The Severance Pay in the Turkish Labor Law

September 29, 2023by Bünyamin Esen0

Labor laws play a crucial role in protecting the rights and interests of employees. In Turkey, the Labor Act No. 4857, also known as the Turkish Labor Law, is a comprehensive piece of legislation that governs various aspects of the employer-employee relationship. One significant aspect covered by this law is severance pay. In addition, the Labor Act No. 1475 also provisions the rights of employees regarding the severance pay. Severance pay is a financial compensation provided to employees under specific circumstances, and it serves as a safeguard against job loss. This essay explores the concept of severance pay according to Labor Act No. 4857 and its importance in the Turkish labor market.

Severance Pay in Turkish Labor Law: An Overview

Severance pay, referred to as “Kıdem Tazminatı” in Turkish, is a form of compensation provided to employees who experience the termination of their employment contract due to specific reasons outlined in the Labor Act No. 4857. This compensation is designed to help employees bridge the financial gap during periods of job transition and to mitigate the economic hardships associated with involuntary job loss.

Eligibility for Severance Pay

The Labor Act No. 4857 outlines the conditions under which an employee is eligible for severance pay. Generally, employees are entitled to severance pay if their employment is terminated due to the following reasons:

  1. Termination by the employer without just cause (wrongful termination).
  2. Resignation by the employee due to compelling reasons recognized by the law (constructive dismissal).
  3. Retirement of the employee upon reaching the legal retirement age and/or fulfilling the pension entitlement conditions
  4. Termination of employment due to the death of the employee.


Calculation of the Severance Pay

The calculation of severance pay in Turkey is based on the employee’s length of service and the gross monthly salary. The formula for calculating severance pay is as follows:

Severance Pay = (Last Gross Monthly Salary x Length of Service)

In this formula, the “Last Gross Monthly Salary” refers to the employee’s gross monthly wage at the time of termination, while the “Length of Service” represents the number of years and days the employee has worked for the employer.


Significance of Severance Pay

Severance pay serves several essential purposes in the Turkish labor market:

  1. Economic Security: Severance pay provides a financial cushion to employees facing job loss, ensuring they have some income during the transition period.
  2. Deterrence Against Unjust Dismissal: The prospect of paying severance compensation encourages employers to adhere to fair and legal termination procedures, reducing wrongful dismissals.
  3. Retirement Benefits: It helps secure the financial well-being of employees upon reaching the retirement age, aiding in their post-retirement life.
  4. Employee Rights: Severance pay reflects the government’s commitment to protecting the rights and interests of workers, ensuring that they are not left financially vulnerable after losing their jobs.


In conclusion, the severance pay, as regulated by Labor Act No. 4857 and the Labor Act No. 1475 in Turkey, is a crucial element of the labor market. It provides financial protection to employees who face involuntary job loss and encourages employers to act fairly and responsibly when terminating employment contracts. By recognizing the importance of severance pay, the Turkish government ensures that employees have a safety net in place, promoting job security and social welfare in the country.

Bünyamin Esen

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