What You Need to Know When Calculating Severance Pay

This article is an English translation of the Turkish original published by the office.

Severance pay is one of the most important topics in Turkish employment law. It is the safeguard of an employee who is unfairly dismissed after years of service, or who has to leave because of the injustices suffered. Of course, it is not true that every employee is entitled to severance pay when the employment contract ends; certain conditions must be met together. Below we examine these conditions and how severance pay is calculated.

What is severance pay?

Severance pay (kıdem tazminatı) is the compensation an employee receives from the employer upon termination of the employment contract, provided that certain conditions set out in the law are met.

What are the conditions?

The conditions can be summarised as being covered by the Labour Law, the Maritime Labour Law or the Press Labour Law; having an employment contract subject to those laws; the contract ending for certain reasons; and the length-of-service condition:

• Being an employee under the law: only persons who are employees under the Labour Law, the Maritime Labour Law or the Press Labour Law can receive severance pay. Article 4 of the Labour Law lists those who are not covered; they are not entitled.
• An indefinite-term contract: it makes no difference whether the contract is written or oral — in practice many are oral. What matters is that it is for an indefinite term. A fixed-term contract ends when its term expires, and no severance pay arises.
• Termination of the contract: the contract must be terminated by the employer without just cause, or by the employee for just cause. If the employer terminates for just cause, or the employee terminates without just cause, there is no entitlement.
• Length of service: the employee must have worked for at least one year. There is no severance pay for less than one year of service.

How is severance pay calculated?

As a rule, severance pay amounts to 30 days’ wages for each full year of service; periods beyond full years are added proportionally. It is calculated on the last wage received, and any money or benefits measurable in money provided to the employee are also taken into account. In short, it is the number of years worked multiplied by the gross monthly wage; the gross figure includes transport, meal and other regular benefits besides the salary. For days beyond full years, the daily gross wage is used. Stamp tax at 7.59 per thousand is deducted from the total, and the remainder is paid to the employee through a bank. The burden of proving payment lies with the employer, not the employee.

The severance pay ceiling is set each year by circular of the Ministry of Treasury and Finance. In the first half of 2025, the ceiling was TRY 46,655.43. The maximum severance pay an employee can receive is therefore this amount multiplied by the years of service.

Worked example

Let us make this concrete. For an employee with 3 years, 9 months and 15 days of service and a last gross monthly wage of TRY 30,000:

• Full years: 3 × TRY 30,000 = TRY 90,000
• Remaining months: (9 / 12) × TRY 30,000 = TRY 22,500
• Remaining days: (15 / 365) × TRY 30,000 = TRY 1,232.87
• Total severance pay: TRY 90,000 + TRY 22,500 + TRY 1,232.87 = TRY 113,732.87

In other words, each full year is multiplied by the gross wage; then the remaining months are divided by 12 and multiplied by the gross wage; finally, the remaining days are divided by 365 and multiplied by the gross wage. The result is the severance pay.

Severance pay lawsuits

An employee who is entitled but has not been paid must first apply to a mediator: employee claims are subject to mandatory mediation, which must be exhausted before going to court. If mediation fails, a lawsuit is filed at the labour court. Where severance pay is paid late, the judge awards interest at the highest rate applied to bank deposits for the period of delay, running from the date the contract ended. Employee claims can, as a rule, be enforced before the judgment becomes final. Under Additional Article 3(a) of Labour Law No. 4857, severance pay arising from an employment contract is subject to a five-year limitation period, whichever law the contract is subject to.

Severance pay cases require care in many respects; advice from an experienced lawyer helps avoid any loss of rights.

Türker Law Office provides legal representation and advice on assessing entitlement to severance pay, reviewing calculations, the mandatory mediation process for employee claims, and lawsuits and other proceedings to collect severance pay.