Separation Pay
Separation pay is pay awarded to an individual who is involuntarily separated, discharged, or released from active duty.
Federal Law
10 U.S. Code § 1174: Active-duty officers with between 6 and 20 years of active service who are involuntarily separated are entitled to separation pay equal to:
- 10% x years of active service x 12 x most recent monthly pay.
- Months of service are counted as 1/12 of a year.
Service Secretaries determine whether the computation should be reduced by half for those officers who are discharged for not being qualified for promotion to O2; for chaplains who lose their professional qualifications; or for officers who request discharge while under investigation by a board of inquiry.
Officers ineligible for separation pay include those who
- ask not to be selected for promotion,
- decline continuation on active duty for a period that will qualify the officer for retirement,
- are discharged or released at their request,
- are released from active duty for training, or
- upon discharge are immediately eligible for retired pay.
As a condition of receiving separation pay, personnel must agree to serve in the Ready Reserve for at least three years. If still under a service obligation, the three-year obligation runs consecutively to the other obligations.
10 U.S. Code § 14517: Reserve officers are entitled to separation pay as outlined in 10 U.S. Code § 1174 .
DoD Policy
DODI 1332.29: Regular or Reserve service members being involuntary separated are entitled to full separation pay if each of the five conditions are met:
- With a few exceptions, the service member has completed at least 6 but fewer than 20 years of continuous active-duty service. Reserve members must have 6 years of continuous active duty or full-time National Guard duty immediately preceding separation.
- The service member's separation is "Honorable" and no conditions limiting eligibility for separation pay apply (as detailed in paragraph 3.4 of the Instruction).
- The service member is being involuntarily separated through either denial of reenlistment or denial of continuation, though qualified for retention.
- The service member agrees to up to 3 years of service in the individual Ready Reserve (IRR) following separation. This condition does not apply if the member is not qualified for appointment or enlistment in the Ready Reserves.
Half-separation pay is authorized to Regular and Reserve service members who are involuntarily separated and meet the following five conditions:
- With a few exceptions, the service member has completed at least 6 but fewer than 20 years of continuous active-duty service. Reserve members must have 6 years of continuous active duty or full-time National Guard duty immediately preceding separation.
- The service member's separation is "Honorable" or "General (under honorable conditions)" and none of the other conditions limiting eligibility apply.
- The service member is being involuntarily separated and is not fully qualified for retention for any of the following reasons:
- Weight control failure
- Parent or custody of a minor child
- Military personnel security program
- Disability that existed before service
- Mental or physical conditions and circumstances not constituting a disability
- Alcohol or drug abuse rehabilitation failure
- Failure to meet minimum retention standards
- The service member is being separated under a Service-specific program established as a half-payment level by the Service Secretary
- The service member agrees to up to 3 years of service in the IRR following separation
- The service member has signed a disclosure statement acknowledging that if the member later becomes eligible for retired or retainer pay and/or disability compensation, the full amount of ISP received will be deducted from such pay.
Service Secretaries may determine in extraordinary cases that the conditions under which a service member is separated do not warrant separation payment. It is intended that this discretionary authority to deny payment be used sparingly, and it may not be delegated.
Military Services may choose to award full separation pay to members who are otherwise only qualified for half-separation pay. This provision applies to "extraordinary instances" in which "the specific reasons for separation and the overall quality of the member's service have been such that denial of [full separation] pay would be clearly unjust."
Full separation pay is equal to 10% x 12 x years of service x monthly basic pay at time of separation. Years of service include partial years computed at 1/12th of a year for each full month of service. Fractional months are discarded.
DOD FMR Vol. 7A Chapter 35: A service member is ineligible for separation pay under a variety of circumstances; most significantly if he or she:
- Is separating at his or her own request, including:
- Declining training to qualify for a new skill as a precondition for continuation on active duty
- Requesting separation
- Declining a regular appointment at the mandatory integration point when an all-regular career force program is implemented by a Service Secretary
- Has not completed the initial active service obligation
- Is released from active duty for training or from full-time National Guard duty for training.
- Is immediately eligible upon separation for retired or retainer pay based upon his or her military service.
- Is being separated under other than honorable conditions.
- Is a warrant officer whose appointment is terminated and who then elects to enlist.
- Is separated through execution of a court-martial sentence.
- Is being dropped from the rolls of the Military Service concerned.
- The member is an enlisted member who is separated for unsatisfactory performance or misconduct, as set forth in DODI 1332.14, except when half separation pay is authorized in subparagraph 350301.C.
- Is an officer who is separated for substandard performance, acts of misconduct, or moral or professional dereliction except when half-pay is allowed.
- Is separated under a Service-specific program established as a no-payment level by the Secretary concerned.
- Is separated in an "extraordinary case", in which the Secretary concerned determines that the conditions under which the member is separated do not warrant separation payment. This discretionary authority is not to be delegated and is intended to be used sparingly.
- Declines continuation on active duty for a sufficient period to qualify for retirement if the officer has twice failed of selection in a grade.
Service members will be required to repay separation pay if they subsequently begin receiving retirement or disability retirement payments, except when the disability payments are associated with a different period of service from the period on which the separation pay is based.
Air Force Policy
Implements U.S. Law and DoD Policy. See AFI 36-3207 for details.
Army Policy
Implements U.S. Law and DoD Policy. See AR 600-8-24, Officer Transfers and Discharges, for details. Additional information contained in AR 637-2, Separation Pay (Non-disability) and Levels of Payment.
Navy Policy
See OPNAVINST 1900.4: To be eligible for separation pay, a Reserve officer must have been involuntarily separated from active duty or denied a voluntary request for additional active duty. The request must be unqualified and specify that the member will accept any assignment commensurate with pay grade and designator.
Marine Corps Policy
This instruction applies to Marines involuntarily separated from active duty on or after November 1990. Reserve Marines separated from inactive duty are not normally eligible for separation pay under reference 10 U.S. Code § 1174, unless specific eligibility requirements are met per reference DODI 1332.29.
The amount of separation pay for a Marine shall be calculated as follows:
- Full separation pay is 10 percent of the product of years of active duty military service (a) and 12 times the monthly basic pay to which the Marine was entitled at the time of discharge or release from active duty (b).
Full Separation Pay = .1(a x (12 x b)) - To determine years of active duty military service for use in computing separation pay, count each full year of creditable service as a year and count each full month of service of creditable service as 1/12 of a year. Disregard any remaining fractional part of a month.
- Periods for which a Marine previously has received separation pay, severance pay, or readjustment pay may be counted for eligibility purposes (to ensure the Marine meets the minimum required years of active duty), but may not be used in the multiplier to determine the amount of separation pay for subsequent separation.
- Do not count periods of unauthorized absence, confinement awaiting trial that resulted in conviction, time lost through disease or injury due to misconduct, or service as a midshipman or cadet at a service academy or in an NROTC program.
- Half separation pay is 1/2 the amount computed above in #1.
Eligibility
Reference 10 U.S. Code. § 1174, and reference DODI 1332.29, govern separation pay. Marines involuntarily separated from active duty whose separation is characterized as honorable or general and who meet the criteria in paragraphs 1307.1 and 1307.2 of this Manual, except those excluded in paragraphs 1308 and 1309 of this Manual, are entitled to the full rate of separation pay. The qualifying years for separation pay do not have to be continuous; however, the last phase of the qualifying term must be six continuous active duty years and end immediately before the separation, discharge, or release.
Minimum service
Officers on the active duty list must have completed at least six continuous years of active duty service prior to separation to be eligible for full separation pay. Officers released or discharged upon completion of an initial period of obligated service as an officer or who are not selected or decline to accept career designation are not eligible for separation pay unless prior periods of completed service are combined to meet eligibility requirements set forth in DODI 1332.29 paragraph 3.1a(1).
Regular enlisted Marines must have completed at least six continuous years of active duty service prior to separation.
Reserve officers and Reserve enlisted Marines not on the active duty list when separated must have completed at least six years of continuous active duty service immediately prior to separation. A period of active duty service is continuous if any break in service does not exceed 30 days.
Reserve obligation
The Marine must enter into a written agreement to serve in the Individual Ready Reserve for a period of not less than three years following separation from active duty. A Marine who enters into this written agreement and who is not qualified for appointment or enlistment in the Individual Ready Reserve need not be enlisted or appointed to be considered to have met this condition of eligibility for separation pay. If the Marine has a service obligation remaining at the time the Marine is separated from active duty, the three-year obligation will begin on the day after the date on which the Marine completes this obligation.
Enlisted Marines fully qualified for retention but denied reenlistment or continuation on active duty due to established promotion or high-year tenure policies are eligible for full separation pay. It must be understood that due to manpower constraints, an individual Marine with an otherwise competitive record may be denied reenlistment due to lack of allocations in a particular skill or grade. These Marines will not be deprived of full separation pay. Likewise, Marines twice failed of selection for promotion to the next higher grade may be granted full separation pay.
Only the Secretary of the Navy may deny separation pay to Marines meeting the criteria in paragraphs 1307 or 1308 of this Manual.
See MCO 1900.16 CH 2 for additional details on half-separation pay and ineligibility.
Implements U.S. Law and DoD Policy.