(1) All state branches, departments, and agencies which have the authority to establish or approve personnel policies for employees and to employ personnel and establish the conditions of their employment shall establish policies to provide terminal “incentive” pay for accumulated and unused sick leave to each employee upon normal or regular retirement for reason other than disability or upon termination of employment, or to the employee’s beneficiary if service is terminated by death, provided such retirement, termination, or death occurs after 10 years of creditable state employment.
(2) The employing entity shall establish and publish rules governing the accumulation and use of sick leave and maintain accurate and reliable records showing the amount of sick leave which has accumulated and is unused by the employee at the time of retirement, death, or termination.
(3) The payments authorized by this section shall be determined by using the rate of pay received by the employee at the time of retirement, termination, or death, applied to the sick leave time for which the employee is qualified to receive terminal “incentive” pay under the rules adopted by the department pursuant to the provisions of this section. Rules and policies adopted pursuant to this section shall permit terminal pay for sick leave equal to one-eighth of all unused sick leave credit accumulated prior to October 1, 1973, plus one-fourth of all unused sick leave accumulated on or after October 1, 1973. However, terminal pay allowable for unused sick leave accumulated on or after October 1, 1973, shall not exceed a maximum of 480 hours of actual payment. Employees shall be required to use all sick leave accumulated prior to October 1, 1973, before using sick leave accumulated on or after October 1, 1973.
(4) The payments made pursuant to this section shall not be considered in any state-administered retirement system as salary payments and shall not be used in determining the average final compensation of an employee in any state-administered retirement system.
(5) Any employee:
(a) Who is found guilty in a court of competent jurisdiction of committing, aiding, or abetting any embezzlement or theft from the employee’s employer or bribery in connection with the employment, committed prior to retirement or 10-year normal creditable termination;
(b) Whose employment is terminated by reason of the employee having admitted committing, aiding, or abetting an embezzlement or theft from his or her employer or by reason of bribery;
(c) Who, prior to 10-year normal creditable termination or retirement is adjudged by a court of competent jurisdiction to have violated any state law against strikes by public employees; or
(d) Who has been found guilty by a court of competent jurisdiction of violating any state law prohibiting strikes by public employees,
shall forfeit all rights and benefits under this section. An employee whose employment terminates as a result of an act committed subject to this subsection shall not be given credit for unused sick leave accumulated prior to termination should the employee be reemployed at a later date.