435 Severance Pay

435.1 Eligibility

Any career Postal Service employee who is involuntarily separated and who has been employed continuously by the Postal Service and/or other federal agency for at least 12 consecutive months (without a break in service of 3 or more consecutive days) immediately prior to the separation is eligible for severance pay, except in the following circumstances:

  1. The employee is entitled to an immediate retirement annuity.
  2. At the time of separation, the employee is offered and declines to accept a position in the Postal Service or in any other federal agency of like seniority, tenure, and pay within the same commuting area.
  3. The employee is separated because of entry in the military service.
  4. The employee is separated for cause on charges of misconduct, delinquency, or inefficiency.
  5. The employee, at the time of separation, is receiving compensation as a beneficiary of the Federal Employees Compensation Act except when receiving this compensation concurrently with postal pay.

435.2 Computing Severance Fund

435.21 Limitation

In no case can the severance pay fund exceed 52 weeks’ basic compensation.

435.22 Creditable Service

Creditable service means all service as a paid federal civilian or postal employee and all military service that interrupts a period of paid federal civilian or postal service — excluding any period of federal or postal service for which severance pay has previously been paid.

435.23 Paid Allowances

The employee is credited with 1 week’s basic compensation, in effect at the time of separation, for each year of creditable service up to 10 years. The employee is credited with 2 weeks’ basic compensation for each year of creditable service in excess of 10 years. Each 3–month period of service that exceeds 1 or more full years of service is computed as 25 percent of a full year.

  1. Employee in Nonpay Status. In this case, the basic compensation is the basic compensation the employee would have received had he or she been in a pay status at the time of separation.
  2. Part-time Regular Employee. In this case, determine the basic weekly compensation by multiplying the number of hours in the employee’s regular schedule by the employee’s hourly rate of compensation.
  3. Part-time Flexible Employee. In this case (1) divide by 52 the total number of hours — excluding overtime hours but including paid leave hours — that the employee had to his or her credit during the previous 52 weeks to find the average hours worked per week and (2) multiply the average hours worked per week by the employee’s hourly rate of compensation to determine the basic weekly compensation.
435.24 Allowance to Age Over Forty

The employee’s basic allowance is increased by 10 percent for each full year and by 2 1/2 percent for each 3 full months in excess of a full year that the employee’s age exceeds 40 years at the time of separation. For example, if the employee’s age at the time of separation is 42 years and 7 months, the basic allowance computed in 435.23 above is increased by 25 percent (10 percent for each of the 2 years in excess of 40, and 2 1/2 percent for each of the two full 3–month periods in excess of the 2 full years).

435.3 Pay Rate and Duration

435.31 PS Form 50 Information

The Remarks section on separation PS Form 50 contains the total amount of severance pay due, the amount of the weekly payments, and the date of the first and last payments.

435.32 Amount and Intervals

Employees receive severance pay each biweekly pay period in the amount of twice their basic weekly compensation less withholding for taxes and other involuntary deductions. The severance pay continues until (a) the severance pay fund is exhausted or (b) the employee is reemployed by the Postal Service or another federal agency — whichever occurs first.

435.4 Effect of Reemployment

435.41 Permanent Employment

If an employee who is receiving severance pay is reemployed by the Postal Service or another federal agency, the employee is recredited with the portion of creditable service covered by the balance of the severance pay fund.

435.42 Temporary Employment

If an employee who is receiving severance pay accepts a time–limited federal or postal appointment, severance pay is suspended for the duration of the appointment. Upon termination, severance pay is resumed until the severance pay fund is exhausted. The time that the employee served under the limited appointment is not creditable for purposes of computing the severance pay it interrupts.