Severance pay in Turkey is a critical aspect of Turkish labor law, designed to protect employees when employment contracts are terminated under specific conditions. It compensates employees for their length of service and aims to provide financial support during the transition to new employment. In this article, ER&GUN&ER Turkish Law Firm, a trusted Istanbul Lawyer Firm, explains the legal framework, eligibility criteria, and calculation method of severance pay under Turkish Labor Law.
Legal Basis for Severance Pay
Severance pay is governed by Article 14 of the repealed Labor Law No. 1475, which remains in force for severance pay matters. Employees earn severance pay upon termination of their employment under specific lawful grounds. The amount is typically one month’s gross salary per year of service, subject to a legal ceiling known as the severance pay cap.
Eligibility Requirements
To qualify for severance pay in Turkey, an employee must:
- Have completed at least one year of service with the same employer
- Experience contract termination due to:
- Employer-initiated termination without just cause
- Retirement
- Military service (for male employees)
- Marriage (for female employees, within one year)
- Death of the employee
Employees who resign voluntarily without a just cause are generally not entitled to severance pay, unless under exceptional conditions such as health risks, unethical employer behavior, or retirement eligibility.
How to Calculate Severance Pay
Severance pay is calculated based on the employee’s last gross salary, including all benefits and allowances, such as transportation or meal stipends. The calculation formula is:
Severance Pay = (Last Gross Monthly Salary ÷ 30) × Days of Service × Years of Employment
However, severance pay is subject to a cap, which is updated every six months by the Ministry of Labor. Also, a small portion of the payment is deducted as stamp tax.
Considerations Related to Termination
The reason for termination greatly affects severance pay entitlement:
- Resignation: Typically ineligible unless based on justified reasons under Article 24 of Turkish Labor Law
- Mutual termination: May include severance pay if mutually agreed
- Termination for just cause by employer: No severance pay is due
- Termination without just cause: Triggers severance pay entitlement
In the event of death, the employee’s heirs are entitled to severance pay.
Service Duration and Inclusions
Service duration includes time off granted by law, such as:
- Weekends and official holidays
- Maternity and paternity leave
- Military service
- Authorized sick leave
- Annual paid leave
All such time periods are included in the calculation of total employment duration for severance pay purposes.
Legal Consultation and Disputes
Disputes about severance pay often arise during or after termination. Consulting a Turkish lawyer experienced in employment law is critical to asserting or defending legal rights. At Istanbul Lawyer Firm, our English-speaking lawyers in Turkey offer professional legal advice for both employers and employees regarding severance calculations, disputes, and court proceedings.
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