The Navy is staying afloat in an odd, long-running battle with a former civilian worker who wants four months of back pay for what he calls "enforced leave." Enforced leave, in this case, refers to his four months in the city jail.

At issue is several thousand dollars that the Grade 8 ($25,000 to $33,000) civilian says is owed him because of four months he missed from the Norfolk Naval Shipyard. The Navy's case was strengthened considerably by the fact that he hadn't asked to work and that he was in jail at the time.

The Navy first fired the man on grounds he wasn't ready, willing and able to report for work. Case records don't show the charge against him. But an administrative law judge ruled that firing was too harsh, and changed it to a 60-day suspension.

But the Merit Systems Protection Board, created to iron out in-house federal fights, said the Navy didn't have to pay the man for his jail time. While incarcerated, he was involved in a work-release program with a private employer. Later, he said the government owed him money because the Navy didn't put him on a federal work-release program. The Navy said he would not have passed the security check, and that he didn't ask to join the program. He has since resigned. The Navy is waiting to see if he appeals the no-pay ruling. Long-Term Care

Workers could convert part of their life insurance to cover nursing home/home health care under a bill by Sen. William V. Roth (R-Del.). The plan had strong bipartisan support last year. It would let those 50 years and older who had insurance for at least 10 years acquire the long-term coverage by reducing the value of their insurance policies.

California Gov. Pete Wilson, who introduced the bill when he was in the Senate, may push for similar legislation at the state level. Family Leave

Rep. William Clay (D-Mo.) is backing a bill that would permit workers to take extended unpaid leave for birth or adoption, or to care for a sick relative or themselves. Clay's bill would guarantee employees jobs on return, and keep their health insurance validated while they are on the unpaid leave. Personal Investing

Government Executive magazine's new personal finance column urges younger workers to go with the stock option of their tax-deferred thrift savings plan. Those closer to retirement should stick with Treasury securities, says Dennis M. Gurtz.

Gurtz says that based on past performance, a 30-year-service employee who winds up as a Grade 15 could have $746,000 in after-tax savings in his account by investing in the stock market option. The same employee would have about $450,000 if he invested in the Treasury or bond market options.

Regardless of how one invests, Gurtz says people in the new Federal Employees Retirement System (mostly post-1983 hires) ought to invest at least 5 percent of pay in the savings plan. If they do, he says, they will have a greater retirement income than under the old Civil Service Retirement System. And non-investors (who also lose the 5 percent government match) will have a hard time making ends meet when they retire, he warns.