3.5. SR 03-13-2000"ity of
River
MEMORANDUM
Item #
3.5
TO:
FROM:
DATE:
SUBJECT:
Mayor and Council
Lori Johnson, Finance Director
March 13, 2000
Consider Severance Pay Change
The recently approved union contract changed the payment of accrued sick
leave (severance pay) to union employees at termination. In the past, the sick
leave payment provisions have been the same for union and non-union
personnel; therefore, the Council is asked to consider changing the Severance
Pay provisions of the city's Personnel Policy Manual to be consistent with the
union contract.
There are two changes in the severance policy in the new union contract. The
first change is in the years of service required to be eligible for severance pay.
Currently, employees need to complete only two years of consecutive service to
be eligible. The new language requires employees hired on or after March 1,
2000, to complete five years of consecutive service before being eligible.
Employees hired before March 1, 2000, who have not yet completed five years
of service will be eligible to receive severance after two years of service.
Second, the maximum payment is proposed to increase for employees who
have completed fifteen years of service. The maximum payment is currently
fifteen percent of the sick leave balance up to a maximum payment of 144
hours. If approved, payment will increase to twenty percent and a maximum
of 192 hours for employees terminating after completing 15 years of service.
Action Requested
The City Council is asked to consider changes to the severance pay section of
the city's Personnel Policy Manual as attached.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425
RESIGNATION
Employees resigning their employment with the City are asked to give proper written notice in
advance of their resignation. In order to give proper written notice of resignation, an employee
resigning his/her employment with the City must submit a written resignation to his/her supervisor
at least ten (10) working days prior to the anticipated resignation date; department heads must
provide twenty (20) working days written notice to the City Administrator prior to the anticipated
resignation date.
An employee who resigns his/her employment with the City after giving proper written notice as
provided above will be compensated for any unused vacation time the employee was eligible to
use during that year. (Vacation time the employee was accruing during the year in which the
resignation occurred, but which was not yet eligible for use, will not be paid at termination.) If
eligible, the employee may also be compensated for a portion of banked sick leave as stated in the
Severance Pay Section of this policy manual. Failure to comply with this notice procedure may be
considered reason for denying an employee future employment with the City.
An unauthorized absence from work for a period of three (3) working days or more may be
considered a resignation without proper notice.
Non-exempt employees will be compensated for any accrued but unused compensatory time as of
the date of separation.
RETIREMENT
Employees who retire from employment with the City may be eligible for retirement programs as
provided by state or federal law.
LAYOFFS
The City Administrator has the authority to lay-off any employee when such action becomes
necessary as determined in the City's sole discretion. The City will attempt to provide employees
with ten (10) working days notice prior to a lay-off
SEVERANCE PAY
An employee resigning his/her employment with the City may be eligible for a cash payment for
unused sick leave if the following conditions are met:
The employee must resign in good standing (not terminated by the City);
and
The employee must provide proper written notice of his/her resignation
(see Resignation Policy above); and
Employees hired before March 1, 2000, must have worked for the City for
at least two (2) consecutive years. Employees hired on or after March 1,
2000 must have worked for the city for at least five (5) consecutive years;
and
4. The employee must execute a release of claims.
Payment shall be based on the consecutive years of service completed by the employee and
his/her accrued sick leave balance.
An employee hired before March 1, 2000, and terminating after completing
two (2) years of consecutive service will receive payment for fifteen
percent (15%) of his/her accumulated sick leave balance up to a maximum
payment for one hundred forty-four (144) hours. Payment shall be at the
current rate of pay.
An employee hired on or after March 1, 2000, and terminating after
completing five (5) years of consecutive service will receive payment for
fifteen percent (15%) of his/her accumulated sick leave balance up to a
maximum payment for one hundred forty-four (144) hours. Payment shall
be at the current rate of pay.
An employee terminating after completing fifteen (15) years of consecutive
service will receive payment for twenty percent (20%) of his/her
accumulated sick leave balance up to a maximum payment for one hundred
ninety-two (192) hours. Payment shall be at the current rate of pay.
For example, if an employee satisfies the above conditions, has completed ten years of service, has
accumulated 1000 hours of sick leave and makes $10.00 per hour, the employee will receive
severance pay as follows:
1000 hours x 15% = 150 hours
Maximum hours eligible for severance pay = 144 hours
144 hours x $10.00/hour = $1,440 severance pay
Any accumulated sick leave in excess of nine hundred sixty (960) hours is not eligible for payment
under this policy (960 x 15% = 144). Employees may, however, continue to accumulate sick
leave in excess of nine hundred sixty (960) hours as a form of income protection in the event of
unexpected long-term illnesses during their employment.
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