Severance pay can be claimed only if the termination notification uses a dismissal code that does not prevent entitlement to severance. Workers dismissed without severance still have the right to pursue a claim through legal channels within 10 years.
What Does the Termination Code Mean?
When an employment contract is terminated, the code on the SGK termination notification that indicates the reason for the employee’s departure is called the termination code.
Which Law Specifies the Importance of Termination Codes?
The significance of termination codes is explained under Article 19 of Labor Law No. 4857.
Why Is the Termination Code Important?
The reason for dismissal determines whether the employee can receive severance pay, notice pay, or unemployment benefits. That reason is recorded using the termination code. Accurate coding protects the rights of both employer and employee.
How Should a Termination Notification Be Submitted?
Termination must be reported to SGK. Employers should submit the termination on the SGK website using the appropriate termination codes, and report the employee’s last working date and the reason for leaving.
What Conditions Must Be Met to Receive Severance Pay?
To be eligible for severance pay, employees must meet two main conditions:
- The employee must have become unemployed without their own fault or will.
- The employee must have at least one year of continuous service with the employer before the termination date.
What Are the Exceptional Cases for Receiving Severance Pay?
Employees who resign voluntarily may still be entitled to severance pay in certain exceptional cases. When these circumstances apply, the employer is obliged to pay severance:
- A female employee who resigns because of marriage may claim severance if she leaves within one year of the marriage.
- Male employees who leave due to military service can claim severance.
- Employees who leave due to disability retirement are entitled to severance.
- Severance is paid when the employee leaves due to regular retirement.
- Employees who leave because they have reached mandatory retirement age are eligible for severance.
- Employees who resign due to health problems are entitled to severance pay.
Which SGK Termination Codes Correspond to Severance Eligibility?
The SGK termination codes that are relevant for severance are as follows:
- 01: Termination by the employer during a probationary period — severance may apply.
- 02: Termination by the employee during a probationary period — severance may apply.
- 03: Employee resignation from an open-ended contract — severance may apply.
- 04: Employer termination of an open-ended contract for just cause — severance is required.
- 05: End of a fixed-term contract — severance may apply.
- 08: Termination due to retirement or lump-sum payment — severance applies.
- 09: Severance after disability retirement.
- 10: Used for termination due to death.
- 11: Used when death results from a work accident.
- 12: Used when leaving for military service and claiming severance.
- 13: Used when a female employee leaves because of marriage.
- 14: Used for employees who meet all retirement conditions except the age requirement.
- 15: Used in mass layoffs — severance is payable.
- 16: Used when the employee’s contract continues but the employee is transferred to another workplace of the same employer.
- 17: Used when the workplace closes.
- 18: Used when the job ends for other reasons.
- 19: Used for suspensions at the end of a season; if the employee will not return, code 04 should be used.
- 20: Used when a contract ends at the conclusion of a campaign but will resume later.
- 21: Used for termination due to a change in employment status.
- 22: Used for termination for other specified reasons.
- 23: Used when the employee terminates the contract for compulsory reasons.
- 24: Used when the employee terminates due to health reasons.
- 25: Used when the employee terminates because of employer conduct that violates morals or good faith.
- 26: Used for dismissals resulting from a disciplinary board decision.
- 27: Used when the employer terminates due to detention or other compulsory reasons.
- 28: Used when the employer terminates due to the employee’s health condition.
- 29: Used when the employer dismisses the employee for behavior that violates morals or good faith.
- 30: Used to suspend the contract of employees whose visa has expired; if the visa is not renewed, code 04 should be used.
- 31: Used when termination occurs for reasons related to the Code of Obligations, Trade Unions Law, or Strike and Lockout Law and is not the employee’s fault.
- 32: Used for terminations under Article 21 of Law No. 4046 related to privatization.
- 33: Used when journalists’ contracts are terminated.
- 34: Used when the workplace or the nature of the job is transferred or changed, leading to termination.
- 36: Used for terminations related to state of emergency / decree laws.
Which Payments Are Included in Severance Pay Calculation?
The following payments are included when calculating severance pay:
- Meal and transportation allowances
- Gross salary
- Cash compensation
- Vehicle allowance
- Education allowance
- Clothing allowance
- Social assistance amounts
- Food and heating allowances
- Housing allowance
- Title-based compensation
- Compensation for wear and tear
- Skilled-worker supplements
- Child allowance
- Regularly paid bonuses and premiums
- Seniority or qualification increases
- Health assistance
- Financial liability compensation
Which Payments Are Excluded from Severance Calculation?
The following payments are not included in severance calculations:
- Annual leave and weekend pay
- Marriage allowance
- Holiday bonuses
- Public holiday pay
- Sickness benefits
- Birth and funeral allowances
- Incentive bonuses
- Travel premiums
- Costs of work clothes and protective equipment
- Non-recurring bonuses
- One-time awards
- Overtime pay
- Job search assistance and per diem
Are Deductions Made from Severance Pay?
A deduction is applied to severance pay at a rate of 0.759% (per mille 7.59) as stamp tax.
What to Do If the Employer Refuses to Pay Severance?
Employees who meet the conditions for severance should first notify their employer of their departure, observing the applicable notice period. If the employer refuses to pay severance, a formal notice should be sent to the employer. Sending a notice by a notary requires the employer to pay within the period specified in the notice; if payment is not made, the employee has the right to apply to the labor court in their jurisdiction.
Will a Severance Fund Be Established?
Severance pay reforms are under discussion and a fund-based system is being developed. Such a fund could be advantageous for employees, but there is no definitive information yet about when it will be implemented.