Severance pay is authorized for full-time and part-time employees who are involuntarily separated from Federal service and who meet other conditions of eligibility.
To be eligible for severance pay, an employee must be serving under a qualifying appointment, have a regularly scheduled tour of duty, have completed at least 12 months of continuous service, and be removed from Federal service by involuntary separation for reasons other than inefficiency (i.e., unacceptable performance or conduct).
An employee is not eligible for severance pay if he or she is serving under a nonqualifying appointment; declines a reasonable offer of assignment to another position; is serving under a qualifying appointment in an agency scheduled to be terminated within 1 year after the date of the appointment; is receiving injury compensation under 5 U.S.C. chapter 81, subchapter I; or is eligible upon separation for an immediate annuity from a Federal civilian retirement system or from the uniformed services. The employing agency must determine whether an employee was provided a reasonable offer, as defined in 5 CFR 550.703.
The following appointments are qualifying appointments for severance pay eligibility:
The following types of appointments are nonqualifying appointments and do not convey eligibility for severance pay:
To be eligible for severance pay, an employee must have completed at least 12 months of continuous service by the date of separation. This continuous service may consist of one or more civilian Federal positions held over a period of 12 months without a single break in service of more than 3 calendar days. The positions held must have been under one or more qualifying appointments; one or more nonqualifying temporary appointments that precede the current qualifying appointment; or an appointment to a position in a nonappropriated fund instrumentality of the Department of Defense or the Coast Guard that precedes the current qualifying appointment in the Department of Defense or the Coast Guard, respectively.
If an employee expects to be involuntarily separated and resigns, the employee is considered to have been involuntarily separated if he or she resigns after receiving a specific written notice that he or she will be involuntarily separated by a particular action effective on a particular date; or a general written notice of reduction in force or transfer of functions which-
However, a resignation is not considered an involuntary separation if the specific or general written notice is canceled before the separation (based on that resignation) takes effect. Resignations under any other circumstances are voluntary separations and do not carry entitlement to severance pay.
An employee's severance pay fund may consist of two parts-the basic severance pay allowance and an age adjustment allowance, if applicable.
The basic severance pay allowance consists of-
The weekly rate of basic pay for employees with variable work schedules is determined based on the weekly average for the last position held by the employee during the 26 biweekly pay periods immediately preceding separation. The regulations at 5 CFR 550.707(b) provide specific instructions on calculating the weekly rate for various types of variable work schedules, including part-time work and seasonal work. For information on how to calculate the approximate amount of severance pay for employees with non-variable work schedules, please see the "Severance Pay Estimation Worksheets."
The basic severance pay allowance is augmented by an age adjustment allowance consisting of 2.5 percent of the basic severance pay allowance for each full 3 months of age over 40 years.
Rate of basic pay means the rate of pay fixed by law or administrative action for the position held by the employee, including, as applicable, annual premium pay for standby duty, law enforcement availability pay, straight-time pay for regular overtime hours for firefighters, night differential for prevailing rate employees, locality payments, and special rate supplements. Rate of basic pay does not include additional pay of any other kind. (See definition of rate of basic pay in 5 CFR 550.703.)
An employee may not receive a total of more than 52 weeks of severance pay during his or her lifetime.
The following types of service are creditable for computing an employee's severance pay:
Severance pay accrues on a day-to-day basis following the recipient's separation from Federal employment. Severance payments must be made at the same pay period intervals that salary payments would be made if the recipient were still employed. The amount of the severance payment is computed using the recipient's rate of basic pay in effect immediately before separation. Severance payments are subject to appropriate deductions for income and Social Security taxes. Severance payments are the responsibility of the agency employing the recipient at the time of the involuntary separation that triggered the current entitlement to severance pay. The regulations at 5 CFR 550.709 provide more details on the accrual and payment of severance pay.
If an individual entitled to severance pay later accepts a position with the Federal Government or the government of the District of Columbia, he or she is no longer eligible for severance pay and severance pay is terminated. The employing agency must then record on the appointment document the number of weeks of severance pay the individual has received. If the employee again becomes entitled to severance pay, the agency from which the employee is involuntarily separated must recompute the severance pay allowance on the basis of all creditable service and the individual's current age. The agency must deduct the number of weeks for which severance pay previously was received from the number of weeks it would take to exhaust the recomputed allowance.
If an individual entitled to severance pay is employed by the Federal Government or the government of the District of Columbia under a nonqualifying time-limited appointment, severance pay is suspended during the life of the appointment, but resumes (without being recomputed) when the employee separates from the nonqualifying time-limited appointment. The resumed severance payments are the responsibility of the agency that originally separated the individual involuntarily.
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