Library Document Details

Severance Pay and Benefits Policy for Nonfaculty Employees

UAB provides severance pay and benefits for full-time regular nonfaculty exempt employees and nonexempt employees.
Effective Date:
Responsible Party:
None Assigned
Administrative Category:
Applies To:
Material Original Source:

University of Alabama at Birmingham


September 1, 2014

(Replaces policy dated October 1, 2011)


Policy Statement

UAB’s severance program is designed to provide financial support for full-time and part-time regular employees (employment categories 01, 03, 12) during a period of employment transition.  Employment transition is defined as: a period of unemployment where there is a loss of income, and there is a burden of having to find new employment.  UAB provides severance pay and benefits for full-time and part-time regular nonfaculty exempt employees below the level of vice presidential/Provost/CEO of the UAB Health System, and nonexempt employees who are terminated involuntarily and experience a period of economic transition for the following reasons: loss of position due to institutional restructuring, loss or lack of funding or workforce downsizing approved by the Provost or the appropriate vice president.  Employees terminated for any reason other than those listed above or who resign are not eligible for pay and benefits under this policy.  This program may not be used if the department intends to refill the eliminated position or rehire the displaced employee in the same job title or have the employee perform similar job duties in the same department/unit within a twelve-month period.  Likewise, non-faculty employees whose employment with UAB ends upon completion of the pre-determined end date of a grant or contract will not receive severance pay.  Only individuals whose termination from UAB will result in a period of  employment transition as defined above are eligible for severance pay.

Affected employees will be given as much advance notice as possible of the impending job loss in addition to the severance payout described in this policy. 

When possible, at least one week prior to the separation date, employees will be notified in writing of the reduction and applicable dates of the severance period, including timeframes of the working notice and severance pay periods. The notice will include the last day worked and the effective termination date, which will be the date the severance period ends.  The decision to allow an employee to continue working may be rescinded by the department at any time during the notice period.  The displaced employee will be given reasonable time to pursue other job opportunities during the notice period.

The amount of severance pay depends on number of years of service and whether the position is nonexempt) or exempt.  The date used to calculate total severance benefits is the employee’s most recent service date.  Severance pay is based exclusively on base pay provided by UAB. The allowed severance pay rates are as follows:

       1.  Nonexempt employees are eligible for severance pay according to the following schedule:
  • Less than 5 years service: 2 weeks pay
  • 5 years but less than 10 years: 4 weeks pay
  • 10 years but less than 20 years: 8 weeks pay
  • 20 years or more service: 12 weeks pay

       2.  Exempt employees are eligible for severance pay according to the following schedule:

  • Less than 5 years service: 1 month pay
  • 5 years but less than 10 years: 2 months pay
  • 10 years but less than 20 years: 3 months pay
  • 20 years or more service: 4 months pay

At the election of the employee, severance pay may be distributed as a one-time payment of the full severance amount or through normal payroll processing using the same rate of payment as before the employee was terminated.  Severance pay distributed as a one-time payment of the full severance pay amount is not subject to Teachers’ Retirement System of Alabama deductions, state income tax nor to TIAA-CREF deductions, but is subject to withholdings for federal tax, Social Security (FICA), city occupational tax and county occupational tax. 

If the severance pay is distributed through normal payroll processing, the following shall apply:

  1. A displaced employee is eligible to continue participation in group benefit plans as previously elected prior to the qualifying event.  Participation will be at the same level, premium rate, or amount as for active employees.
  2. Vacation and sick time will continue to accrue.
  3. The displaced employee is eligible to continue participating in defined contribution-based and defined benefit plans such as the Teachers' Retirement System of Alabama, TIAA-CREF, and VALIC.  For purposes of crediting time in the retirement system, the Teachers' Retirement System of Alabama treats severance periods the same as paid sabbaticals and other paid leaves of absence (that is, the time is credited toward retirement).

Regardless of whether an employee elects to be paid at one-time or through normal payroll processing, as stated above, any and all rights to severance pay benefits, including any right to a lump sum payment or additional distributions, if payments were elected through normal payroll processing, will be forfeited permanently on the date the individual secures a new assignment within UAB, UAB Medicine, or any other employer participating in the Teacher's Retirement System or begins receiving state Teacher's Retirement income.  If a displaced employee obtains employment outside of UAB, UAB Medicine or any other employer participating in the Teacher's Retirement System, all severance pay will be paid regardless of whether the displaced employee obtains new employment prior to completion of the severance period.

Accrued, unused terminal vacation pay will be paid as a one-time payment and may not exceed allowable maximum limits for accrual of vacation time.  (For current allowable maximum accrual limits, see the You & UAB Handbook for Faculty and Staff or visit  All UAB equipment (pagers, laptops, etc.) for which the employee is responsible must be returned in operating condition before the accrued vacation pay-out can be calculated. 

Costs for severance pay and benefits are the responsibility of the affected department or unit.

Prior to any communication with affected employees concerning severance pay and benefits, written notification to the affected employees must be approved (1) by the appropriate senior administrative official delegated such duties by the President and (2) by the Office of Human Resources.



The Vice President for Financial Affairs and Administration is responsible for procedures to implement this policy.