The Federal Government's Severance Pay Programs Need Reform

FPCD-78-68: Published: Dec 7, 1978. Publicly Released: Dec 7, 1978.

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Severance pay for federal personnel was legislated to provide involuntarily terminated employees with recognition for their service, compensation for the lost job and its consequences, and help in the transition to a new career. The federal government's severance pay programs are divided into two major categories: (1) for federal civilian employees; and (2) for uniformed services personnel.

The armed services nondisability severance program is sometimes viewed as a substitute for vesting for officers who are separated with less than 20 years of service. There are inequities in severance pay entitlements of military and civilian personnel and in benefits available to members of the uniformed services. For example, military nondisability severance pay is available only to officers, not enlisted members; Army and Air Force officers separated for substandard performance sometimes receive more severance pay than officers separated for nonpromotion; basic pay used in calculating military severance pay does not fully reflect a member's compensation; most military officers are limited to a maximum severance pay of $15,000 unlike civilians who are not limited to a fixed dollar amount; military officers can receive severance pay if separated for unsatisfactory performance while civilian employees are eligible only if they are not at fault; and payments for civilian employees cease if they are rehired while this limitation does not apply to military members. Recent legislation may affect employees' entitlement to the concurrent receipt of severance pay and unemployment insurance.

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