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.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should: (1) revise the uniformed services' severance pay programs so that separation pay will be calculated and applied uniformly for all services; (2) provide a severance pay program for enlisted personnel; (3) base the military severance pay formula on the average regular military compensation of the grade of the separated member and bring eligibility criteria in line with the civilian severance program; (4) eliminate the practice of providing severance pay to members separated for unsatisfactory performance; and (5) provide uniform severance pay limitations for all federal personnel reemployed by the government. It should also clarify the Unemployment Compensation Amendments of 1976 as they relate to the concurrent receipt of severance pay and unemployment insurance.


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