[Entitlement of Former HUD Employees to Severance Pay]

The Director of the Personnel Systems and Payroll Division, Department of Housing and Urban Development (HUD), requested an advance decision concerning the entitlement to severance pay of certain former HUD employees whose employment was extended by a court injunction and then terminated by a reduction in force (RIF) when the injunction was lifted. HUD made the RIF retroactively effective, contending that these employees during the stay were de facto employees who were entitled to pay, but not to creditable service. The issues were whether the employees were entitled to severance pay and, if so, in what amounts and from what date. HUD posed the questions of whether it could legally pay severance pay in light of the dual compensation restrictions; if the severance pay were effective on the first day of the stay; and whether the employee were entitled to the severance pay that would have been received during the 6-week injunction period, if HUD were precluded from paying severance pay until the day of actual separation. GAO held that severance pay is not basic pay and, therefore, not precluded by the dual compensation prohibitions of statutory law. GAO also stated that, since individuals must be actually separated from government service to receive severance pay, those employees were not entitled to it until they were separated after the lifting of the injunction. They were then entitled to severance pay beginning on the date of actual separation, with years of service and pay rates based on the originally intended date of the RIF, assuming that the retroactive application of the RIF was upheld by the Merit Systems Protection Board (MSPB). If MSPB decides that the RIF should not have been retroactively effected, then the changes in pay rate and time of service during the period of the injunction should be included in computing their severance pay entitlement.