Severance pay is one of the rights provided to employees by the Turkish Labour Code. In case that an employee has at least one full year seniority in the workplace or workplaces of the same employer he/she would be entitled to severance pay, within the condition of exit code declared to the Social Security Institution (SSI) is suitable.
Severance pay is a reward for an employee’s service that lasts more than one year.
If the employee has acts contrary to the rules of morality and goodwill as enlisted in the second paragraph of the Article 25 of the Labour Code No. 4857 and therefore the employment contract is terminated, severance pay is not to be paid.
However, if a female employee marries, a male employee goes to the compulsory military service, the employee dies, the employee retires (become a pensioner), meets the conditions other than age for retirement, the health conditions of the employee do not allow to work, if compelling reasons occur, or the employer’s morality and goodwill as stated in the second paragraph of the Article 24 of the Labour Code are breached, the employee will be entitled to severance pay, again as with the condition of fulfilling one-year seniority.
Severance pay is supposed to be calculated based on the final, dressed gross wage. In the calculation of the severance pay of the worker, in addition to the wage, the money paid to the worker and all the measurable benefits in kind and in cash are taken into account. Severance pay is paid over thirty days’ wages for each year.
In the 14th Article of the Labour Code No. 1475, the calculation of the severance pay is being defined as: “in cases where the employment contract is terminated with severance pay, the employer pays the employee a 30-day severance pay for each full year from the date the employee started to work during the continuation of the service contract.”. This is also stipulated in the aforementioned act that “The calculation of severance pay is made over the final salary.”
According to these rules the severance pay is mainly paid as 1 month’s dressed gross wage for each full-service period. The remaining months from the year are calculated by proportioning to 12, and the days by proportioning 365.
The most recent gross salary of the insured is multiplied by the seniority period. The calculated figure is subject to stamp duty only and the stamp duty rate is 0.00759.
Finally, there is a ceiling application in terms of severance pay according to the provisions of the Turkish Labour Law. If the dressed gross wage of the employee is below the severance pay ceiling, severance pay is paid over the clad gross wage. However, if the gross wage of the employee is above the severance pay ceiling, this time the calculation is made over the severance pay ceiling.
Example severance pay calculation for the calendar year of 2023:
Employment Date: 01.01.2021
Termination Date: 30.01.2023
Seniority Total: 2 years 1 month
The last gross salary: TRL 14,000
Gross meal allowance: TRL 1,000
Severance Pay Ceiling: TRL 19,982.83
Gross pay to be base for severance pay calculation: TRL 15,000
The amount of severance pay to be calculated for 2 years: 15,000 * 2 = TRL 30,000
Severance pay to be calculated for 1 month: (15,000 * 1 day) / TRL 1250 for each month exceeding one year.
Total gross severance pay: 30,000 + 1,250 = TRL 31,250
Stamp duty amount (0,00759): 31,250 TL *0,00759= TRL 237.19
Stamp duty to be exempted: 75.96 TL
Exceptional severance pay: TRL 31,088.77.
Severance pay without exception: TRL 31,012.81*
*If the stamp duty exemption is applied to the employee’s wage, it will not be applied to the severance pay for the second time.
