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Severance Pay and Reduction in Force (RIF)

Knowledge is Power -- Severance pay may be available for full-time and part-time Feds who are involuntarily separated (i.e., RIF'd) from Federal Service, within the conditions of eligibility and the written notice given. You can view the specifics at the Code of Federal Regulations, 5 CFR § 550.703, found at https://www.ecfr.gov/current/title-5/chapter-I/subchapter-B/part-550/subpart-G/section-550.703


Employees are eligible for severance pay if the employee is:

✅ serving under a qualifying appointment, and

✅ has completed at least 12 months of continuous service by the date of separation, with some qualifiers (see the link above).


Employees are NOT eligible for severance pay if the employee:

✅ 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 determines whether an employee was provided a reasonable offer, as defined in 5 CFR 550.703. The three components of a reasonable offer are:

✅The offer is in writing

✅The employee meets established qualification requirements, and

✅The offered position is--

  • In the employee's agency, including an agency to which the employee is transferred with his or her function in a transfer of functions between agencies;

  • Within the employee's commuting area, unless geographic mobility is a condition of employment;

  • Of equal or greater tenure and with the same work schedule (part-time or full-time); AND

  • Not lower than two grade or pay levels below the employee's current grade or pay level, without consideration of grade or pay retention under part 536 of this chapter or other authority. In movements between pay schedules or pay systems, the comparison rate of the offered position must not be lower than the comparison rate of the grade or pay level that is two grades below the grade of the current position on the same pay schedule as the current position.


Lists of qualifying and non-qualifying appointments are also found at the link above.


Employees are considered to have been involuntarily separated if they resign after receiving a specific written notice that they will be involuntarily separated by an action effective on a specific date or under a written notice of reduction in force or transfer of functions, if three distinct actions are met (see the OPM link and make a note of the last (3rd) bullet).


REMEMBER...as the OPM website states,

▶️ If the written notice is canceled before the separation takes effect, resignation is NOT considered an involuntary separation.

▶️ Resignations under any other circumstances are voluntary separations and do NOT carry entitlement to severance pay.


The OPM link at the top talks about how severance pay is calculated. There are a few components to the severance pay calculation:

▶️ Basic severance pay allowance -- components of the basic severance pay calculation include creditable service for each full year through 10 years AND each full year beyond 10 years PLUS an additional percentage for each full 3 months of creditable service beyond the final full year.

▶️ Age adjustment allowance of 2.5% of the basic severance pay for each full 3 months of age over 40 years.


Creditable service for the purpose of pay calculations and the definition of "rate of basic pay" are defined in the 5 CFR 550.703 (linked above).


🚨 Rate of basic pay does NOT include locality pay or other special pay components as listed. 🚨


The lifetime limit on severance pay for employees is 52 weeks of the basic rate of pay.



Stay strong! We see you and support you! 💙


DISCLAIMERS:

THE SEVERANCE PAY ESTIMATION WORKSHEET IS A PRODUCT OF THE OFFICE OF PERSONNEL MANAGEMENT (OPM) AS FOUND ON THEIR OFFICIAL GOVERNMENT WEBSITE AS LINKED BELOW. THERE IS NO EXPRESS WARRANTY PROVIDED BY FEDSUBK OR MYSELF AS TO THE ACCURACY OF THE ESTIMATE OBTAINED THROUGH THE USE OF THIS WORKSHEET.


CONSULT YOUR AGENCY HR OFFICE OR AN ATTORNEY KNOWLEDGABLE IN FEDERAL EMPLOYEE LAW OR PAY BEFORE MAKING ANY DECISION OR TAKING ANY ACTION THAT IMPACTS OR CHANGES YOUR FEDERAL EMPLOYMENT STATUS.

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