MEMORANDUM FOR SEE DISTRIBUTION
SUBJECT: Guidance for Change in Calculation of Severance Pay for
Nonappropriated Fund (NAF) Employees
Reference memorandum, NAF Personnel Policy and Program Division, dated September 17, 1999, subject: Proposed Change to Army Nonappropriated Fund (NAF) Severance Pay Calculation, that was forwarded to each major Army command for comment and coordination.
The severance pay change was forwarded to the Office of The Judge Advocate General for coordination and comment. Based on their response, we have altered the formula slightly to ensure compliance with Department of Defense (DoD) policy. The new severance pay calculation we are adopting is currently used by the Air Force and Army and Air Force Exchange Services for their NAF employees as well. This calculation ensures fairness to employees while ensuring affordability to the Nonappropriated Fund Instrumentalities (NAFI).
Therefore, effective October 1, 2000, except for employees who already received official Business Based Action (BBA) notification; and, subject to your statutory and contractual labor relations obligations, where applicable, the formula for calculating NAF severance pay for eligible employees changes to the following:
The amount of severance pay shall be based on the number of hours the employee is regularly scheduled to work during the week averaged over a period not to exceed the preceding twelve (12) months, and at the basic pay rate received immediately before separation. Eligible employees will receive one week's pay, at the rate of basic pay the employee was receiving immediately before separation, for each full year of creditable service through ten (10) years; two week's pay, at the rate of basic pay the employee was receiving immediately before separation, for each full year of creditable service beyond 10 years; and twenty-five percent (25%) of the otherwise applicable amount for each full three (3) months of creditable service beyond the final full year. Payment shall be made in a lump sum. The maximum amount of severance pay an employee may receive is 52 weeks of basic pay.
In accordance with DoD 1400.25-M, Chapter 1400, subchapter 1405, Appendix E, Classification, Pay and Allowances, the following provisions apply.
Conditions Under Which Eligible Employees Receive Severance Pay:
An eligible employee shall receive severance pay when:
1. The employee is separated or resigns following a receipt of a specific written notice of separation due to BBA.
2. The employee's basic pay is reduced, and the employee resigns instead of accepting the reduction.
3. The employee's employment category is involuntarily changed from Regular Full-Time to Regular Part-time and the employee resigns instead of accepting the change.
4. The employee's employment category is involuntarily changed from Regular to Flexible.
5. The employee is furloughed for more than 60 consecutive days and resigns instead of accepting the furlough.
Regular employees who have completed at least 12 months of continuous creditable service are eligible for severance pay. The continuous service qualifying the employee for severance pay must have occurred within the 12 months preceding the effective date of the BBA.
Determining Creditable Service for Severance Pay:
1. Service in a pay status as a Regular employee in one or more DoD NAFIs;
2. Military service that interrupted creditable service, as prescribed in Chapter 43 of 38 U.S.C ; and
3. Service in a continuing (i.e. without a time limits on the length of the appointment) appropriated fund position, if the employee moved from a DoD appropriated fund (APF) position to a DoD NAF position on or after January 1, 1987, without a break in service of more than 3 calendar days.
The following service is not creditable for purposes of NAF severance pay:
1. Service upon which a NAF or civil service annuity is based, if the annuity began before the date of the BBA.
2. Periods of service for which NAF or APF severance pay was previously granted; and
3. Service used to determine an employee's APF severance pay entitlement under the provisions of 5 U.S.C. 5595(h).
Severance pay will not be paid when the employee:
1. Was separated because of misconduct, unsatisfactory performance, or delinquency.
2. Is employed, without a break in service of more than 3 calendar days after separation in another DoD NAF Regular position, or a DoD APF position, without a time limit on the length of the appointment. See 5 CFR 550.708. Note: DoD NAF employees who move to DoD APF positions without a break in service of more than 3 days are eligible for portability of benefits. Under 5 CFR 550.708, NAF service is creditable for computing an employee's APF severance pay if the employee is later separated from the APF position under conditions entitling the employee to APF severance pay.
3. Has refused an offer of employment in any DoD NAFI that would not result in a rate of basic pay that is lower than the rate of basic pay received immediately before the BBA, or a loss of employment category. Offers must be in the same commuting area unless the employee is covered by an agreement in which mobility is a condition of employment.
4. Is entitled to an immediate annuity that is not reduced because of the employee's age at the time of retirement. This exclusion covers an annuity from a NAF retirement plan, or from a civil service retirement plan in which the employee elected to remain following movement between employment systems 5 U.S.C. 8347(q) and 8461(n).
5. Is receiving payments from the Department of Labor's Office of Workers Compensation Programs for a job related injury.
The point of contact for this action is Ms. Sandra Curran at (703) 325-7762/
DSN 221-7762, or e-mail sandra.curran@(email address expired).