When workers meet the legal conditions, the payment they receive is called severance pay. Severance pay is granted under the Labor Law as compensation for the worker’s length of service at the workplace. Throughout their employment, workers contribute years of labor to their workplace and the employer, supporting the business’s economic future.
Severance pay is the benefit earned in return for continuous and regular service and contribution. When calculating severance pay, the worker’s last salary is taken into account together with allowances such as meal, transportation and social assistance, and the calculation is based on the gross wage.
Conditions for Entitlement to Severance Pay
There are several conditions a worker must meet to be entitled to severance pay. These conditions are set out in the Labor Law and are summarized below:
Being Considered a Worker under the Labor Law: To be eligible for severance pay, the person must be regarded as a worker as defined by Law No. 4857. Whether the employment contract between worker and employer is verbal or written does not affect the right to severance pay. However, employment contracts are usually written. Article 14 of the Labor Law lists certain occupations and working arrangements that are not classified as worker status. Those employed in these excluded occupations are not eligible for severance pay.
Which occupations are excluded:
- Persons working in sea and air transport,
- Persons employed in agricultural or forestry enterprises with 50 or fewer workers (50 included),
- Those working in agricultural-related structures and activities that do not exceed the family economy,
- Family members up to the third degree working at home or in artisanal activities where no external person is involved (up to third degree),
- Domestic service workers,
- Apprentices,
- Athletes,
- Persons in rehabilitation programs,
- Those working in workplaces where three persons operate, as defined under the relevant Craftsmen and Artisans Law.
One-Year Service Requirement: Another requirement for severance pay is at least one year of employment. The worker must have at least one year of service with the same employer, either at the same workplace or at different workplaces of the same employer. Employees who have not completed one year cannot claim severance pay.
Requirement of Indefinite-Term Employment: The form of the employment contract (verbal or written) is less important than whether it is for an indefinite period. Workers under fixed-term contracts are generally not entitled to severance pay. If a fixed-term contract specifies completion of a particular job, the contract ends automatically when that job is completed. If such a contract ends prematurely due to an unjustified act by the employer or for a justified reason presented by the worker, the worker may become entitled to severance pay.
Statute of Limitations for Severance Pay
Severance pay is subject to a five-year statute of limitations. Therefore, the claim for severance pay must be made within five years from the date the employment contract was terminated. This five-year limitation period is regulated by an additional article of Law No. 4857; if the severance pay claim is not pursued within this period, it cannot later be brought to court.
When Is a Worker Entitled to Severance Pay?
A worker who terminates the employment contract for a justified reason is entitled to severance pay. If the employer dismisses the worker and the worker wants severance pay, the dismissal must be unjustified; if the employer dismisses for a justified reason, the worker is not entitled to severance pay.
- If the nature of the work endangers the worker’s health during performance, the worker may terminate the employment contract.
- If a colleague or the employer with whom the worker has close and direct contact carries a contagious disease incompatible with the worker’s duties, the worker may terminate the contract.
- To claim severance pay for health reasons, the worker must document the reason with a medical board report from a state or university hospital.
- If the employer persistently fails to pay overtime wages owed to the worker, the worker may terminate the employment contract.
- Offensive words, threats, harassment, sexual harassment, or insults directed at the worker or the worker’s family by the employer give the worker grounds to terminate and claim severance pay.
- If colleagues behave as described above and the employer fails to take necessary corrective action after being informed, the worker may terminate the contract.
- A male worker who resigns to perform military service may be entitled to severance pay.
- If there are fundamental changes in the nature or conditions of the job, the worker has the right to terminate the employment contract.
- A worker who legally retires may terminate the contract and claim severance.
- Female workers may resign within one year of marriage and claim severance on marriage grounds.
- In the event of the worker’s death, legal heirs may claim severance pay.
- Being a union official can justify termination and entitlement to severance pay.
- If the worker is employed on a piece-rate basis and the employer reduces the volume of work to pay a lower wage, the worker may terminate the contract.
When Is a Worker Not Entitled to Severance Pay?
There are situations in which the worker cannot receive severance pay. These include:
- If the worker breaches the duty of loyalty to the job or employer, the employer may terminate the employment contract and severance pay will not be due.
- If the worker voluntarily leads an abnormal lifestyle and, as a result, becomes ill or disabled and then is absent for three consecutive workdays or five workdays in a month, the employer may dismiss the worker.
- If the worker is dependent on alcohol or drugs and is absent for three consecutive workdays or five workdays within a month due to that dependency, the employer may terminate the contract.
- If a medical board report shows the worker has an incurable illness that makes continuing the current work harmful to the worker’s health, the employer may dismiss the worker.
- If the worker provided misleading information about an essential aspect of the job when the contract was formed, the employer may terminate the contract.
- Insults directed at the employer or the employer’s family are grounds for dismissal without severance.
- Acts such as sexual harassment toward a colleague, using drugs at work, abusing trust, or theft are valid reasons for termination without severance.
- Revealing trade secrets acquired during employment that enable others to learn them is a cause for dismissal.
- If the worker commits an offense carrying an unpostponable prison sentence of more than seven days, the employer may dismiss the worker.
- Unauthorized absenteeism—two consecutive workdays without permission, two instances within one month of missing the first workday after a holiday without justification, or three workdays absent within a month—can lead to dismissal without severance.
- If the worker intentionally or negligently endangers workplace safety, damages equipment, and does not compensate up to thirty days’ wages, the employer may dismiss the worker.
- When the worker is detained or arrested, termination may be allowed depending on length of service: for workers employed up to six months, detention over two weeks; for six months to one and a half years, detention over six weeks; for workers employed over three years, detention over eight weeks may justify dismissal.
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