What is severance pay?

What is Severance Pay? – Izmir Lawyer

Severance pay, regulated under Article 17 of the Labor Law No. 4857, is compensation paid when the other party is not notified before the termination of indefinite-term employment contracts, or when the legally stipulated timeframes are not adhered to.

This regulation aims to prevent hardship for both parties by allowing a reasonable period of time before the termination of the contract between the employee and the employer.

What are the notice periods?

According to the law, the party wishing to terminate an employment contract is obliged to give the other party prior notice within the periods specified below:

If the parties terminate the employment contract immediately without complying with these deadlines, compensation equal to the amount of wages corresponding to the notice period. He/She has to pay.

What are the eligibility requirements for severance pay?

Severance pay is a two-way compensation that can be claimed by both the employee and the employer. However, the following points should be noted:

From the Worker's Perspective:

• By the employer without notice and unfair dissolution If this has happened, the worker is entitled to severance pay.

From the Employer's Perspective:

• Employee, without a valid reason If an employee leaves their job without complying with the statutory notice period, the employer may demand severance pay from the employee.

Does severance pay accrue in the case of termination for just cause?

Articles 24 and 25 of Law No. 4857 immediate termination for just cause In these cases, severance pay is not applicable. This is because there is no obligation to comply with the notice period in such terminations.

Calculation of Severance Pay

Severance pay is calculated based on the employee's gross salary and length of service. The following factors are taken into account in the calculation:

• Monthly gross wage,
• Food, travel, bonus regular paid fringe benefits (brief salary),
• Fee applicable on the termination date is taken as the basis.

Example: If an employer terminates an employee's contract without notice and unfairly after two years of employment, the employer is obligated to pay severance pay equivalent to six weeks' gross salary.

Are there notice periods for fixed-term employment contracts?

According to Article 17 of the Labor Law No. 4857, severance pay is only applicable to indefinite-term employment contracts. Therefore, since fixed-term employment contracts terminate automatically at the end of their term, no notice period or severance pay applies to these contracts.

Is job searching allowed during the notice period?

Yes, there is. According to Article 27 of the Labor Law No. 4857:

• It is a legal obligation of the employer to grant the employee at least 2 hours of leave per day to search for a new job during the notice period.
• The employee can use this leave on a daily basis, or, with the employer's approval, combine it and use it all at once (for example, by adding it to the last few days).
• İş arama izninin hiç kullandırılmaması veya eksik kullandırılması hâlinde, bu sürelere ilişkin ücret, işçiye %100 zamlı (fazla çalışma gibi) ödenmek zorundadır.
• Failure to use or collective use of job search leave does not affect the overall notice period. In other words, the notice period continues to run for the legally defined duration.

Statute of Limitations

With the amendment made to the Labor Courts Law No. 7036, claims related to severance pay also commence from the date of termination of the employment contract. 5 years A request must be made within it.

What should be done in case of a dispute?

In disputes regarding severance pay as well mandatory mediation as a prerequisite for filing a lawsuit The process should be followed. If an agreement cannot be reached through mediation, a lawsuit can be filed in labor courts.

Work or Payment in lieu of wages during the notice period.

The employer is not obligated to employ the worker during the notice period. However, in this case:

• An employer who wishes to dismiss an employee immediately can do so by paying the employee's wages in advance, which would correspond to the notice period.
• Similarly, if an employee wishes to leave without adhering to the specified terms, they are obligated to pay severance pay to the employer.

Severance pay is a significant entitlement that arises when an employment contract is not terminated properly, and it affects both the employee and the employer. To ensure accurate calculation of this compensation and a complete legal process, it is recommended to seek professional legal assistance.

For all your questions and specific situations regarding notice pay, severance pay, and other labor-related entitlements, you can receive legal advice from our office.

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