“Severance pay” (or “Severance compensation”) is a payment made to the employee whose employment contract has ended due to the conditions and reasons stipulated in the 14th Article of the Labour Law No. 1475. The payment shall be made to the employee or to the heirs of the employee in the event of the decease of the employee.
The employee’s seniority period is the date he/she has started working, as specified in the first Paragraph of the 14th Article of the Labour Law No. 1475. In other words, the date the employee’s seniority period begins is not the date the employment contract is signed, but the date the employee starts working. The end of the employee’s seniority period should be considered as the date the employment contract ends.
Employees may be entitled to severance pay if certain conditions are met. These can be listed as follows:
- The employee to be within the scope of the Labour Law,
- The employment contract is terminated for certain reasons,
- The employee’s employment contract has continued for at least one year.
The beginning of the minimum one-year period is the date the employee actually starts working at the workplace.
The employee who is entitled to severance pay shall be paid severance pay in the amount of thirty days’ wages for each full year from the date of commencement of employment by the employer. Payments shall be made by establishing a proportional ratio for periods exceeding one year.
In order to calculate the severance compensation, the employee’s one-day wage shall first be determined, multiplied by thirty and then by the employee’s seniority years, and payment shall be made proportionally for periods exceeding one year.
The following points should be taken into consideration when determining the additional benefits to be taken into account in the calculation of the daily gross wage that forms the basis of severance pay:
- The additional payment must arise from the contract or law,
- It must be continuous,
- It must be a benefit provided to the employee,
- It must be measurable in money or paid by money,
If one of these principles is not present, the benefit provided to the employee shall not be included in the calculation of severance pay.
The Severance Pay Upper Limit amount for the period 1.7.2024-31.12.2024 is 41,828.42 TL gross, and 41,510.94 TL net after stamp duty deduction.
Only 7.59 per thousand stamp duty is deducted from severance pay. No social insurance premium or income tax shall be deducted.
At the end of the lawsuit to be filed due to non-payment of severance pay on time, the judge will rule that the highest interest applied to the deposit nationwide in Türkiye according to the unpaid period for the delay period be paid.
The statute of limitations for severance pay is five years.
