Labor & Employment Law Daily Wrap Up, AGENCY NEWS—Voluntary separation payments up to $25k offered to HHS employees, (Mar 10, 2025)

By Patricia K. Ruiz, J.D.

The incentive payments aid the government in avoiding costly and disruptive reductions in force.

In an email to most of its 80,000 workers, the Department of Health and Human Services (HHS) offered a payment of up to $25,000 in exchange for voluntary separation. The offer, effective March 10 through March 14, 2025, comes pursuant to the agency’s voluntary separation incentive payments (VSIP) authority, or its buyout authority.

Voluntary separation incentive payments. The buyout authority allows agencies that are downsizing or restructuring to offer employees lump-sum payments of up to $25,000 as an incentive to voluntarily separate. An agency, with the approval of the Office of Management and Budget (OMB), may offer VSIP to employees who are in surplus positions or have skills that are no longer needed in the workforce to separate by resignation, optional retirement, or voluntary early retirement. Agencies can minimize or avoid involuntary separations through costly and disruptive reductions in force by allowing employees to volunteer to leave the government.

The incentive payment is the lesser of: (1) an amount equal to the amount of severance pay the employee would be entitled to receive, as computed under 5 U.S.C. § 5595(c), without adjustment for any previous payment made; or (2) an amount determined by the agency head, not to exceed $25,000. The amount the employee actually receives is less than the amount determined because of the deduction of taxes, including federal, state, social security, and Medicare, as appropriate.

Previous voluntary early retirement authority offer. This most recent offer follows the agency’s March 3 notification to employees that they could, by March 14, apply for early retirement through the government’s voluntary early retirement authority (VERA). VERA allows agencies to temporarily lower the age and service requirements in order to increase the number of employees who are eligible for retirement. Doing so encourages more voluntary separations and helps the agency complete the needed organizational change with minimal disruption by the work force. Employees may then benefit from receipt of an immediate annuity, years before they would otherwise be eligible. Agencies must request VERA and receive approval from OPM.

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