A worker’s right to severance pay ensures they receive compensation for their service and labor. Severance pay is paid to employees who have worked for an employer for a certain period when they lose their job, taking into account the contributions they made to the workplace. This lump-sum payment helps the worker cover living expenses while unemployed.
After the minimum wage increases in January 2022, the severance pay ceiling amounts were adjusted. The severance pay ceiling set for the first half of 2022 was 10,596.74 TL.
As the number of years worked increases, the severance pay also increases accordingly. Anyone who meets the retirement conditions can, under certain circumstances, receive severance pay through the Social Security Institution (SGK) if they resign. Calculations are made according to set rates and vary depending on the length of service.
At the end of each completed 30-day period of employment, a certain severance entitlement accrues for the worker. Severance pay can be considered compensation for years of service and wear-and-tear on the worker.
What Are the Conditions for Becoming Eligible for Severance Pay?
Eligibility for severance pay arises under certain conditions. These conditions can be summarized as follows:
- Being an employee as defined by Law No. 4857; people working under employment contracts are considered employees.
- Having worked at the same workplace for at least one year.
- The employment contract being terminated for specified reasons.
- Unjustified termination by the employer.
Workers dismissed by the employer for valid cause may not be entitled to severance pay. In all other qualifying cases, they are entitled to it. Death of the worker and compulsory military service are also considered within the scope of severance pay. When a worker legally retires, they become eligible for severance pay. If a worker terminates their employment contract for these reasons, they are entitled to receive severance pay.
How Is Severance Pay Calculated?
People whose employment contracts are terminated for various reasons may be entitled to severance pay. For each year worked from the start date, the severance amount increases. Employers pay severance based on specified amounts for the duration the employee has worked. The payment is calculated as a 30-day wage amount for each year of service.
The calculation of severance pay is based on the employee’s most recent salary. For periods longer than one year, the same method applies. In addition to the last salary received by the employee, the following amounts should be included:
- Transportation allowance
- Meal allowance
- Payments given as social assistance
- Allowances for education and housing
All these amounts are calculated on the gross salary basis. You can consult experts for precise severance calculations. Whatever the 30-day gross wage is, the severance pay increases proportionally.
Who Cannot Benefit from Severance Pay?
According to Law No. 4857, most workers defined as employees are eligible for severance pay. However, certain categories of workers are excluded from this right. Those excluded may seek legal remedies if they believe their rights were violated, although some groups are explicitly outside the scope of the law and thus not entitled to severance.
Persons who cannot claim severance pay include the following:
- Workers employed in maritime and air transport businesses
- Those working in agricultural and forestry operations
- Persons doing agricultural work to contribute to the family economy
- Workers engaged in domestic handicrafts
- Domestic service workers
- Apprentices who have not yet been promoted to journeyman
- Individuals engaged in sports activities professionally
- People undergoing rehabilitation
- Employees working at workplaces with only three employees
Even if these workers have worked longer than one year, they are not entitled to severance pay and typically do not have the right to pursue compensation after contract termination. However, employers may choose to grant severance pay to these employees voluntarily.
What Is the Just Cause Requirement for Severance Pay?
Employment agreements should ideally be of indefinite duration, whether written or verbal, to ensure worker protections. Fixed-term contracts generally do not entitle the worker to severance pay when the contract ends. Workers should check that their contracts are indefinite when accepting a job, which provides stronger protection and potential severance rights.
The just cause requirement for severance pay applies in appropriate situations. In fixed-term contracts, the contract automatically ends when the specified period expires, and no severance payment is required. To avoid falling into this category, workers should prefer open-ended contracts where possible.
What Is the Limitation Period for Severance Pay Claims?
Severance pay claims must be made within the statutory limitation period. Employees whose contracts are terminated become entitled to severance pay as of the termination date. If payment is not made within the limitation period, the claim may expire. The limitation period is approximately five years according to the law. After five years, the right to claim under the supplementary article of Labor Law No. 4857 is considered time-barred.
The limitation period for severance claims is determined by law and cannot be unilaterally changed by employers. Within the five-year limitation period, a worker may file a severance claim against the employer and should consult specialized lawyers if needed. If no legal action is taken within five years, the worker loses the right to bring a claim related to that period of employment.
In Which Situations Is Severance Pay Paid to the Worker?
Law No. 4857 sets out clear rules about when severance pay must be paid. Under this law, severance pay becomes mandatory in the following situations:
- Unjust termination by the employer when no force majeure exists
- Termination by the employee due to the employer’s bad faith or immoral behavior
- For male employees, termination before going to military service
- Employee resigns to exercise retirement rights
- Termination due to the worker having completed the necessary days and premiums to retire
- Female employees resigning voluntarily within one year following marriage
If a worker dies, the employment contract is terminated and severance pay is paid to their heirs. The length of service is clearly calculated and payments are made according to the applicable conditions. The legal framework defines severance pay entitlements precisely.
What Factors Affect the Amount of Severance Pay?
Several factors influence the amount of severance pay and may require re-calculation of the payment. The basic measure is one month’s gross wage for each year of service, with the worker’s most recent gross monthly salary being the primary determinant.
Factors that affect the severance amount generally include:
- Social assistance payments such as family or child allowances
- Amounts paid as education allowances
- Amounts covering health-related expenses
- Other items included under social assistance
- Housing allowance amounts, if provided
- Monthly gross amounts for meal and transportation allowances
These supplementary payments increase the gross basis used to calculate severance pay. For exact determinations, consult a professional to ensure all eligible components are included in the calculation.
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