Si,: 54- as/a ^ UNITED STATES CIVIL SERVICE COMMISSION Bureau of Policies and Standards Personnel Management Series No. 23 Revised March 1973 Digitized by the Internet Archive in 2010 with funding from University of Florida, George A. Smathers Libraries with support from Lyrasis and the Sloan Foundation http://www.archive.org/details/severancepaywhat1973unit Severance Pay — What It Is A law passed in 1965 authorized, for the first time, severance pay for Federal employees who are involun- tarily separated from the service. How much money an employee gets is computed on the basis of his basic pay at time of separation, his years of Federal service, and age, if he is over 40. He gets it at the same rate, and at the same intervals, as he was paid his salary. There are some limitations on eligibility for sever- ance pay. For example, if, when separated, an em- ployee is receiving payments from the Labor Depart- ment's Bureau of Employees' Compensation for a job-related injury he is not entitled to severance pay. Neither is an employee who is entitled to an immediate annuity which includes a reduced annuity, a disability annuity or annuity earned as a member of the uniformed services. The following material answers the most frequently asked questions about severance pay. 1. Q. How do I know if I am eligible for severance pay? A. To be eligible for severance pay, you must be serving under one of the following types of appoint- ments at the time of your separation : ( 1 ) A career or career-conditional appointment in the competitive service, or their equivalent in the excepted service; (2) An indefinite-appointment system that preceded the career-conditional appointment system; (3) An indefinite appointment without time limita- tion in the excepted service, except a Presidential appointment, an appointment filled by a non- career executive assignment, or an appointment to a Schedule C position; (4) An overseas limited appointment without time limitation ; (5) An appointment held as a status quo employee including an appointment by which you became an indefinite employee upon promotion, demo- tion, or reassignment; (6) A time-limited appointment in the Foreign Serv- ice to which you were assigned under a statutory authority that entitled you to reemployment in your former agency, but your right to reem- ployment had expired. In addition, you must have been currently employed for a continuous period of at least 12 months. If you were either a part-time or a full-time employee and you meet these requirements you are eligible for severance pay. 2. Q. If entitlement to an immediate annuity at the time of separation is a bar to severance pay, will my sever- ance pay be discontinued if I become entitled to an annuity beginning at some later time? A. No. The only provision for discontinuing or sus- pending severance pay applies to situations involving reemployment. The offer of equivalent employment at a later time, or entitlement to an annuity beginning at a later time, has no eflfect on your entitlement to severance pay. 3. Q. What if I start drawing severance pay but later become entitled to a disability annuity? A. Since the disability annuity will be retroactive to the date of your separation from the service, you will have to return all severance pay that you received. 4. Q. Who determines whether I am entitled to severance pay? A. The separating agency makes this determination. If you are eligible, your agency advises you of the maximum amount of severance pay you may receive (referred to as the severance pay fund), the date payment will begin, and the number of weeks required to exhaust the severance pay fund. 5. Q. What should I do if my agency determines that I am not entitled to severance pay, and I believe that I am? A. You should file a claim for pay with the Claims Division, General Accounting Office, Washington, D.C. 20548. 6. Q. How is the amount of my severance pay determined? A. Your severance pay fund (that is, the maximum amount of severance pay you may receive) is deter- mined on the basis of your basic rate of pay at the time of separation and years of creditable service (basic allowance). If you are over 40 years of age, an age adjustment allowance is also a part of the formula. Your basic allowance is computed on the basis of one week's basic salary for each year of creditable serv- ice for the first 10 years, and two weeks' basic salary for each year of service thereafter. Your age adjust- ment allowance is computed on the basis of 10 per- cent of the basic allowance for each year your age exceeds 40 years of age. For example, if you are 45 years old with 20 years of creditable service, and your basic weekly salary is $100, your severance pay fund would be computed as follows: Basic allowance : $100 (weekly salary) x 10 (first 10 years) = $1,000 $100 (weekly salary) X 2 X 10 (years in excess of 10) = $2,000 $3,000 Age adjustment allowance: $3,000 (basic allowance) x5 (years over 40) X 10% = $1,500 Severance pay fund: $3,000 (basic allowance) +$1,500 (age adjustment allowance) Total = $4,500 7. Q. What method of payment is used? A. As a separated employee you receive from the Treasury Department a check for approximately the same amount as you received from your agency at the same intervals as before until you are either reem- ployed or your severance pay fund is exhausted. 8. Q. What is creditable service? Does it include military service? A. Creditable service for severance pay purposes is any service which is creditable for leave accrual pur- poses, including military service, provided the military service interrupts otherwise creditable civilian service. Military service which precedes civilian service is not creditable for severance pay purposes. 9. Q. If I resign will I be entitled to severance pay? A. Generally speaking, a resignation is a voluntary separation and would not entitle you to severance pay. However, there are three circumstances under which your resignation is considered involuntary for purposes of severance pay, provided you have not declined the offer of an equivalent position in your agency before separation and that you resign after receipt of: ( 1 ) A specific notice in writing by your agency that you are to be involuntarily separated and the separation is not because of misconduct, delin- quency, or inefficiency; (2) A general notice of reduction-in-force by your agency which announces that all positions in your competitive area will be abolished or trans- ferred to another commuting area and that your resignation is effective on a date which is no more than one year before the abolition or trans- fer; or (3) A notice by your agency proposing to separate you for declining to accompany your activity when it is to be moved to another commuting area because of a transfer of function and when all positions in your competitive area are to be abolished or transferred to another commuting area within a period of no more than one year. 10. Q. What is an "equivalent position"? A. For purposes of entitlement to severance pay, an equivalent position is one of like seniority (seniority has meaning only for employees in the postal field service) , tenure, and pay (other than a retained rate of pay) located within the employee's commuting area. 11. Q. My agency is transferring the function of which my position is a part to an installation located in a city 500 miles away. If I do not move with my position, I will be separated. The agency has offered to pay my moving expenses to the new location, but for personal reasons I do not wish to move. When I am separated, will I be entitled to severance pay? A. Failure to accept such an assignment to a dif- ferent commuting area in connection with a trans- fer of function (or reduction-in-force) situation is not a bar to severance pay. Therefore, if you are otherwise qualified, and are separated for declining reassignment in a transfer of function you are entitled to severance pay. 12. Q. Is a refusal to accept an assignment to another com- muting area ever a basis for denying severance pay? A. Yes, but only when geographic reassignment is a condition of employment, as evidenced by the em- ployee's position description or other written agree- ment or understanding providing for such assign- ments. In all other cases an employee who is separated because he declines to accept assignment to another commuting area is eligible for severance pay. 13. Q. I have received my draft notice. Will I be entitled to severance pay? A. No. Separation to enter the military service does not entitle an employee to severance pay. 14. Q. May I accept other employment and still receive my severance pay? A. Yes, unless (1) your new employment is in the Federal Service or the District of Columbia govern- ment or (2) your activity is transferred to a non- Federal organization, and you accept employment with the successor organization within 90 days of the date of the transfer. If you accept a temporary appointment with the Federal Government or District of Columbia Govern- ment your severance pay will be suspended during your temporary employment and then resumed upon termination of the appointment. If you accept an appointment without time limitation with the Federal Government or District of Columbia Government, regardless of whether the tour of duty is full-time, part-time, or intermittent, you lose your right to severance pay, and further entitlement to severance pay will depend upon the nature of a subsequent separation. 15. Q. Is entitlement to unemployment compensation a bar to severance pay? A. No. 16. Q. Am I entitled to severance pay if I am receiving em- ployees' compensation for a job-related injury? A. No. 17. Q. Will my severance pay, and the period covered by the severance pay, be creditable for retirement or leave accrual purposes? A. No, because when a person receives severance pay he is no longer a Federal employee. 18. Q. If I die during the period before my severance pay fund is exhausted, what happens to the balance? A. Payments will continue to be made at the same rate and interval to your survivors or beneficiaries until your fund is exhausted. This money will not be paid to your estate in a lump sum. 19. Q. Is there any limit on the amount of severance pay I can receive? A. Yes. The total severance pay you are eligible to receive is limited to one year's pay at the rate of pay you received before separation. This is a lifetime limi- tation. Therefore, if you are in a position to receive severance pay a second time, your severance pay can- not continue after the sum of the two periods reaches 52 weeks. Suppose, as in Question No. 6, the total severance pay to which you are entitled is $4,500. Because your pay at the time of separation is $100 it will take 45 weeks to pay you your entire severance pay. After receiving severance pay for 20 weeks, you are re- employed in the Federal Government under an ap- pointment without time limitation, and the severance pay is terminated. You work for three full years and are again separated under circumstances entitling you to severance pay. You are now 48 years of age and have 23 years of creditable service. At the time of your second separation your basic weekly pay is $125. Your severance pay fund is computed as follows: Basic allowance: $125 (weekly salary) X 10 (first 10 years) = $1,250 $125 (weekly salary) X 2 X 13 (years in excess of 10) = $3,250 $4,500 Age adjustment allowance: $4,500 (basic allowance) x8 (years over 40) x 10% = $3,600 Severance pay fund: $4,500 (basic allowance) +$3,600 (age adjustment allowance) Total = $8,100 The severance pay fund equals $8,100. It will take 64 and 8/10 weeks ($8,100 divided by $125) to pay you your entire severance pay. However, since total severance pay may not exceed 52 weeks, and since you have already received 20 weeks of severance pay, you are entitled to only 32 weeks of severance pay at $125 a week. 20. Q. What is the authority for paying severance pay? A. The severance pay statute is section 5595 of title 5, United States Code; the severance pay regulations issued by the United States Civil Service Commission are in subpart G of part 550 of title 5, Code of Federal Regulations. 21. Q. Where can I get additional information about sever- ance pay? A. The personnel office of your agency, or the United States Civil Service Commission, will answer any other questions you have about severance pay. U.S. GOVERNMENT PRINTING OFFICE : 1973— 0-497-253 For sale by the Superintendent of D( UNIVERSITY OF FLORIDA Washington, D.C. 20402. Price: 20 cents Stock N