SECTION 1. (a) Notwithstanding sections 31, 33, and 39 of the Massachusetts General Laws Chapter 31, or any other general or special law to the contrary, if permanent employees tenured under Chapter 31, who hold the same rank in an agency, are to be separated from employment because of lack of work, lack of funding, or abolition of positions, such employees shall, except as hereinafter provided, be separated from employment according to their seniority in such rank and shall be reinstated in the same agency unity and in the same position or positions similar to those formerly held by them according to seniority in such rank. Thus, employees senior in length of service within each respective rank shall be retained the longest and reinstated first. Employees separated from positions under this section shall be reinstated prior to the appointment of any other applicants to fill such openings.

(b) Any action by an appointing authority to separate a tenured employee from employment based on lack of work, lack of money, or abolition of positions shall comply with section 41 of Chapter 31. Any such employee who has received written notice of an intent to separate the employee from employment for such reasons may, as an alternative to such separation, file with the appointing authority, within seven days of receipt of such notice, a written consent to demotion in (i) a position in the next lower rank or ranks in succession in the official service or to (ii) the next lower rank or ranks in the labor service, as the case may be, if in such next lower rank or ranks there is an employee junior to the employee in length of service within that rank. If work or funding is restored, any employee so demoted shall be restored to the rank in which the employee was formerly employed, according to seniority in such rank.

(c) A permanent employee tenured under Chapter 31, who has become separated from employment because of disability and is subsequently deemed capable of employment as determined pursuant to section eight of Massachusetts General Laws Chapter thirty-two by the Methuen Retirement Board, as defined in section one of chapter thirty-two, such employee shall be placed in a position in the same or similar title in the department from which the employee was separated, or any other department prior to the appointment from any civil service list; provided, however, that if such placement of such employee occurs more than five years after the date of such separation, or if such placement is in a different title from the title of the position from which the employee was separated, such employee must undergo a retraining program established by the appointing authority, and approved by the personnel administrator, prior to, and as a condition of, such placement.

SECTION 2. Nothing in this section shall impair the preference provided for disabled veterans by section twenty-six.