A lateral move occurs when an employee moves into a new position within the same pay grade as his/her current position. An example of a lateral move: An employee is an Accountant II at a 7 pay grade and they post for a position of Financial Analyst I, which is also at paygrade 7. This is a lateral move. The pay range and paygrade remains the same. This can occur within the current department or moving to a different department.
A transfer is when an employee moves to a position outside his or her current department. Salary changes may or may not be warranted in the case of a transfer.