran excludes anyone who had a day of extended active duty (a period of more than 90 days on active duty) in the 60 days ending on the hiring date (26 U.S.C. 51(d)(3)(B)). A hire made during terminal leave, or within 60 days of the separation date, cannot count under the veteran categories. WOTC also does not apply to anyone who begins work after December 31, 2025 unless Congress renews it, and it had not been renewed as of September 2026. For federal contractors, the VEVRAA "recently separated veteran" period is the three years beginning on the date of discharge or release from active duty (41 CFR 60-300.2). Federal agencies can accept the 120-day certification described above in place of a DD-214 for competitive service appointments (5 U.S.C. 2108a).

If you do business with the federal government, three more rules apply. First, if your new hire is an officer, do not have them represent your company to a federal agency before their separation date: 18 U.S.C. 203(a)(2) reaches whoever knowingly gives or offers compensation for representational services rendered while the person is a federal officer, not only the officer. Second, if the candidate is working personally and substantially on a federal procurement for a contract above the simplified acquisition threshold in which you are a bidder or offeror, hold no job discussions until they have reported the contact in writing and stepped out of that procurement. A bidder or offeror that holds employment discussions with such an official, knowing the official has not done so, is subject to penalties (41 U.S.C. 2103). Third, if your DoD contracts include DFARS clause 252.203-7000, you may not knowingly compensate a covered former DoD official within two years after they leave DoD service without first determining that they have sought and received a written ethics opinion, or have not received one 30 days after asking. Ask for that opinion before the first paycheck. The candidate may share it with you (JER paragraph 7-100).

• Get the terminal leave start date and the separation date, and see the orders.
• Start on or after the first day of terminal leave, with room to move.
• Form I-9: the employee picks the documents, and the DD-214 is not one of them.
• Do not hold payroll or benefits for the DD-214. Collect it later only if a program needs it.
• Officers: no representing your company to federal agencies until the separation date.
• Bidding on a federal contract above the simplified acquisition threshold: no job talks with an official working on it until they have reported the contact and stepped aside (41 U.S.C. 2103).
• DoD contractors: confirm the written ethics opinion before paying a covered former official.

Sources

Every figure above is drawn from these sources. Figures and rules change, so check the current source before you act.

• 5 U.S.C. 5534a: Dual employment and pay during terminal leave from uniformed services
• 5 U.S.C. 3326: Appointments of retired members of the armed forces to positions in the Department of Defense
• 5 U.S.C. 2108a: Treatment of certain individuals as veterans, disabled veterans, and preference eligibles
• 10 U.S.C. 973: Duties: officers on active duty; performance of civil functions restricted
• 10 U.S.C. 802 (UCMJ Article 2): Persons subject to this chapter
• 10 U.S.C. 1168: Discharge or release from active duty: limitations
• 18 U.S.C. 203: Compensation to Members of Congress, officers, and others in matters affecting the Government
• 18 U.S.C. 205: Activities of officers and employees in claims against and other matters affecting the Government
• 18 U.S.C. 206: Exemption of retired officers of the uniformed services
• 18 U.S.C. 207: Restrictions on former officers, employees, and elected officials of the executive and legislative branches
• 37 U.S.C. 908: Reserves and retired members: acceptance of employment, payments, and awards from foreign governments
• 41 U.S.C. 2104: Prohibition on former official's acceptance of compensation from contractor
• 41 U.S.C. 2103: Actions required of procurement officers when contacted regarding non-Federal employment
• 38 U.S.C. 4311 (USERRA): Discrimination against persons who serve in the uniformed services and acts of reprisal prohibited
• 26 U.S.C. 51: Amount of credit (Work Opportunity Tax Credit)
• 5 CFR part 2635, subpart F: Seeking Other Employment (eCFR)
• 5 CFR 2635.102: Definitions (Standards of Ethical Conduct, eCFR)
• 5 CFR 2635.103: Applicability to enlisted members of the uniformed services (eCFR)
• 5 CFR 2635.107: Ethics advice (eCFR)
• 5 CFR 2635.203: Definitions (prohibited source, eCFR)
• 5 CFR 2641.101: Purpose (post-employment rule, eCFR)
• 5 CFR 2641.104: Definitions (who 18 U.S.C. 207 covers, eCFR)
• 5 CFR 2641.105: Advice (eCFR)
• 5 CFR 2641.201: Permanent restriction on any former employee's representations to United States concerning particular matter in which the employee participated personally and substantially (eCFR)
• 5 CFR part 3601: Supplemental Standards of Ethical Conduct for Employees of the Department of Defense (eCFR)
• DFARS 252.203-7000: Requirements Relating to Compensation of Former DoD Officials (eCFR, 48 CFR)
• 41 CFR 60-300.2: Definitions (VEVRAA, recently separated veteran, eCFR)
• DoD Instruction 1327.06, Military Leave, Liberty, and Administrative Absence (August 7, 2025)
• DoD Directive 1344.10, Political Activities by Members of the Armed Forces (February 19, 2008)
• DoD Standards of Conduct Office: Joint Ethics Regulation (May 15, 2024)
• U.S. Department of Justice, Office of Legal Counsel: Continuation of Terminal Leave for Military Officer Appointed to Federal Civilian Position, 40 Op. O.L.C. 13 (March 24, 2016)
• USCIS I-9 Central: Form I-9 Acceptable Documents
• USCIS I-9 Central: Completing Section 2, Employer Review and Attestation