Overseas Teachers Act of 1981

Overseas Teachers Act of 1981 - Amends the Defense Department Overseas Teachers Pay and Personnel Practices Act regarding Department of Defense overseas dependents schools to limit the term of teaching positions and the travel and quarters allowance benefits for teachers who are recruited outside the United States. Provides exemptions from such limitations in specified teaching situations.

Eliminates the limitation on the amount of leave an overseas teacher may accumulate. Permits the use of leave for paternity purposes. Allows any Federal or District of Columbia employee who becomes an overseas teacher to transfer any sick leave accumulated. Requires that any annual leave accumulated by such a Federal or District of Columbia employee shall be liquidated as a lump-sum payment. Transfers the leave accumulated by an overseas teacher as sick leave if the teacher becomes a Federal or District of Columbia government employee. Allows any teacher who is separated from the service to elect to have any leave remaining: (A) liquidated as a lump-sum payment; (B) considered as creditable service for purposes of retirement benefits; or (C) credited to the individual's account in the event the individual is reappointed to a position in an Executive agency.

Authorizes the Director of the Office of Dependents' Education to grant a sabbatical to a teacher under certain conditions including the condition that the teacher agrees to serve in the civil service for three years after completing the sabbatical.

Requires the Secretary of Defense to set the basic rates of compensation for teachers at rates equal to the average of the range of rates for similar positions in the public school system of the District of Columbia or urban school jurisdictions having an average daily attendance of at least 100,000, whichever average range of rates is higher. (Current law requires rates equal to the average range of rates in urban school jurisdictions of 100,000 or more population).

Allows a teacher with at least one school year of service to acquire competitive civil service status upon passing a non-competitive examination.

Requires the Secretary to issue regulations concerning certain specified terms and conditions of employment of overseas teachers.