NFL CBA Series: Termination Pay
The threshold for becoming eligible for Termination Pay in the NFL is earning four Credited Seasons under the Bert Bell/Pete Rozelle Retirement Plan, which is definitely an indication of the short shelf life a player in the League has.
If an NFL player is released during the regular season and has earned a 53-man roster spot on or after the date of the team’s first regular season game, he is eligible to receive Termination Pay from the team that last released him before receiving such pay (Art. 30, Sec. 1, (a), 157).
Should a player meet these qualifications, he is entitled to receive his remaining P5 Salary for the League Year he is released in. Teams cannot pay players Termination Pay until the day after its last regular season game but must compensate players before February 2. All players can only receive Termination Pay once during their careers in the NFL ((b), 157).
Former Atlanta Falcons defensive end Ray Edwards, who signed a five-year, $27.5 million contract with the team in 2011, received a fairly substantial compensation check prior to the start of the 2013 League Year. Edwards had a base salary of $3 million in 2012.
After being released after Week 10 of the 2012 season, he collected over $1 million in Termination Pay ($176, 470.59 weekly salary multiplied by seven remaining weeks of the regular season). Had he not cleared waivers, the Falcons would have been off the hook for his salary
If a player is signed after the regular season opener to the team that terminated his contract, he is still entitled to payments but at a reduced rate. He is entitled to the greater of 25% of his initial P5 salary or one week’s salary. However, the latter is subject to a maximum of the minimum salary for a veteran with ten or more Credited Seasons. Article 30 also uses the “proportionate remaining balance” for purposes of the 25% calculation.
Players can, however, lose their right to Termination Pay. If the player is issued a written warning (form Appendix I in CBA) pertaining to his lack of good-faith effort to perform services required by others on that team, such a player can be disqualified from eligibility for Termination Pay.