In the schedule of cost components under an ECC option C, item 12(f) allows for payments to people for severance related to working on the contract. In our view this means that the amount payable to the contractor under the contract for severance would be the proportion of severance paid to the individual employee, which related to the time the individual spent working within the working areas.
By way of example, an individual who has worked for the contractor for 48 months has spent 10% of this period working on the contract within the working areas. Hence, by our calculation, 10% of his severance payment would be payable to the contractor under the provisions of item 12(f). Do you agree?
Answer
The severance is limited to that portion which relates to your contract. Exactly how that is calculated may vary although most people seem to pr-rata it in relation to the total time spent on the contract compared with the total time working for the company.
There may, however, be other ways of assessing it, especially if the first period of any employment does not count towards the severance payment made. In addition this relates to all employees, not just those whose employment ended on your contract. So, if somebody on your contract moves to another contract and is then made redundant, you still need to pay your share of that redundancy.
