Severance Pay

To be eligible for severance pay, an employee must be serving under a qualifying appointment, have a regularly scheduled tour of duty, have completed at least 12 months of continuous service, and be removed from Federal service by involuntary separation for reasons other than inefficiency (i.e., unacceptable performance or conduct). See 5 C.F.R. § 550.704-706.

The following types of employees involuntarily separated (for reasons other than for cause on charges of misconduct, delinquency, or inefficiency) may be eligible for severance pay, providing they are serving in a qualifying appointment:

• Full- and part-time General Schedule (GS) employees;
• Full- and part-time career Senior Executive Service (SES) employees, Senior-Level & Scientific and Professional Positions (SL/ST), and SES equivalents;
• Full time title 38 employees;
• Part-time title 38 employees appointed without time limitation; and
• Federal Wage System (FWS) employees.

The following appointments are qualifying appointments for severance pay:

• A career or career-conditional appointment in the competitive service or the equivalent in the excepted service (including appointments paid under the General Schedule whether appointed under title 38 or title 5);
• Title 38 appointments under 38 U.S.C. § 7401(1) or 7401(4);
• Part-time title 38 employees appointed under 38 U.S.C. § 7405(a)(1)(A) without time limitation;
• Federal Wage System (FWS) non-temporary employees;
• A career appointment in the SES, SL/ST or SES equivalents;
• An excepted appointment without time limitation, except under Schedule C or an equivalent appointment made for similar purposes;
• An overseas limited appointment without time limitation;
• A status quo appointment, including one that becomes indefinite when the employee is promoted, demoted, or reassigned;
• A time-limited appointment in the Foreign Service, when the employee was assigned under a statutory authority that carried entitlement to reemployment in the same agency, but this right of reemployment has expired; and
• A time-limited appointment (or series of time-limited appointments by the same agency without any breaks in service) for full-time employment that takes effect within 3 calendar days after the end of a qualifying appointment.

The following are nonqualifying appointments and do not convey eligibility for severance pay:

• An appointment at a noncovered agency (see the definition of agency in 5 C.F.R. § 550.703);
• An appointment in which the employee has an intermittent work schedule (e.g., fee basis or without-compensation employees);
• A Presidential appointment;
• An emergency appointment;
• An excepted appointment under Schedule C or an equivalent appointment made for similar purposes (e.g., Political Appointees for confidential or policy roles);
• A noncareer appointment in the SES or a noncareer SES equivalent appointment made for similar purposes; and
• A time-limited appointment* including—
  • A term appointment such as under 38 U.S.C. § 7306;
  • An overseas limited appointment with a time limitation;
  • A limited term or limited emergency appointment in the SES, as defined in 5 U.S.C. § 3132(a), or an equivalent appointment made for similar purposes;
  • A Veterans Recruitment Appointment; and
  • A Presidential Management Fellows appointment.

*Note, a time-limited appointment may be qualifying if it is made effective within 3 calendar days after separation from a qualifying appointment. See 5 C.F.R. § 550.703.

An employee is ineligible for severance pay if the employee:

• Is serving under a nonqualifying appointment;
• Declines a reasonable offer of assignment to another position;
• Generally, employees serving under a qualifying appointment in an agency scheduled to be terminated within 1 year after the date of the appointment (see 5 C.F.R. § 550.704(b)(3) and (4));
• Is receiving injury compensation under 5 U.S.C. chapter 81, subchapter I (unless received concurrently with pay or is at the result of someone else’s death); or
• Is eligible upon separation for an immediate annuity from a Federal civilian retirement system or from the uniformed services to include voluntary early retirement (VERA) and discontinued service retirements. Such an employee is ineligible even if all or part of the annuity is offset by payments from a non-Federal retirement system the employee elected instead of Federal civilian retirement benefits or disability benefits received from the Department of Veterans Affairs. (Note: This is separate from Deferred Resignation Program (DRP), see OPM DRP Guidance)
• Holds a position for which the rate of basic pay is fixed at an Executive Schedule (EX) rate or has a rate of basic pay in excess of the official rate of pay for EX level I;
• Deferred Resignation Program (DRP) participants;
• Voluntary Separation Incentive Payment (VSIP) participants;

A reasonable offer is an offer given to an employee for a position that meets all of the following conditions:

• The offer is in writing;
• The employee meets the established qualification requirements of the offered position; and
• The offered position is—
  • In the employee’s current agency, which includes a different agency to which the employee is being transferred with his or her function. Within the employee’s commuting area, unless geographic mobility is a condition of employment;
  • Of equal or greater tenure and with the same work schedule (full-time or part-time); and
  • Not lower than two grades or pay levels below the employee’s current grade or pay level.

If an employee expects to be involuntarily separated and resigns, the employee is considered to have been involuntarily separated if the employee resigns after receiving:

• A specific written notice that the employee will be involuntarily separated by a particular action effective on a particular date; or
• A general written notice of reduction in force or transfer of functions which—
  • Is issued by a properly authorized agency official;
  • Announces that the agency has decided to abolish, or transfer to another commuting area, all positions in the competitive area by a particular date (no more than 1 year after the date of the notice); and
  • States that, for all employees in that competitive area, a resignation following receipt of the notice constitutes an involuntary separation for severance pay purposes.

However, a resignation is not considered an involuntary separation if the specific or general written notice is canceled before the separation (based on that resignation) takes effect. Resignations under any other circumstances are voluntary separations, and do not carry entitlement to severance pay.

Servicing human resources (HR) offices will compute the employees’ total years of creditable civilian service. (See VAH 5007, Part IV, Chapter 2).

The HR Officer, or designee, will furnish verification of eligibility and years of service to the appropriate Fiscal office. The Fiscal office is responsible for computing the employee’s severance pay amount using the information furnished by the HR office. (See VAH 5007 Part IV Chapter 2).

An employee’s severance pay fund may consist of two parts – the basic severance pay allowance and an age adjustment allowance, if applicable. The age adjustment allowance refers to an augmentation of the basic severance pay allowance consisting of a 2.5 percent of basic severance pay allowance added for each full 3 months of age an employee is over 40 years old.

Generally, the basic severance pay allowance consists of the following:

1. One week of pay at the rate of basic pay for the position held by the employee at the time of separation for each full year of creditable service through 10 years;
2. Two weeks of pay at the rate of basic pay for the position held by the employee at the time of separation for each full year of creditable service beyond 10 years; and
3. Twenty-five percent of the otherwise applicable amount for each full 3 months of creditable service beyond the final full year.

The lifetime severance pay fund is limited to that amount which would provide 52 weeks of severance pay (taking into account weeks of severance pay previously received).

Severance payments are made at the same pay period intervals that salary payments would be made if the recipient were still employed.

Severance payments are subject to appropriate deductions for income and Social Security taxes.

Rate of basic pay means the rate of pay fixed by law or administrative action for the position held by the employee, including, as applicable, annual premium pay for standby duty, law enforcement availability pay, straight-time pay for regular overtime hours for firefighters, night differential for prevailing rate employees, locality payments, and special rate supplements.

The rate of basic pay does not include additional pay of any other kind. For employees covered under 38 U.S.C. § 7431, (Physicians, Dentists, Podiatrists and *Optometrists) only base and market pay is considered rates of basic pay.

*Implementation of optometrists’ movement to 38 U.S.C. § 7431 is underway in 2025 pursuant to Section 142 of Title I of the Dole Act (P.L. 118-210).

Title 38 pharmacy executive special pay and nurse executive special pay (as applicable) are included pursuant to 38 U.S.C. § § 7410(b)(4) and 7452(g)(4), respectively.

If an individual entitled to severance pay later accepts a position with the Federal Government or the government of the District of Columbia, that individual is no longer eligible for severance pay, and severance pay is terminated.

When an individual entitled to severance pay is employed by the Government of the United States or the government of the District of Columbia under a nonqualifying time-limited appointment, severance pay must be suspended during the life of the appointment. Severance pay resumes, without any recomputation, when the employee separates from the nonqualifying time-limited appointment.

A period covered by severance payments is not a period of service or employment with the Government of the United States for any purpose.

A current Federal employee is not subject to a RIF while serving in the uniformed services (see 5 CFR 353.102 for “uniformed services” definition), and the employee is provided with additional RIF protections when they return to Federal service. If the employee served for more than 180 days, they may not be separated by RIF for 1 year after the employee returns.

If the employee served for more than 30 but less than 181 days, they may not be separated by RIF for 6 months. (See 5 CFR 353.209)

 If the same employee is involuntarily separated based on a RIF action after the expiration of his or her applicable period of protection, he or she will be eligible for severance pay, if all the required conditions are met.

Note: In computing the amount of severance pay the separated employee receives, credit is given for service in the uniformed services only if it interrupts Federal civilian service and the employee returns to Federal civilian service by exercising a restoration right under law, Executive order, or regulation. Service in the uniformed services performed prior to an individual’s Federal civilian service is not creditable for severance pay purposes.

The payments of severance pay with respect to the employee shall be continued as if the employee were living and shall be paid on a pay period basis to the survivor of the employee in accordance with section 5 U.S.C. § 5582(b).