1.    For the purposes of this section, “severance pay” means compensation received, upon termination of employment, for reasons primarily beyond the control of the state employee or officer. Severance pay does not include payments made to a terminated employee or officer for accrued annual or sick leave, or compensatory leave, when such payments are authorized.

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2.    Except as provided in subsection 3, no state employee or officer is entitled to severance pay upon termination of employment if the employee or officer quit employment voluntarily or resigned of the person‘s own accord, or was dismissed for gross neglect of duty, gross misconduct while on duty, or for other good cause. A state employee or officer may be entitled to severance pay if the employee or officer was dismissed from employment because of reductions in staff or temporary or permanent layoffs, or for other reasons primarily beyond the control of the employee or officer. This section does not affect the rights of employees or officers in salary or wage disputes which are the subject of out-of-court settlements.

3.    A state agency may, within the limits of its legislative appropriations, provide financial incentives to encourage an employee to retire or resign if the resulting departure will increase agency efficiencies or reduce expenses.