Severance and Notice Indemnity Calculation Principles

In Turkish labor law, the two most fundamental compensation items protecting employee labor are Severance Pay (Kıdem Tazminatı) and Notice Pay (İhbar Tazminatı). Severance pay, regulated under Article 14 of the active parts of Labor Law No. 1475, and notice pay, regulated under Article 17 of Labor Law No. 4857, are calculated based on the termination status of the employment contract. The calculation metrics, definition of broadened gross salary, and legal conditions are strictly defined by statutes and precedents.

1. Eligibility Requirements for Severance Pay in Turkey

To claim severance pay, an employee must first accumulate at least 1 full year of continuous employment with the same employer. Furthermore, the employment contract must terminate due to one of the following reasons:

• Dismissal by the employer for reasons other than code of conduct violations (Article 25/II of the Labor Law).
• Resignation by the employee based on just cause (Article 24 of the Labor Law), such as unpaid salaries, lack of social security declarations, health hazards, or mobbing.
• Military service (for male employees).
• Resignation of a female employee within 1 year of her marriage date.
• Retirement or fulfilling the required contribution days (excluding age) for retirement.
• Death of the employee (in which case, payments revert to their heirs).

2. Understanding Broadened Gross Salary (Giydirilmiş Brüt Ücret)

Severance pay calculations are not based on the net monthly salary, but on the broadened gross salary (giydirilmiş brüt ücret). This includes the employee's base gross salary plus regular cash and in-kind benefits provided by the employer:

• Regular travel and meal allowances, or shuttle and cafeteria services,
• Regular bonuses, premiums, heating, or holiday allowances,
• Regular health insurance premiums or housing expenses covered by the employer.
• Note: Overtime pay, annual leave pay, and one-off premium payments are not included in the calculation of broadened gross salary.

3. Notice Pay and Statutory Notice Periods

The party seeking to terminate an employment contract must notify the other party beforehand, respecting the statutory notice periods based on the employee's tenure:

• Under 6 months of work: 2 weeks notice.
• Between 6 months and 1.5 years: 4 weeks notice.
• Between 1.5 years and 3 years: 6 weeks notice.
• Over 3 years of work: 8 weeks notice.

If the employer terminates the contract without respecting these notice periods, they must pay Notice Pay equivalent to the salary of the corresponding notice duration. Conversely, if an employee resigns without notice, they may be liable to pay notice compensation to the employer.

4. Can Resigning Employees Claim Severance and Notice Pay?

A common misconception is that resigning employees forfeit all compensation. If an employee resigns for just cause (such as systematic delay of wages or mobbing), they are entitled to full severance pay. However, even under just cause resignation, the employee cannot claim notice pay, as notice pay is designed to compensate the party who did not initiate the termination.

Frequently Asked Questions

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