What is Severance Pay? Conditions and Calculation Details

Severance pay, according to Article 14 of the Labor Law No. 1475, which is still in effect, is compensation received by an employee who has worked for the same employer for at least one year, when their employment contract is terminated for reasons specified in the law.

 

1. Conditions for Entitlement to Severance Pay

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

• One Year of Seniority: The employee must have worked for at least one full year at a workplace affiliated with the same employer (or at different workplaces of the same employer).

• Termination of Employment Contract: The employee must have been dismissed by the employer for a reason other than "violation of moral and good faith rules" (Law No. 4857, Article 25/II).

• Termination for Just Cause: This right also arises when an employee resigns for justifiable reasons, such as health issues or the employer's unethical behavior.

• Retirement, Military Service, and Marriage: Employees who meet the retirement requirements, male employees who leave due to compulsory military service, and female employees who leave their jobs within one year of their marriage are entitled to severance pay.

 

2. How is severance pay calculated?

Severance pay is calculated based on the employee's last "Gross Salary including benefits".

• Gross Salary (including basic wage): This is not just the base salary; it's the gross total of all allowances including transportation, meals, bonuses, and other regular social benefits.

• Calculation Formula: The employee is paid compensation equivalent to 30 days' gross salary for each full year of service. Periods exceeding one year are included in the calculation proportionally.

• Severance Pay Ceiling: The legislator has set an upper limit (ceiling) for the gross wage to be used as the basis for severance pay. Even if the employee's gross wage is above this ceiling, the calculation is made based on the ceiling figure.

 

3. What are the interruptions?

Severance pay is exempt from income tax. Only a stamp duty deduction of 0.759% (seven point five hundred ninety per thousand) is made from this payment. Any other deduction is against the law.

 

4. Why Should You Seek Professional Help?

The most common problems encountered in severance pay cases are: underreporting of working hours, failure to include gross wage components (food, transportation, etc.) in the calculation, or incorrectly stating the reason for termination.

 

At Tanyeri Law & Consultancy, with our 37 years of experience in labor law, we take a meticulous approach to resolving disputes. From mediation to litigation, we are by your side to ensure that your compensation is calculated accurately down to the last penny and that your legal rights are fully collected. With our transparent process management, we handle complex compensation cases with experience and determination.

 

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