Severance Pay In Turkish Law

Severance pay is one of the most important topics in Turkish labor law and is primarily based on Article 14 of the repealed Labor Code No. 1475, which remains in effect. This article provides general information regarding the circumstances under which an employee, whose employment contract has terminated, is entitled to severance pay.

Although certain exceptions provided for in the legislation and detailed below apply, employees whose period of service with the employer has reached one year are entitled to severance pay, if their employment contract is terminated by the employer or by the employee for specific reasons listed in the legislation.

The amount of severance pay is calculated based on the employee’s 30-day gross salary for each full year of service, starting from the date the employee began working for the employer. For any incomplete year of service, this amount is prorated accordingly.

The employee’s severance pay is calculated based on the total duration of employment with the same employer, regardless of whether the employment contract continued uninterrupted, and considering the periods worked at one or more of the employer’s workplaces. Furthermore, in the event of the transfer, succession, or any other form of transfer of the workplace from one employer to another, or its relocation to another location, the employee’s seniority is calculated based on the total duration of the employment contracts at the workplace or workplaces. In the event of a workplace transfer, the transferring and the receiving employers are jointly liable for the severance pay obligation arising prior to the transfer with respect to the relevant employee; however, the transferring employer’s liability is limited to a period of two years from the date of transfer.

A cap applies to severance pay; if the employee’s 30-day gross salary exceeds this cap, the calculation is based on the cap amount. This cap is generally updated twice a year, effective as of January 1 and July 1. 

The statute of limitations for claims regarding severance pay is five years.

If the employer fails to pay the severance pay to which the employee is entitled, the employee may seek legal remedies to demand payment of this amount. In this context, mandatory mediation must first be pursued; if no agreement is reached, a lawsuit may be filed in labor courts. If the court rules in favor of severance pay as a result of the dispute, the amount in question is generally collected along with the highest interest rate applicable to deposits.

In the event of the employee’s death, if severance pay has been earned, this amount is paid to the employee’s legal heirs.

• Circumstances Under Which Employees Are Entitled to Severance Pay

 Employees are entitled to severance pay from the employer in the following cases:

• • Termination of the employee’s employment contract by the employer for the just reasons listed in Articles 25/I (health reasons), 25/III (compelling reasons), and 25/IV (absence exceeding the notice period due to the employee’s arrest or detention) of the Labor Code No. 4857 (“Labor Code”) that is currently in force;
  • The employer’s termination of the employee’s employment contract pursuant to Article 18 of the Labor Code based on valid grounds related to the employee’s performance, conduct, or the requirements of the work, the business, and/or the workplace;
  • The employee’s termination of the employment contract pursuant to Article 24 of the Labor Code based on just reasons such as health reasons, situations where the employer fails to comply with the rules of morality and good faith and similar circumstances, as well as compelling reasons;
  • In cases where the employment contract is terminated by mutual agreement through the execution of a settlement agreement between the employer and the employee, even if the employee is not entitled to severance pay under the law, it is recommended that severance pay be paid to the employee in accordance with Supreme Court decisions;
  • While employees generally do not qualify for severance pay upon resignation, the following situations constitute exceptions to this rule, and employees are entitled to severance pay when they resign for the following reasons:
    • A female employee resigning within one year of getting married,
    • Termination of the employment contract by the employee due to mandatory military service, and
    • Resignation due to retirement.
• Circumstances Under Which Employees Are Not Entitled to Severance Pay

Employees are not entitled to severance pay from the employer in the following cases:

• • Termination of the employee’s employment contract by the employer for just reasons listed in Article 25/II of the Labor Code (cases where the employee fails to comply with rules of morality and good faith and similar situations);
  • The employee’s voluntary resignation, excluding the reasons listed above as military service, marriage, or retirement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.