Severance Pay:

DOD Not Exempt From Paying Benefits to Greek Employees

NSIAD-91-223: Published: Jul 22, 1991. Publicly Released: Aug 5, 1991.

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Pursuant to a congressional request, GAO: (1) analyzed whether section 311 of the National Defense Authorization Act for Fiscal Years 1990 and 1991, which prohibits the Department of Defense (DOD) from making severance payments if termination of employment results from the host government's request to close or curtail activities at a U.S. base, applied to the closure of two military bases in Greece; (2) determined the amount of severance and incentive pay to which base employees may be entitled; and (3) analyzed difficulties in implementing section 311 and proposed ways to alleviate them.

GAO found that: (1) the historical record suggested that the United States decided to close one base, and although the historical record indicates that the Greek government repeatedly told the United States it would have to close the other base, the 1990 Mutual Defense Cooperation Agreement states that the United States decided to close it; (2) DOD and the Department of State believe that section 311 does not apply to the two bases, since the United States decided to close them; (3) section 311 does not apply to the Greek base closures, since the closures resulted from termination of a 1983 agreement that was entered into before section 311 became effective; and (4) according to U.S. military officials, the United States will owe a total of about $7.2 million in severance and incentive pay to local nationals employed at the two bases. GAO also noted that problems that could arise in implementing section 311 include: (1) confusion as to who requested the base closures and why; (2) legal difficulties that the United States and its contractors may encounter if they do not make the payments; (3) actions against the United States by the Greek government; and (4) lawsuits and labor unrest since there is no guarantee that the Greek government would make the severance payments if the United States does not meet its obligation.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: The National Defense Authorization Act repealed section 311B, prohibited severance payments to Philippine national employees, and instructed the President to enter into active negotiations to have severance pay cost assumed by host nations by October 1, 1994.

    Matter: In view of international agreements in several countries obligating the United States to make severance payments and the possibility of lawsuits and labor unrest, Congress may wish to consider eliminating section 311. Alternatively, if Congress wanted to effectively restrict severance pay, it could prohibit DOD from using any appropriations for severance pay at specific bases, such as Hellenikon. In the future, to determine whether severance payments are warranted, Congress could require advance notification of the DOD planned action and conduct its own inquiry, or require an executive branch report, on the circumstances of particular base closures.


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