Severance pay, also known as termination or redundancy pay, is a crucial aspect of labor rights and social protection for employees. It serves as a financial buffer during the transitional period following the termination of employment.
In Turkey, the legal framework governing severance pay is outlined in the Turkish Labour Code No. 4857. The key provisions of severance pay as stipulated by Turkish legislation and its calculation method are being presented below:
Calculation Method:
Under Turkish Labour Code No. 4857, severance pay is calculated based on an employee’s length of service (seniority) and the last monthly gross salary earned. The length of service is the primary determinant of the severance pay amount, while the salary level determines the applicable multiplier.
For employees with a continuous service period of less than one year, severance pay is not mandatory. However, if the service period exceeds one year, the entitlement to severance pay is established. The calculation formula is as follows:
Seniority year x Lass gross wage = Severance Payment
For example, the severance pay of a worker with 10 years of seniority is calculated as follows:
In Article 14 of the Labor Law No. 1475, it is stated that the employer will pay the employee a 30-day severance pay for each full year during the continuation of the service contract starting from the date of employment. Therefore, the worker is entitled to severance pay in the amount of a total of 300 days’ wages, 30 days for each year.
In case of termination of any employment contract for a reason that requires severance pay, severance pay equal to 30 days’ gross wage is paid for each full year worked. The periods increasing from one year are also included in the calculation by proportioning. During the calculation of severance pay, in addition to the wage paid to the worker, all money and benefits that can be measured in money (road allowance, meal allowance, bonus payments on condition that it is regular, etc.) are also taken into account. The amount of severance pay paid for each full working year is limited to the severance pay ceiling valid at the date of termination.
