Severance pay is a major right for workers and represents compensation for their labor. Severance pay, which the employer is obliged to provide when an employee leaves for various reasons, is paid to the worker based on the years they have worked.
What Is Severance Pay?
Severance pay protects employees and prevents them from being disadvantaged in certain situations. To receive severance pay, the employee generally must have been dismissed by the employer without a valid reason. In other words, if a person resigns voluntarily, they typically forfeit their right to severance pay. However, in some exceptional cases, an employee who resigns for justified reasons may still be entitled to severance.
Under What Conditions Can Employees Who Resign Voluntarily Receive Severance Pay?
It is possible for an employee who leaves by their own choice to qualify for severance in certain special circumstances.
These conditions include:
- Working under excessively harsh or dangerous conditions.
- The employer not complying with the terms promised at the start of employment.
- The employer delaying or failing to pay social security contributions on time.
- Changes to social security registration made without the employee’s knowledge.
- Not receiving overtime pay for work performed on holidays or public holidays.
- A woman leaving work due to marriage and changing her surname.
- Not being allowed to use annual leave in full.
If the employer fails to meet the conditions listed above, an employee who resigns for these reasons may be eligible for severance pay.
Can Someone Who Has Completed the Required Insurance Contribution Days Receive Severance Pay?
Those who have completed the required contribution days may still be eligible for severance pay. To retire, both the required number of contribution days and the retirement age must be met. If a person has completed the contribution days and decides to stop working, they can be entitled to severance pay. Likewise, if the retirement age is met while contributions still continue, the worker can also claim severance depending on the circumstances.
When Can a Worker Receive or Be Denied Severance Pay?
Certain situations determine whether employees can claim severance pay. These include:
- If the employee is dismissed for reasons that do not entitle them to severance pay, they will not receive it.
- If the employee violates rules of morality or good faith and is dismissed for misconduct, they are not entitled to severance.
- Acts that disturb workplace peace or theft are grounds for dismissal without severance pay.
- If the employee must leave work due to health problems that constitute a valid legal reason, they may receive severance.
- Male employees who leave to complete compulsory military service may be entitled to severance.
- A female employee who resigns within one year due to marriage may be entitled to compensation.
- Employees who leave due to retirement can also be eligible for severance pay.
The transfer of a workplace to another party—known as workplace transfer—affects severance rights. Labor Law provisions govern employer-employee relationships, specifying job descriptions, working conditions, durations, and rules for changes in the nature of the work. Any such changes should be communicated to the employee and require their consent when legally necessary.
What Happens to the Employee When the Workplace Is Transferred?
The employer and employee duties in cases of workplace transfer are set out in Labor Law. These laws must be followed, and when a workplace is transferred the employer should obtain the employee’s consent. If the employer goes bankrupt or the workplace closes, the worker is entitled to severance pay. To be eligible, the employee must usually have worked at least one year at the same workplace. Severance is calculated using the monthly gross wage multiplied by the number of years worked.
Items included in the salary—such as meal and transportation allowances, bonuses, and health insurance—are considered when calculating severance pay. There is a statutory maximum limit for severance; the total amount is the gross monthly wage multiplied by the years worked, up to that cap. The government sets the ceiling and it can change annually. Employers who transfer or acquire a workplace cannot dismiss employees solely because of the transfer. A management change alone does not automatically create a valid reason for the employee to leave without affecting their rights.
How Does a Change of Employer Affect an Employee’s Seniority?
A lawful transfer of the workplace to another employer results in a change of employer. If a workplace run by individual owners is incorporated as a company, this is also considered a transfer. When a lawful transfer occurs, the employment contracts and the employees’ rights and obligations pass to the new owner. Service length is the determining factor when calculating accrued rights and obligations, so time worked under the new employer is taken into account. The date the workplace was transferred determines which service periods are considered for calculating entitlements.
Severance calculation is part of these accrued rights. Other entitlements arising from transfer—such as unused leave and notice periods—become the responsibility of the acquiring employer. However, this responsibility is generally limited to two years. Since severance becomes payable only after one year of work for the current employer, an employee who wishes to leave immediately after a transfer may, under certain conditions, refuse to accept the transfer and claim severance based on the previous employer’s obligation.
What Are an Employee’s Rights When Two Workplaces Merge?
According to case law, when an employer changes as a result of a workplace transfer, the employee’s contract does not automatically terminate in a way that allows severance claims solely for that reason. When workplaces merge, the legal character of the operation can change. A merger is treated as a change of employer and is considered a transfer to another employer. Transfers motivated by state intervention, inheritance after an employer’s death, or similar changes do not eliminate the employee’s accrued seniority. A change of ownership does not give the employee the right to unilaterally terminate the contract and claim severance on that basis alone.
Which Factors Affect an Employee’s Seniority?
Entries and exits recorded in the employee’s social security records do not automatically reset seniority for severance pay purposes. Some employers attempt to use registration gaps to their advantage, but such entries and exits do not necessarily erase accumulated service. Workers may mistakenly believe their seniority has been nullified, but this is not always accurate. Court decisions have emphasized that the nature of the job and the length of gaps between termination and rehire should be considered. If an employer’s registration changes effectively reduce the worker’s accumulated service inappropriately, the total service period should still be used to calculate severance based on the most recent salary, and any outstanding amounts should be paid.
If an employee continues working for the same employer at a different workplace, the periods worked at each location are combined when calculating severance pay. Whether the employment relationship continued uninterrupted or a new contract was signed, service periods are taken into account in calculating entitlements.