Buyouts, sometimes referred to as voluntary severance incentive payments, may be paid by some agencies during a downsizing to reduce disruption and costs associated with a downsizing or for workforce restructuring purposes. work. Public Law 107-296 provided permanent government-wide buyout authority for workforce restructuring and Public Law 108-136 gave the Department of Defense permanent authority to pay up to 25,000 redemptions per year for restructuring or downsizing, redemptions related to base closures not counting. against this limit.
Department of Defense employees who receive buyout payments can choose to receive the payment in one sum or in bi-weekly or two-part installments. Employees who choose bi-weekly installments can choose the preferred rate, although they cannot spread payments over more than one year. Alternatively, they can choose to receive half the payment up front and the other half six months later, which could be invaluable for those wishing to transfer money into the following tax year.
See also www.opm.gov/policy-data-oversight/workforce-restructuring/voluntary-separation-incentive-payments.
General redemption policies
An incentive payment is the lower of:
- the amount of severance pay you would get if you were involuntarily separated;
- $25,000 (generally; amounts may vary by agency);
- an amount determined by the head of the branch, if the redemption authority grants this power to the branch; Where
- an amount fixed by the law authorizing redemptions for the agency, if this law provides for a lower amount.
Whether to offer a buyout even once an agency has authority is strictly at the discretion of the agency; an employee is not entitled to a buyout even if the agency has the authority to offer them and does offer them within the organization.
Agencies also have wide discretion to tailor their buy-back programs, such as setting specific eligibility rules and developing procedures for allocating buy-ins if more employees agree to take them than there are. enough to avoid a RIF. For example, an agency in this situation might choose recipients based on departure date order, order of receipt of completed applications, seniority, and other factors. Incentives may be targeted to positions based on locations, organizations, and/or occupations (including grade levels), but may not be targeted to individuals.
There are no age requirements, although in practice most buyout beneficiaries are eligible for regular or early retirement. Early retirement offers are often coupled with buyout offers, but the buyout program is not a retirement program and it does not change standard retirement eligibility rules. Additionally, a buyout beneficiary cannot become a “gradual” retiree as this does not involve separation from service, but rather part-time employment.
It is prohibited to compel an employee to take a buyout. Even if an agency uses buyouts in a downsizing situation, it is possible that the buyouts will not result in a sufficient number of voluntary departures and the agency will have to downsize. A buyout offer does not protect the FRR employee.
A buyout taker must repay the full amount (before tax) of the incentive to the agency that paid the buyout if the employee accepts employment with the United States government or under a personal services within five years of separation with the incentive. (A “personal services contract” generally includes consultancy-type agreements, but not employment with a company under contract with the agency. Definitions vary from agency to agency, so check the specific provisions for advance.) The direct rehire restriction applies to quasi-governmental enterprises. agencies such as the US Postal Service as well as part-time and temporary positions.
Reimbursement should be made before the person’s first day of work in the new position.
In some cases, the Office of Personnel Management may waive reimbursement at the request of the agency head if the individual possessed unique abilities and is the only qualified candidate available for the position. Reimbursement could also be canceled in emergency situations that threaten life or property.
Accepting a takeover offer also means waiving the rights that the employee would have acquired by remaining in the agency through a reduction in the workforce. These include entitlement to a standard severance package as well as various forms of re-employment assistance. Buyout takers are generally considered ineligible for unemployment benefits. However, they can continue federal life and health insurance on the same terms as anyone who resigns or retires without a buyout.
If you received a buyout and are declared eligible for disability retirement later, then you are responsible for reimbursing the full amount of the buyout to the agency that paid you the buyout.
Workforce Restructuring Buyout Authority
Public Law 107-296 authorized buyouts in the executive and judicial branches of the federal government for the purposes of workforce restructuring. The aim is to grant agencies the power to reduce high-level, managerial or supervisory positions, correct skills imbalances or reduce operating costs without losing positions, without linking their use to the elimination of full-time equivalent positions, the use of involuntary departures or downgrading.
Offers can be targeted based on organizational unit, series or occupational level, geographic location, specific time periods, skills, knowledge, or other job-related factors , or a combination of these factors, but not performance.
An agency that uses buyouts for workforce restructuring is required to submit a detailed plan to the OPM outlining the use of authority and how the agency’s workforce would be restructured. An agency plan could not be implemented without the approval of the OPM, who could modify the plan before approving it. The plan must specify the period during which the authorization would be used, as well as the number of employees for which it would be used, although the law does not impose a ceiling on the number of employees to whom buy-outs can be offered.
Agencies are required to pay lump sum buyouts to employees who voluntarily retire or resign in accordance with their approved plans.
Certain employees are excluded from eligibility, including re-employed annuitants, employees eligible to retire on disability, employees about to be separated for misconduct or unacceptable performance, and employees who have already received a federal government buyout. . Employees generally need at least three consecutive years of ongoing service, but not necessarily all of them with the agency offering the buyout.
Redemption authority for downsizing
Buyout authority for downsizing is usually granted by an act of Congress after an agency has argued that it will incur disruption and other costs by downsizing (some agencies have the power distinct from using buyouts for downsizing; check with your office staff). Eligibility varies from agency to agency depending on the specific terms of the laws that apply to them. Generally, an employee is eligible to receive a buyout by accepting an offer and voluntarily resigning or retiring during an allowable window.
Generally, those not eligible for redemptions include those who: are re-employed annuitants; have a disability as a result of which the employee is or would be eligible for disability retirement; are serving under a time-limited appointment; those who have not met the agency’s continuous service requirements; having received specific notice of involuntary departure for misconduct or unacceptable performance; have already received a redemption but have not repaid it; are covered by the legal rights of re-employment of another organization; have benefited from a recruitment or relocation bonus within 24 months of the separation to benefit from a buyout; or have received a retention bonus within 12 months of separation to receive a buyout. Check with your agency for any specific variations.