Interest on Workers' Excesses

Interest on Employee Debts | Izmir Labor Law Attorney

Interest on Workers' Excesses

Employee receivables, Labor Law No. 4857‘Employment claims are regulated in the relevant legislation and refer to certain rights and entitlements arising from the termination of an employee's employment contract. Some employee claims (such as severance pay, notice pay, annual leave pay, and compensation for unfair dismissal) are claims dependent on termination and can only be demanded upon the termination of the employment contract. Other claims (such as wages, overtime pay, holiday pay, etc.) are not dependent on termination and can be demanded by the employee regardless of whether the employment contract has been terminated or not. The method of applying interest to employee claims and determining the commencement date for interest calculation are sometimes confusing in practice. Let's examine these in order:;

1. Severance Pay:

The employee's severance pay is calculated based on their last gross salary (including all benefits). The total gross salary is obtained by adding regular social benefits and similar payments such as transportation allowance, meal allowance, bonuses, etc., to the employee's last gross salary, and this gross salary is used as the basis for calculating severance pay.

The starting date for interest on severance pay is always the same, whether in the initial lawsuit, a supplementary lawsuit, or an increase in the claim amount (through amendment): the date the employment contract is terminated in a way that entitles the employee to severance pay. Since severance pay becomes due as of the date the employee leaves the job, the starting date for interest will also be the termination date. The statute of limitations for severance pay is ten years according to the Turkish Code of Obligations. The statute of limitations begins to run from the date of termination of the employment contract.

The ruling of the 9th Civil Chamber of the Supreme Court of Appeals, numbered 2017/5554 E., 2018/7618 K., dated 04.04.2018;  ”"...According to Article 11 of Article 14 of Law No. 1475, which is currently in force, by virtue of Article 120 of the Labor Law No. 4857, if severance pay is not paid on time, the highest interest rate applied to deposits should be awarded..." Therefore, the interest rate to be applied to severance pay is the highest interest rate applied to deposits by banks.

2. Severance Pay

Severance pay is compensation that the party terminating an indefinite-term employment contract without just cause and without providing proper notice must pay to the other party. Unlike seniority and annual leave, severance pay is not tied to a one-year employment requirement. Even if the contract lasted less than six months, the employee has the right to receive severance pay.

Legal interest is applied to severance pay. As of 2018, the legal interest rate is 1 TP3 T9. However, since this rate may change annually, it is necessary to check this rate if enforcement proceedings are to be initiated during the collection of the employee's receivables. The starting date for the interest on severance pay for the employer (or employee) is the date on which the other party is put in default. This date may start from the date the notice is served if a notice is sent to the other party via a notary, or from the date of the lawsuit if a lawsuit is filed directly. The statute of limitations for severance pay is ten years according to the Turkish Code of Obligations. The statute of limitations begins to run from the date of termination of the employment contract.

The ruling of the 9th Civil Chamber of the Court of Cassation, numbered 2017/5535 E., 2017/11218 K., dated 22.06.2017.;

”"...The interest rate to be applied in terms of severance pay should be the legal interest rate, which varies according to current rates. If a different type of interest is stipulated in an individual or collective labor agreement, the agreed interest rate shall be applied, provided it is not lower than the legal interest rate...".

Unlike other receivables, legal interest is applied to this receivable item. If the employee sent a notice to the employer via a notary public following their termination, interest can be claimed from the date the notice was received; if no such notice was sent, interest can be claimed from the date of the lawsuit.

3. Annual Leave Pay Entitlement

Annual paid leave is a right granted to an employee to rest during the year, provided they are not working and receive payment in advance. Unused annual leave does not automatically expire; it continues to accumulate, and the employer is obligated to grant it until the termination of the employment contract. Otherwise, upon termination, all unused annual leave accrues as unpaid wages, and the employee has the right to claim these wages from the employer.

Annual leave pay becomes due on the date of termination of the employment contract. However, for interest to commence, the employer must also be put in default. If the employer is not put in default through a formal notice, interest should accrue from the dates of the lawsuit or amendment. The statute of limitations for annual leave pay claims is 5 years.

4. National Holiday, Public Holiday and Overtime Pay

This receivable item is referred to as UBGT., tThe date of default is the starting date for interest accrual. If a notice was sent via a notary, interest can be claimed from the date the notice was sent; if not, interest can be claimed from the date of the lawsuit, and the interest rate should be the highest interest rate applied to deposits. The statute of limitations for UBGT (Unlimited Tax on Deposit) claims is 5 years.

5. Overtime Pay

While the burden of proof for overtime work rests with the employee and the burden of proof for payment of overtime wages rests with the employer, in wage claims, the burden of proof for payment of wages rests with the employer; the employee bears no such burden. The interest rate should be the highest interest rate applied to deposits. Interest commences from the date the employer is put in default. The statute of limitations for overtime claims is 5 years.

In Light of Supreme Court Decisions Interest Commencement Dates in Partial Claims and Uncertain Claims

In its decision dated February 28, 2018, with case number 2015/9-3157 and decision number 2018/365, the General Assembly of the Supreme Court of Appeals ruled that, ”On the other hand, considering the purpose of the uncertain claim lawsuit and the nature of the lawsuit, in cases where there is no default before the date of the lawsuit, the default occurs on the date the lawsuit is filed for the entire amount of the claim determined in full and definitively as a result of the trial in an uncertain claim lawsuit, and therefore interest should be awarded from the date of the lawsuit.” and further ruled that, “In this case, since the lawsuit is an uncertain claim lawsuit, the material and formal legal consequences arising from the filing of this lawsuit (interruption of the statute of limitations and others) should also be valid for this lawsuit; therefore, it was correct for the court to apply interest from the date of the lawsuit to the entire amount of the claims, including the increased amounts requested in the petition for increased claim.”.

In this situation, the jobfarming Ain the future Faiz and Zamanaşımı Surea İChinese Uwill be implemented TEmel Sstandards It is as follows:

Start of Interest Calculation in Uncertain Receivable Cases

In cases where default (notice of default) exists, interest should be applied to the entire amount requested in the "Petition for Increase in Price" from the date of default; in cases where there is no default (notice of default), interest should be applied to the entire amount requested in the "Petition for Increase in Price" from the date of the lawsuit. The statute of limitations will be interrupted for the entire amount of the claim increased in the "Petition for Increase in Price" on the date of the lawsuit.

Start of Interest Calculation in a Debt Collection Case Filed as a Partial Claim

In cases where default exists (notice of default), interest should be calculated from the date of default; in cases where there is no notice of default, interest should be calculated from the date of the lawsuit for the amount requested in the lawsuit petition, and from the date the fee for the amendment petition is paid for the increased amount. The statute of limitations will be interrupted on the date of the lawsuit for the amount stated in the lawsuit petition, and on the date the fee for the amendment petition is paid for the increased amount.

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