Severance Pay Under Turkish Labor Law

Turkish labor law regulates the conditions under which employers and employees work together. One of the nuances of Turkish labor law is severance pay. Under Turkish labor law, it is the type of payment that the employee receives according to his/her seniority, to compensate for the work that he/she did before the termination of his employment. This means that some employees can be eligible for the payout if he/she has a legitimate reason. 

To understand whether your situation is eligible for such payments, you might want to consult a lawyer. Attorneys at our Istanbul Law Firm will help you regarding severance pay. You can book an appointment according to your availability and get a consultation from experienced lawyers in their respective fields such as labor law. 

Legal Base for Severance Pay

Severance pay is regulated by Turkish Labor Law, which means that the same law also regulates the conditions that are required to be eligible for it. It is usually equal to the monthly gross salary that the worker has received every year he/she worked with the said company. But even the amount has certain nuances only a competent attorney can understand and work through. 

In this article, we are going to explain how these conditions and legal terms work, especially in the case of Turkish law.

Conditions for Severance Pay

As mentioned above, several conditions need to be met to be eligible for severance pay. There are two main conditions put forward by Turkish Law, and these are as follows:

  • To be eligible, the worker must have worked for the same employer for at least a year.
  • The process regarding the termination of a worker must fall into the categories described under Article 14 of Turkish Law no.1475

Therefore, before consulting your attorney, you might want to make sure that these two conditions are met. Even if you think they are not met and you are not within the scope of the payment, you might still want to contact a lawyer, as you might be missing something. Lawyers at Istanbul Lawyer Firm will help you greatly with this subject. 

Service Length Required for Severance Pay

As mentioned above, the requirement for the timeframe for severance pay is a full year. Service length is calculated by considering these:

  • Accidents or illnesses that cause the worker to not be present during a workday
  • The days when the worker is called for civic duty, such as military work
  • Weekends, public holidays
  • Three-day leave taken for a worker after marriage
  • Leave covering two days after the death of a family member
  • Annual paid leave

In short, every kind of leave that the employer is supposed to grant to his/her worker by law is taken into consideration in the eligibility for the payment. That way, it is possible to see whether the worker has worked for 365 full days for the company or not. 

Termination of Employment in Severance Payment

One of the most crucial points to look at while deciding whether a person is eligible for severance pay or not is the cause of the termination of work. For instance, resignation is usually not a reason that seems to make one eligible for the payment. This means that workers who quit their jobs by resigning cannot ask for such payments. In the case of the termination of employment due to the employee’s death, his/her family can be eligible for payment. 

Understanding the circumstances under which a worker becomes eligible for such a payment is important for both employees and employers. Therefore, in the case of a termination of an employment contract, it is advisable for both parties to consult a employment lawyer before concluding this type of payment. 

How to Calculate Severance Payment

One of the most asked questions regarding this subject is “How is severance pay calculated?” For this, there are several factors that employers must take into consideration. The payment is calculated considering the monthly gross salary of a worker as well as additional benefits such as allowances offered to him/her before or during his/her employment. This type of payment is not exempt from taxes, it is subject to a kind of tax called “stamp tax”.

However, there is also a “severance pay ceiling”, which refers to the maximum amount that can be taken into consideration as the gross salary of a worker while calculating this payment. The seniority indemnity ceiling may change every six months according to several economic reasons such as the inflation of a country. 

The payment is usually calculated by dividing the gross salary into 365 and multiplying the result by the length of service in the form of days. After that, there is a calculation of stamp tax, which is removed from the result. 

Final Words on Severance Payment

The term “severance pay” refers to the compensation that a worker may receive following the termination of his/her employment contract. Certain situations render the employee eligible for such payment according to Turkish Law. Given the fact that the law might be subject to change, it is generally recommended that the worker consult a lawyer to thoroughly understand whether he/she is eligible for severance pay.

Attorneys at Istanbul Lawyer Firm, who are experts in Turkish Labor Law, can help employees and employers understand the nuances of severance pay in Turkey.

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