What is severance pay?

What is Severance Pay? | Izmir Labor Law Attorney

What is severance pay?

Severance pay is a labor entitlement regulated under Article 14 of Law No. 1475, which is in effect pursuant to Article 120 of the Labor Law No. 4857. It is a payment that the employer must make to the employee upon termination of the employment contract, under certain conditions, in return for the employee's service throughout their employment period.

An employee is entitled to severance pay if the legally defined conditions are met. Severance pay is compensation for years of labor and is a legally guaranteed right. Proper assessment and timely submission of claims related to this right are of great importance to the employee.

Conditions for Entitlement to Severance Pay

According to Article 14 of the Labor Law No. 1475, for an employee to be entitled to severance pay, the following conditions must be met simultaneously:

• To work subject to the Labor Law,
• Having worked for the same employer for at least one year,
• The employment contract;
  • By the employer termination without just cause (Except for Article 25/II of Law No. 4857),
  • By the worker termination for just cause (m.24),
  • The worker military service leaving the job due to,
  • female worker married voluntarily resigning from the job within one year from that date,
  • The worker pension, ...meeting the conditions other than age, or leaving after obtaining a letter from the Social Security Institution (SGK),
  • The worker death termination due to.

Except in these cases, for example, when an employee resigns or the employer terminates the employment contract for just cause, severance pay is generally not entitled.

Severance Pay Calculation

Severance pay is calculated based on the employee's length of service and the latest figures applicable as of the employee's termination date. dressed gross wage The calculation is based on the following: When calculating the worker's gross wage, all ongoing social benefits, whether in kind or in cash, such as transportation allowance, meal allowance, etc., must be taken into account.

However, since there are many technical factors to consider in the calculation (e.g., severance pay ceiling, fringe benefits, duration calculation, interest application, etc.), seeking professional assistance in this matter is important.

You can seek advice from our law firm to ensure your severance pay is calculated correctly and in accordance with current legislation.

What is the ceiling for severance pay?

The maximum gross salary to be used as the basis for calculating severance pay is limited by the severance pay ceiling determined annually (or every six months) by the Ministry of Treasury and Finance.

According to Article 14 of the Labor Law No. 1475, severance pay to be paid to the employee is calculated based on 30 days' gross wages for each full year of service. However, this wage cannot exceed the severance pay ceiling.

The salary cap is particularly important for high-paid employees. An employee whose gross monthly salary exceeds the cap can only receive severance pay up to the cap amount.

The severance pay ceiling is calculated based on the civil servant salary coefficient and is generally updated twice a year, in January and July.

Maximum Severance Pay Amounts by Year

Timing of Severance Pay Payment and Late Payment Interest

Upon termination of the employment contract in the ways described above, severance pay must be paid immediately and in full by the employer.

According to the last paragraph of Article 14 of the Labor Law No. 1475:

“In a lawsuit filed due to the delayed payment of severance pay, the judge will, at the end of the proceedings, determine the amount of payment for the period of delay, based on the unpaid period. the highest interest rate applied to deposits "It orders payment."”

According to this regulation, if the employer fails to pay severance pay on time, the employee can claim not only the amount owed but also interest on late payment calculated at the highest interest rate applied to deposits.

Statute of Limitations

With the entry into force of the Labor Courts Law No. 7036, the statute of limitations for claims related to severance pay has been extended. 5 years This period is defined as such. This period begins to run from the date the employment contract ends. Claims not made within this period are subject to statute of limitations.

Is it mandatory to resort to mediation?

In disputes relating to severance pay, Mandatory mediation before filing a lawsuit The mediation process must be initiated. If the parties cannot reach an agreement during the mediation process, the employee can file a lawsuit in the labor court. As a result of the trial, the court will order the payment of severance pay and, if necessary, accrued interest.

For all legal details regarding your entitlement to severance pay, including calculation of your claim, statute of limitations risk, interest rates, and litigation and mediation processes, you can receive consultancy services from our office.

For legal advice on this matter, please contact our expert team. Contact page.

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