Severance pay in law in Turkey

What is Severance Pay?

Severance pay in law in Turkey is the financial compensation that the worker will receive in return for the “seniority” he has accumulated during his time at the workplace. While the worker contributes to his job and workplace for years, he contributes to the conduct of the employer’s commercial business. Severance pay is paid taking into account the employee’s last gross wage.

Some conditions are stipulated for the worker to receive severance pay:

Worker: According to the Labor Law, a person who works at an employer’s workplace with an employment contract is called a worker. The employment contract can be written or oral. Since Article 14 of the Labor Law does not consider the work performed by people in certain job and professional groups as labor, these people cannot receive severance pay because they are not workers. For example, those who work in sea and air transportation, those who work in workplaces or enterprises where agricultural and forestry works employ less than 50 workers, all kinds of construction works related to agriculture within the borders of the family economy, among the members of a family and relatives up to the third degree, without the participation of anyone from outside. Those who work at home and in handicraft jobs, those who work in domestic services, apprentices, athletes, and those who are rehabilitated cannot receive severance pay.

One Year Working Condition: In order for a worker to be entitled to severance pay, he must work continuously for at least 1 year in the same employer’s workplace. If the employee has worked at the employer’s workplace for less than 1 year, he cannot receive severance pay. Even if the employee works in different workplaces or even different companies depending on the employer, the entire period is included in the calculation of the 1-year period.

In order to be entitled to severance pay, the employment contract must be an employment contract of indefinite duration, whether written or verbal. If the employee terminates the indefinite employment contract for a justified reason or if the employer terminates the contract for an unfair reason, the employee will be entitled to severance pay. In certain employment contracts, severance pay cannot be requested from the workplace at the end of the contract. Fixed-term employment contracts terminate automatically upon completion of the work or the fulfillment of the condition agreed upon in the contract.

Employer’s Right to Immediate Termination for Just Cause

If the employer terminates the employee’s employment contract for justified reasons, the employee is not entitled to severance pay. According to the Labor Law, the situations in which the employer can terminate for just cause are as follows:

Situations that do not comply with the rules of morality and good faith:

• Giving false information about the worker’s qualifications
• The employee making immoral remarks towards the employer.
• A worker sexually harasses another worker.
• The worker behaves in ways that do not comply with honesty and loyalty.
• Employee committing a crime at work.
• Worker not coming to work without permission or excuse.
• Failure of the worker to fulfill his/her duties
• The worker endangers occupational safety or damages property in the workplace.

Termination of Employment Contract Due to Health Reasons:

• The worker suffers from illness or disability due to his own intent, untidy lifestyle or addiction to alcohol, and the absence for this reason lasts more than 3 consecutive working days or 5 working days in a month.

Termination of the Employment Contract Due to Forced Reasons:

• The emergence of a compelling reason that prevents the worker from working at the workplace for more than a week.
• In case the worker is detained or arrested, the absence exceeds the notice period.

In case of the above-mentioned circumstances, the employee will not be entitled to severance pay when the employee’s employment contract is terminated by the employer. In other words, if these reasons exist, the employer can terminate the employment contract without paying severance pay to the employee.

Right to Immediate Termination by the Worker for Just Cause

The worker has the right to terminate the employment contract immediately for justified reason. Article 24 of the Labor Law regulates the employee’s right to termination for just cause. Some conditions are foreseen to exercise this right:

Health Reasons:

• Performing the work is dangerous to the health or life of the worker.
• The employer or another worker with whom the worker constantly meets closely and directly has a contagious disease.

Situations that do not comply with the rules of morality and good faith:

• Employer providing false information or misleading the employee during the employment contract
• The employer acts in a way that harms the honor and dignity of the employee or his family.
• Employer sexually harassing employee
• The worker is subjected to sexual harassment in the workplace by another worker or third parties and the necessary precautions are not taken despite reporting this situation to the employer.
• Failure to calculate or pay the employee’s wage by the employer in accordance with the provisions of the law or the terms of the contract.

Compelling Reasons:

• The emergence of a compelling reason that prevents the worker from working at the workplace for more than 1 week.

When the above situations occur, the employee can immediately terminate the employment contract and request severance pay.

Duration of Severance Pay Payment

There is no clear period specified in the Labor Law No. 4857 regarding the payment period of severance pay. However, the general opinion and practice is that it must be paid immediately and within a reasonable period of time from the date of termination of the employment contract. As a matter of fact, in accordance with Article 32 of the Labor Law titled “Wage and Payment of Wages”, “In the termination of employment contracts, the employee’s wage and benefits that can be measured in terms of contract and money must be paid in full.” Severance pay must be paid immediately after termination.

Severance Pay Calculation

Severance pay calculation is made based on the employee’s service period since the date of employment and the last gross wage received. Here is a general calculation formula:

Severance Pay = Duration of Service (Year) × Final Gross Wage

Calculation Steps:

1. Last Gross Wage: The last gross salary of the worker on the date of leaving the job
2. Service Period: For each year completed from the date the worker started work
3. Calculation is made based on the daily wage for the days and months remaining from the full year and added.

Statute of Limitations for Severance Pay

According to the legal regulations in Turkey, the statute of limitations for severance pay receivables is 5 years. This period starts from the date of termination of the employment contract and ends at the end of 5 years. If a claim for severance pay is not made or a lawsuit is not filed within this period, the right to severance pay expires and this right is lost.