In Turkey, severance pay is calculated for an employee who has worked for the same employer for at least one year and whose employment contract ends in one of the ways listed in the law: for each full year of service, the employee receives 30 days of their gross wage including regular benefits, periods beyond a full year are added at the same rate, and the annual amount cannot exceed the severance pay cap. Only stamp duty is deducted.
In this article, we cover eligibility for severance pay, the calculation method, the severance cap, payment and interest rules, the difference from notice pay, and the mediation and limitation periods. For other employee claims, see our employment law page.
Which law governs severance pay?
Severance pay (kıdem tazminatı) is not regulated in the Labour Act No. 4857 but in Article 14 of the former Labour Act No. 1475. When Law No. 4857 entered into force in 2003, it repealed all provisions of the former act except this article (Labour Act No. 4857, Art. 120). For this reason, the conditions and calculation of severance pay are still determined today under Article 14 of Law No. 1475.
Who is entitled to severance pay?
Two conditions must be met together:
- The employee has worked for the same employer for at least one year. Periods spent at different workplaces of the same employer and intermittent periods of employment are added together; the liability of the transferring and acquiring employers in a transfer of business is regulated separately in the law (Labour Act No. 1475, Art. 14(2)).
- The employment contract has ended in one of the ways listed in the law.
| Way the contract ends | Severance pay | Point to note |
|---|---|---|
| Termination by the employer | Yes | Except termination for just cause based on conduct contrary to morality and good faith (Labour Act Art. 25(II)); termination for a valid reason is also covered |
| Termination by the employee for just cause | Yes | Situations such as unpaid wages, sexual harassment or failure to apply working conditions (Labour Act Art. 24) |
| Compulsory military service | Yes | Leaving because of military service must be documented |
| Retirement, disability pension or lump-sum payment | Yes | Entitlement to the pension and the application to the institution must be documented |
| Completion of the non-age conditions for retirement | Yes | A letter obtained from SGK; 15 years and 3,600 days for those insured before 08.09.1999 |
| A female employee leaving within one year of marriage | Yes | The period runs from the date of marriage |
| Death of the employee | Yes | The payment is made to the legal heirs |
| Resignation without any just cause | No | Unless one of the special cases in the law applies |
Resignation for just cause is the situation most often disputed in practice. The employee may terminate the contract without waiting for the notice period for reasons such as wages not being calculated or paid in accordance with the law or the contract, conduct by the employer that offends the employee’s honour and dignity, or failure to apply working conditions (Labour Act Art. 24). The right to terminate based on conduct contrary to morality and good faith must be exercised within six working days of learning of the situation and in any event within one year of the act (Labour Act Art. 26). However, for continuing breaches such as unpaid wages, the Court of Cassation holds that this period does not run while the breach continues, so the time limit must be assessed on the facts of each case. Stating the reason clearly in the notice of termination is important for proof later on.
The 15 years and 3,600 days case makes it possible to receive severance pay without waiting for retirement age. The employee may leave voluntarily after obtaining a letter from SGK (Social Security Institution) showing that they have completed the non-age conditions for retirement, namely the insurance period and the number of premium days (Labour Act No. 1475, Art. 14(1)(5)). For those first insured before 08.09.1999, this condition is a 15-year insurance period and 3,600 premium days (Law No. 506, provisional Art. 81); a higher number of premium days is required for those insured later. The letter must be obtained before leaving the job.
How is severance pay calculated?
The calculation is made in four steps:
- The length of service is determined: The period between the start date and the date the contract ended is calculated in years, months and days.
- The wage base is established: The calculation is based on the last gross wage. Money and benefits measurable in money that are regularly provided to the employee are added to the base wage; this is known as the dressed wage (giydirilmiş ücret) (Labour Act No. 1475, Art. 14). If the wage is not fixed, as with piece-rate or percentage pay, the average of the wages paid over the last year is used.
- 30 days’ wages are calculated for each full year; months and days beyond a full year are added at the same rate. In practice, one twelfth of the annual amount (30 days’ wages) is multiplied by the number of months, and one 365th by the number of days.
- The cap is checked: If the dressed wage exceeds the severance cap, the cap amount is used for each year.
In the case law of the Court of Cassation, regular payments such as bonuses, continuing premiums, and meal, transport and fuel allowances are included in the dressed wage; items paid once or several times a year are added by dividing the total paid over the last year into a monthly or daily amount. Occasional overtime, weekly rest day and public holiday pay, and benefits provided for use at the workplace, such as work clothing, are not included.
Deductions: Severance pay owed under the law is exempt from income tax (Income Tax Act Art. 25(7)) and is not included in earnings subject to premiums (Law No. 5510, Art. 80). Only stamp duty at 7.59 per thousand is deducted from this amount (Stamp Duty Act, Table 1, IV-1-b). Contractual payments exceeding the statutory amount may be subject to income tax.
What is the severance pay cap?
Severance pay for one year of service cannot exceed the maximum retirement bonus payable for one year of service to the highest-ranking civil servant under the Pension Fund Act No. 5434 (Labour Act No. 1475, Art. 14). Because this limit is tied to civil servant salary coefficients, in recent years it has been updated in January and July.
According to figures published by the Ministry of Labour and Social Security, the severance pay cap for 1 July – 31 December 2026 is TRY 73,729.87. The cap in force on the termination date applies. As a new amount will apply from 2027, check the current cap in the Ministry’s announcements.
Worked example of a severance pay calculation
The figures below are entirely hypothetical and serve only to illustrate the method. Assumptions: length of service 6 years, 4 months and 15 days; monthly gross wage TRY 40,000; monthly meal allowance TRY 3,000; monthly transport allowance TRY 2,000; an annual bonus of TRY 24,000 paid once a year (TRY 2,000 per month). The dressed gross wage is TRY 47,000, which is below the cap.
| Item | Calculation | Amount (TRY) |
|---|---|---|
| 6 full years | 47,000 × 6 | 282,000.00 |
| 4 months | 47,000 ÷ 12 × 4 | 15,666.67 |
| 15 days | 47,000 ÷ 365 × 15 | 1,931.51 |
| Gross severance pay | Total | 299,598.18 |
| Stamp duty | 7.59 per thousand | 2,273.95 |
| Net severance pay | Gross – stamp duty | 297,324.23 |
If the dressed wage had exceeded the cap, the cap in force on the termination date would have been used instead of TRY 47,000. In the same example, if the employer terminated without giving notice, the employee could also claim notice pay equal to eight weeks’ wages.
When must severance pay be paid, and does interest accrue on late payment?
According to the case law of the Court of Cassation, severance pay becomes due when the employment contract ends, meaning it must be paid immediately. In a lawsuit filed because severance pay was not paid on time, the judge awards the highest interest rate applied to deposits for the period of delay (Labour Act No. 1475, Art. 14). In practice, this interest runs from the termination date without the need for a separate notice of default. As a rule, statutory interest applies to notice pay.
Two points should be noted when accepting payment:
- According to the Court of Cassation, an employee who accepts a late payment without reserving the right to interest may not be able to claim the ancillary interest later (Court of Cassation, 9th Civil Chamber, 19.01.2021, 2020/4492 E., 2021/1536 K.).
- A release (ibraname) must be made in writing at least one month after the contract ends, must clearly state the type and amount of the claim, and the payment must be made in full through a bank. A release that does not meet these conditions is absolutely void (Turkish Code of Obligations (TBK) Art. 420).
What is the difference between severance pay and notice pay?
The two are often claimed together, but their conditions and calculations differ:
| Severance pay | Notice pay | |
|---|---|---|
| Legal basis | Labour Act No. 1475, Art. 14 | Labour Act Art. 17 |
| Condition | At least one year of service and one of the ways of ending listed in the law | Termination of an indefinite-term contract without observing the notice period |
| Who pays? | The employer only | The party that fails to give notice; this may also be the employee |
| Amount | 30 days’ dressed wage for each year | Dressed wage for the notice period |
| Cap | Yes | No |
| Interest | Highest interest rate applied to deposits | As a rule, statutory interest |
| Deductions | Stamp duty only | Income tax and stamp duty |
Notice periods are determined according to the employee’s length of service at the same workplace (Labour Act No. 4857, Art. 17):
| Employee’s length of service | Notice period |
|---|---|
| Less than 6 months | 2 weeks |
| 6 months – 1.5 years | 4 weeks |
| 1.5 years – 3 years | 6 weeks |
| More than 3 years | 8 weeks |
These periods are minimums and may be extended by contract. The employer may also terminate the contract by paying the wages for the notice period in advance.
Must you apply to a mediator before claiming severance pay?
Yes. For employee receivables and compensation claims based on the law or on an individual or collective employment agreement, applying to a mediator before filing a lawsuit is a precondition for bringing the case (Labour Courts Act No. 7036, Art. 3). The application is made to the mediation office at the other party’s place of residence or where the work is performed; an employee working in Ankara can apply to the mediation office in Ankara.
- The mediator concludes the application within three weeks of being appointed; in compelling cases, this period may be extended by up to one week.
- A party who fails to attend the first meeting without a valid excuse is held liable for half of the other party’s litigation costs, even if they later win the case; this rule was amended in 2024 (Labour Courts Act Art. 3(12)).
- If an agreement is reached, no lawsuit can be filed later on the matters agreed (Law No. 6325, Art. 18(5)). An offer should be assessed by comparing it with the calculation above.
- If no agreement is reached, the lawsuit is filed at the labour court.
The deadlines for a reinstatement claim are different and much shorter; on that subject, see our article on reinstatement lawsuits.
What is the limitation period for severance pay?
Severance pay, notice pay and annual leave pay are subject to a five-year limitation period (Labour Act No. 4857, Additional Art. 3). This period was introduced by Law No. 7036 and entered into force on 25.10.2017; it applies to contracts that ended after that date (Labour Act, provisional Art. 8). As a rule, the period runs from the date the employment contract ended.
For contracts that ended before 25.10.2017, the previous ten-year period continued to apply, but where the remaining period exceeded five years, it expired once five years had passed. The limitation period is suspended from the application to the mediation office until the final report is drawn up (Labour Courts Act Art. 3(17)).
Which documents are needed for the calculation?
- The employment contract, payslips and bank payment records
- Documents showing meal, transport, bonus and premium payments
- Your SGK service record and the exit code
- The notice of termination or a resignation letter stating the reason
- In the case of retirement or 15 years and 3,600 days, the letter obtained from SGK
- In the case of leaving for military service or marriage, the relevant document
In brief
The three points that most affect the outcome of a severance pay claim are correctly identifying how the contract ended, which items are included in the dressed wage, and whether the cap applies. Gathering your documents and making the calculation as at the termination date makes it easier to assess the offer made at mediation. For an assessment specific to your file, you can contact our office.
