Severance pay (kıdem tazminatı) and notice pay (ihbar tazminatı) are calculated based on the duration of employment and the salary received. These compensations, which the Labor Law provides to protect employees until they find a new job, are payable when certain conditions are met. With changes in minimum wage and public servant salaries in 2023, the maximum limits for these payments have been updated. Below you will find clear, SEO-friendly details about how severance and notice pay are calculated.
What Is Severance Pay?
Severance pay is a lump-sum payment made to an employee who has been dismissed or retired after working at one or more workplaces under an employer. It compensates for the employee’s loss of service or “wear and tear” from work, helping to cover the period until retirement or until a new job is found. For this reason, severance pay is sometimes referred to as “wear-and-tear compensation.”
What Is Notice Pay?
Notice pay is the compensation an employer must pay to an employee who is dismissed without proper notice or before the notice period expires. Under the Labor Law, the right to notice pay is calculated according to the employee’s salary and length of service and must be paid when an employee is dismissed without valid cause or without respecting the legal notice period.
Who Is Eligible for Severance Pay?
Eligibility for severance pay is defined by the Labor Law. Employees who have worked at least one full year at the same workplace and whose employment contract is terminated by the employer without just cause are eligible. Men who leave work for military service and employees who resign within one year due to marriage may also be entitled to severance pay if they meet the legal conditions.
Who Is Eligible for Notice Pay?
Notice pay becomes payable when an employment contract is terminated without proper notice or during the notice period. Unlike severance pay, no minimum service duration is strictly required for notice pay. Employees with less than six months of service can still be eligible for notice pay—typically equivalent to two weeks’ wages—if the legal conditions are met.
Conditions for Severance Pay
Conditions for receiving severance pay under the law are:
- The employment contract between the employee and employer must be subject to the Labor Law,
- The employee must have worked at least one full year at the same employer’s workplace,
- The employer must terminate the employment contract without a justified reason.
Conditions for Notice Pay
The conditions for receiving notice pay are:
- The employment contract must be of indefinite duration,
- The dismissal must not be based on a justified reason,
- The dismissal notice must not have been given within the legal notice periods.
What Was the 2023 Severance Pay Ceiling?
The severance pay ceiling for the first half of 2023 was determined by a Treasury and Finance Ministry circular and set at 17,904.00 TL.
2023 Severance Pay Calculation
Severance pay is calculated using the length of service, the employee’s last 30 days’ gross wage and allowances, and the maximum severance pay ceiling. For both severance and notice pay, the decisive factors are the duration of employment and the employee’s gross wage.
Additionally, Article 14 of the Labor Law states that severance pay cannot exceed the maximum lump-sum retirement bonus payable under the relevant pension law. This provision also affects the calculation.
The severance pay calculation can be summarized in four steps:
- Determine the total period the employee worked for the employer.
- Multiply the employee’s last gross monthly wage (including travel, meal, and other allowances) by the number of service years.
- For incomplete years, multiply the daily gross wage by the number of remaining days and add this to the annual total.
- Deduct stamp tax at the applicable rate (0.759%) from the total; the remaining amount is the severance pay due to the employee.
How Is Severance Pay Claimed?
To receive severance pay, an employee must meet the legal conditions. If an employee with at least one year of service is dismissed for reasons not attributable to them, the employer must pay severance immediately. The employee is not required to file a separate application to collect this right.
If the employer fails to pay severance at the end of the employment contract, the employee may pursue legal remedies. Turkish law typically requires first applying to a conciliator. Within the five-year limitation period, the employee can submit a claim to the conciliator and attempt to resolve the matter with the employer.
If conciliation fails, the employee may file a lawsuit. If the court rules in favor of the employee, the employer must pay the calculated severance amount plus accrued interest based on the highest deposit interest rate applicable.
2023 Notice Pay Calculation
Notice pay is calculated according to the employee’s length of service and gross wage. Even employees with less than six months of service can receive notice pay if conditions are met. The calculation follows these steps:
- Determine the employee’s length of service.
- Multiply the notice period corresponding to that service length by the employee’s daily gross wage.
- Deduct stamp tax and income tax from the calculated amount; the net remainder is paid to the dismissed employee without being subject to a ceiling.
Notice Periods
Notice periods and their corresponding durations are:
- Employees with less than 6 months of service: 14 days’ notice.
- Employees with 6 to 18 months of service: 28 days’ notice.
- Employees with 1.5 to 3 years of service: 42 days’ notice.
- Employees with more than 3 years of service: 56 days’ notice.
When Does the Notice Period Start?
The notice period starts on the day the resignation is delivered or, if no specific start date is stated in the dismissal notice, on the same day or the following day. From that date, the 2-, 4-, 6- or 8-week periods corresponding to the employee’s length of service mark the end of the notice period.
How Is Notice Pay Claimed?
To claim notice pay, the dismissed employee does not need to file a special application. The employer must pay the notice pay together with the dismissal. If the employer fails to pay, the employee can apply to the conciliator from the dismissal date and, if conciliation does not resolve the dispute, file a lawsuit to recover the unpaid notice pay.
Leaving Without Serving the Notice Period
Employees who leave without serving the notice period are subject to different procedures depending on the reason for departure. Under the Labor Law, if the worker has a justified reason under Article 24, they may terminate the contract immediately without serving the notice period. If the employee resigns without a justified reason, they may be required to compensate the employer by paying the notice pay.
When Is Notice Pay Due?
The payment timing for notice pay is specified in Article 17 of the Labor Law No. 4857. If the employer terminates the employment contract without observing the notice period, the employer must immediately pay the notice pay. The payable amount is calculated using the notice period and the employee’s daily gross wage as explained above.
Civil Servant Severance Pay Calculation
Civil servant severance pay is calculated under Article 154 of Law No. 657 using the applicable coefficient (katsayı). The calculation multiplies the relevant indicator and the civil servant salary coefficient to determine the annual severance amount, which is then multiplied by years of service.
Caretaker (Doorman) Severance Pay Calculation
Severance pay for building caretakers (doormen) is calculated like standard severance pay. They calculate their entitlement by multiplying their last 30 days’ gross wage by the number of years worked.
Minimum Wage Severance Pay Calculation
Severance pay for minimum wage earners is calculated based on the “dressed” wage (gross wage including allowances). In 2023 the gross minimum wage was 10,008.00 TL; multiplying that gross amount by the number of service years gives the severance amount.
Severance Pay Calculation from Net Salary
Severance pay is calculated from the dressed (gross) wage. To calculate from a net salary, add any allowances such as clothing, meal, travel, and account for income tax to reach the gross wage, then multiply by years of service.
Severance Pay for Marriage-Related Resignation
Severance pay for employees who resign due to marriage is calculated similarly to regular severance pay: multiply the employee’s last 30 days’ gross wage by the duration of service.
Can You Look for a Job During the Notice Period?
Employees serving their notice period have the right to two hours per day to search for a new job. This time can be used daily or accumulated. During these permitted hours, employers must pay the employee at a rate of 100% of their wage.