What is Severance Pay? Conditions and Calculation Details

 

Severance pay—governed by the still-active Article 14 of Labor Law No. 1475—is compensation paid to an employee who has worked for the same employer for at least one year upon the termination of their employment contract under conditions specified by law.

​

1. Conditions for Entitlement to Severance Pay

An employee must meet specific criteria to be eligible for severance pay:

• One Year of Service
  The employee must have completed at least one full year of service at a workplace (or multiple workplaces) under the same employer.

• Termination by the Employer
  The employee must be dismissed for reasons other than "violation of moral and good faith rules" (Labor Law No. 4857, Article 25/II).

• Resignation for Just Cause
  Employees are entitled to severance if they resign for legally justified reasons, such as health issues or unethical employer conduct.

• Retirement, Military Service, and Marriage
  Employees meeting retirement requirements, male employees leaving for compulsory military service, and female employees resigning within one year of marriage are entitled to severance.

 

2. How is severance pay calculated?

Severance pay is calculated based on the employee's gross wage, incorporating all benefits:

• Gross Wage Base
  The calculation includes the base wage along with regular social benefits such as transportation, meals, bonuses, and allowances.

• Calculation Formula
  Employees receive 30 days of gross wage for each full year of service. Periods exceeding one year are calculated proportionally.

• Severance Pay Ceiling
  The state sets a statutory upper limit (ceiling) for the wage base. Even if an employee's gross wage exceeds this amount, the calculation is capped at the ceiling figure.

 

3. What are the interruptions?

Severance pay is exempt from income tax. Only a stamp duty of 0.759% is deducted from the payment. Any other deductions are strictly unlawful.

​

4. Why Should You Seek Professional Help?

Common issues in severance cases include underreported working hours, excluded wage components (such as food or transport), or misstated termination grounds.
 

At Tanyeri Law & Consulting, drawing upon 37 years of experience in labor law, we manage disputes meticulously from mediation to litigation to ensure your compensation is calculated down to the last penny and fully collected. With transparent process management, we handle complex compensation claims with absolute determination.

 

Note: The calculation tool above provides estimated figures for general informational purposes only, based on the data you enter. Each specific case may involve unique circumstances, interest commencement dates, and additional variables. To avoid any loss of rights, we strongly recommend seeking professional legal assistance.