What Is Severance Pay? Who Is Entitled to It and How Is It Calculated?

Meta Title: What Is Severance Pay? Who Is Entitled to It? | Turkish Labor Law

Meta Description: What is severance pay in Türkiye? Learn who is entitled to severance pay, how it is calculated, termination conditions, foreign workers’ rights, and employer obligations.

Keywords: severance pay in Türkiye, severance pay calculation, Turkish Labor Law, employee rights, foreign worker severance pay, foreign employee, employer obligations

What Is Severance Pay?

Severance pay is an important employment-related entitlement that may become payable to an employee when an employment contract ends, provided that the statutory requirements are satisfied.

In Türkiye, severance pay is primarily regulated by Article 14 of Labor Law No. 1475, which remains in force with respect to severance pay, together with other applicable legislation.

The fundamental purpose of severance pay is to provide a financial payment reflecting an employee’s period of service with the same employer or within the same workplace when the employment relationship ends under circumstances recognized by law.

However, not every employee who leaves a job is entitled to severance pay.

To determine whether an employee is entitled to severance pay, it is necessary to examine:

• the employee’s period of service,
• the manner in which the employment contract ended,
• the reason for termination,
• the employee’s employment status,
• any applicable special statutory provisions.

Therefore, simply answering the question “How many years have I worked?” is not sufficient to determine whether an employee is entitled to severance pay.

How Long Must an Employee Work to Qualify for Severance Pay?

As a general rule, an employee must have worked for at least one year for the same employer or within the employer’s workplace or workplaces.

Employment for less than one year generally does not create an entitlement to severance pay.

For example, an employee who has worked for:

• 8 months,
• 10 months, or
• 11 months

will generally not satisfy the minimum one-year service requirement for severance pay.

Once the employee completes one year, severance pay may become payable if the employment relationship ends in a manner that gives rise to such entitlement.

The important point is that the employee’s length of service is not the only requirement.

The manner and reason for termination of the employment contract are equally important.

Is Severance Pay Due When an Employer Dismisses an Employee?

Not every dismissal automatically creates an entitlement to severance pay.

However, where the statutory requirements are satisfied, an employee may be entitled to severance pay following termination by the employer.

For example, if the employer terminates the employment contract under circumstances that give the employee a statutory right to severance pay, the employer may be required to make the payment.

On the other hand, where the employer lawfully terminates the employment contract for certain reasons involving the employee’s violation of rules of morality and good faith, severance pay may not be payable.

Therefore, it would be incorrect to assume that an employee automatically receives severance pay simply because the employer terminated the employment relationship.

The reason for termination must be examined.

Can an Employee Receive Severance Pay After Resigning?

As a general rule, an employee who voluntarily resigns without a legally justified reason is not entitled to severance pay.

However, there are important exceptions.

For example, if the employee terminates the employment contract for a legally recognized justified reason, the employee may be entitled to severance pay even though the termination was initiated by the employee.

There may also be different rules in certain situations involving retirement, military service, and other special circumstances recognized by law.

Therefore, the word “resignation” alone is not sufficient to determine whether severance pay is due.

The key question is why the employee terminated the employment relationship.

Termination Because Wages Are Not Paid

An employer’s failure to pay wages in accordance with the law or employment contract may, under certain circumstances, give an employee the right to terminate the employment contract for a justified reason.

For example, the repeated delay of wages or a serious violation of the employer’s obligation to pay wages may, depending on the circumstances, constitute grounds for justified termination.

Where the statutory requirements are satisfied, the employee may then claim severance pay.

However, the employee’s assertion of a justified reason must actually satisfy the legal requirements applicable to justified termination.

For this reason, employees should carefully state the grounds for termination when exercising this right.

How Is Severance Pay Calculated?

The calculation of severance pay generally takes into account the employee’s final wage and total period of service.

The basic calculation is generally based on:

30 days’ wages for each completed year of service.

Additional months and days beyond completed years are also generally calculated proportionally.

For example, if an employee has worked for the same employer for 5 years and 6 months, the calculation should not be limited to the five completed years. The additional six months should also be taken into account proportionally.

However, the calculation is not necessarily based solely on the employee’s basic salary.

Certain regular benefits and benefits that can be measured in monetary terms may also be included in the calculation under the applicable rules.

For this reason, an accurate severance calculation should take into account the employee’s complete remuneration structure.

What Wage Is Used to Calculate Severance Pay?

Severance pay is generally calculated based on the employee’s gross wage including applicable regular benefits, often referred to as the “grossed-up” or “dressed” wage in Turkish employment law.

This means that the calculation may not be limited to the employee’s basic salary.

Certain regular benefits provided to the employee and measurable in monetary terms may be included, depending on their nature and the applicable legal conditions.

Examples may include:

• regular meal allowances,
• regular transportation allowances,
• regular bonuses,
• certain social benefits,
• other regularly provided employment benefits.

However, not every payment automatically forms part of the severance-pay calculation.

The nature, regularity, and purpose of the payment must be considered.

What Is the Severance Pay Cap?

Turkish law provides for a statutory upper limit on severance pay.

Even if an employee’s actual wage exceeds this limit, the applicable statutory severance-pay cap may restrict the amount used in the calculation.

The severance-pay cap is periodically updated.

Therefore, when calculating severance pay, the cap applicable on the relevant date should be checked.

This can be particularly important for employees with high salaries and long periods of service.

When Must Severance Pay Be Paid?

When an employment contract ends under circumstances giving rise to severance pay, the employer is generally required to pay the employee’s severance entitlement.

The timing of payment and the process for claiming the amount may depend on the circumstances of the particular case.

If the employer fails to pay severance pay or pays less than the amount due, the employee may pursue the claim through the legally available procedures.

Employees should therefore review matters such as:

• their period of service,
• final wage,
• reason for termination,
• amounts already paid,
• payroll records.

Can a Foreign Worker Receive Severance Pay?

Yes. Foreign workers may be entitled to severance pay if the applicable legal requirements are satisfied.

A worker’s nationality does not, by itself, eliminate the right to severance pay.

Foreign employees working in Türkiye under Turkish labor law may also fall within the scope of the rules governing severance pay.

For example, if a foreign employee has worked for several years for an employer in Türkiye with the required work authorization and the employment relationship ends under circumstances that give rise to severance pay, the foreign employee may also claim severance pay.

The following factors should generally be considered:

• period of service,
• reason for termination,
• wages,
• applicable legislation.

Does a Foreign Worker’s Work Permit Affect Severance Pay?

A work permit concerns a foreign national’s legal authorization to work in Türkiye.

Severance pay, on the other hand, is an employment-related financial entitlement arising from the termination of an employment relationship.

Therefore, although the two matters may be connected, they are not the same legal issue.

For example, a foreign worker’s work permit may have been issued in connection with a particular employer. If the employment relationship ends, the legal status of the work permit must be evaluated separately.

However, the existence or expiration of a work permit is not, by itself, the only factor determining whether severance pay is due.

The manner in which the employment contract ended and the employee’s period of service must also be considered.

Can a Foreign Worker Receive Severance Pay After Resigning?

The basic rule is also applicable to foreign workers.

A foreign employee who voluntarily resigns without a legally justified reason will generally not be entitled to severance pay.

However, the situation may be different if the resignation is caused by unlawful conduct or serious contractual violations by the employer.

For example:

• failure to pay wages,
• unlawful changes to working conditions,
• serious breaches of the employment contract,

may, depending on the circumstances, give rise to a right to terminate the employment contract for a justified reason.

In such circumstances, the foreign employee’s potential entitlement to severance pay should be evaluated separately.

Is a Foreign Employer Required to Pay Severance Pay?

Where an employment relationship between a foreign employer and an employee working in Türkiye is subject to Turkish labor law, the rules concerning severance pay may also apply.

The employer’s foreign status does not automatically eliminate the employee’s employment-related rights.

Where the employer operates in Türkiye, the employee performs work in Türkiye, and the employment relationship falls within the scope of Turkish legislation, severance pay and other employment claims may need to be assessed under Turkish law.

However, in cross-border employment relationships, the question of which country’s law applies must be determined by considering all relevant circumstances.

How Is a Foreign Worker’s Period of Service in Türkiye Evaluated?

Whether a foreign employee’s period of work in Türkiye should be included in the severance calculation depends on the legal structure of the employment relationship.

Issues that may become relevant include:

• whether the employee worked for the same employer,
• whether the employee worked at the same workplace,
• changes of employer,
• transfers between companies,
• assignments from abroad to Türkiye,
• changes to work permits.

If a foreign employee has worked for different employers during different periods, each employment period may need to be examined separately.

Change of Employer and Severance Pay

Special rules may apply where a workplace is transferred or the identity of the employer changes.

In the case of a workplace transfer, the employee’s previous period of service may, under certain circumstances, continue to be recognized for severance purposes.

This issue can also be important in workplaces employing foreign workers.

In particular, mergers, acquisitions, corporate restructurings, or changes in ownership involving foreign-invested companies do not necessarily mean that an employee’s accumulated service is automatically reset to zero.

Difference Between Severance Pay and Notice Compensation

Severance pay and notice compensation are two different types of employment-related claims.

Severance pay is primarily related to the employee’s period of service and the manner in which the employment contract ends under circumstances recognized by law.

Notice compensation, on the other hand, may arise when one party terminates the employment relationship without complying with the applicable statutory notice period.

Therefore, under certain circumstances, an employee may be entitled to both severance pay and notice compensation.

However, both forms of compensation do not automatically arise in every termination.

Common Mistakes Concerning Severance Pay

Several common mistakes may occur when calculating or claiming severance pay.

Looking Only at the Basic Salary

If the employee regularly receives certain benefits or other forms of remuneration, calculating severance solely on the basis of basic salary may produce an incorrect result.

Failing to Include Additional Service Periods

Months and days beyond completed years should generally be included proportionally in the calculation.

Ignoring the Reason for Termination

The employee’s length of service is important, but the reason and manner in which the employment contract ended are equally significant.

Assuming Foreign Workers Are Not Entitled to Severance Pay

A foreign employee’s nationality does not, by itself, eliminate the employee’s potential right to severance pay.

Confusing Work Permits With Severance Rights

A work permit and severance pay concern different legal issues. The status of one does not automatically determine the other in every case.

Frequently Asked Questions

How long must I work to qualify for severance pay?

As a general rule, an employee must have completed at least one year of service with the same employer. In addition, the employment contract must have ended under circumstances that create an entitlement to severance pay.

Can an employee receive severance pay after voluntarily resigning?

Generally, an employee who resigns without a legally justified reason is not entitled to severance pay. However, there are statutory exceptions.

Can a foreign worker receive severance pay?

Yes. Foreign employees may be entitled to severance pay if the applicable legal requirements are satisfied.

Does a foreign worker without a work permit have a right to severance pay?

Such situations require careful individual assessment. A violation of work-permit legislation and employment rights arising from an employment relationship are separate legal issues. The complete circumstances of the case should be examined.

How is severance pay calculated?

As a general principle, severance pay is calculated on the basis of 30 days’ wages for each completed year of service, with additional periods calculated proportionally. The applicable statutory severance-pay cap and the employee’s qualifying wage components must also be considered.

Is a foreign employer required to pay severance pay?

Where Turkish labor law applies to the employment relationship and the requirements for severance pay are satisfied, a foreign employer may also have a severance-pay obligation.

Conclusion

Severance pay is one of the most important employment-related financial entitlements under Turkish labor law. However, simply working for a certain period is not enough to establish an entitlement in every case. The reason and manner in which the employment contract ends are also critically important.

As a general rule, an employee who has completed at least one year of service with the same employer may become entitled to severance pay when the employment relationship ends under circumstances recognized by law.

When calculating severance pay, factors such as the employee’s period of service, final wage, regular employment benefits, and the applicable statutory severance-pay cap should be considered.

The same fundamental principles may apply to foreign workers. Being a foreign national does not, by itself, eliminate a foreign employee’s potential right to severance pay. The employee’s period of service in Türkiye, the reason for termination, and the applicable law should be considered together.

The work permit and severance pay should also be treated as separate legal matters. When a foreign employee’s work permit expires or the employment relationship ends, the legal consequences of both matters should be examined separately.

Foreign employers should likewise carefully evaluate employees’ employment-related rights when operating or employing workers in Türkiye. The employer’s foreign status does not automatically exclude the employment relationship from applicable Turkish labor-law provisions.

Ultimately, determining a severance-pay entitlement requires more than looking at an employee’s salary or length of service. The type of employment relationship, reason for termination, period of service, remuneration structure, legal status of the employer, and, for foreign workers, work-permit circumstances should all be considered together.