The federal government grants severance pay to employees who separate involuntarily from the federal service. Not all employees can receive severance pay, however.
To qualify, an employee first has to meet several prerequisites. You should also know that severance pay plays an important role for those who are in the process of obtaining a federal disability retirement.
We cover the basics here, but we recommend that you reach out to a knowledgeable federal employment attorney to learn more.
What Is Severance Pay?
Just like in the private sector, severance pay is compensation given to employees who are involuntarily separated from federal service. “Involuntary separation” includes several key scenarios, including:
- Separation for a medical inability to perform one’s duties;
- Reductions in Force (RIF) or downsizing;
- A transfer of the position’s function outside of the employee’s commuting area;
- Expiration of incumbent’s term of office; and
- A lack of funds to pay the employee.
Am I Eligible For Severance Pay?
You may be eligible for severance pay if you are involuntarily separated from the federal service as defined above.
However, you need to meet a couple of additional basic conditions. First, you need a career or career-conditional appointment in the competitive or excepted services.
Appointments in the Senior Executive Service and some time-limited appointments also qualify, but presidential and emergency appointments do not.
Second, you need to have completed at least 12 months of continuous service in the federal government by the date of separation.
Finally, you cannot have accepted another position with the federal government and receive severance pay.
How Much Severance Pay Can I Get?
Naturally, the amount of severance pay varies from one employee to another. The amount of severance pay that you can receive depends primarily on your years of service in the federal government.
You can get one week of severance pay (calculated at your final basic pay rate) for each of your first 10 years of service.
Every additional year of service grants you an additional two weeks of severance pay. There is also an age adjustment that boosts the amount of severance pay for employees over 40.
For every three months of age beyond age forty, you can add an additional 2.5% to your basic severance pay rate.
When calculating your years of service, you can generally include any time you spent in the national guard or the Armed Forces. Former United States Postal Service (USPS) workers can include their time with that agency as well.
How Does Severance Pay Affect My FERS Disability Retirement?
Many employees applying for federal disability retirement look to severance pay as a way to boost their financial picture when exiting government service.
However, under current guidance, you cannot receive severance pay if you are “eligible . . . for an immediate annuity from a Federal retirement system.”
This means that if you receive an involuntary separation while applying for federal disability retirement, you’ll likely have to return any severance pay you receive.
Have More Questions About Severance Pay?
Severance pay is a tricky topic, especially when you have a pending federal disability retirement application.
It can be stressful to think about how you’re going to pay for retirement or your next period of unemployment. You shouldn’t have to deal with this issue on your own.
Our attorneys at the Law Office of Aaron D. Wersing, PLLC, are totally committed to helping you secure your financial future.