How is severance pay computed?
The formula is:

• 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;
• 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
• 25 percent of the otherwise applicable amount for each full three months of creditable service beyond the final full year.

For employees who are over age 40, an age adjustment allowance is added to the basic allowance. This over-40 age adjustment calls for computing 2.5 percent of the basic severance allowance for each full three months of age over age 40.

There are certain special rules for various types of variable work schedules, including part-time work and seasonal work.

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

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