Overview
In Türkiye, the calculation of notice pay and severance pay is governed by detailed statutory regulations under the Turkish Labour Law.
These provisions ensure fairness, predictability, and legal protection for both employers and employees during the termination of employment relationships.
While notice pay compensates an employee for the lack of advance warning prior to dismissal, severance pay rewards long-term service and provides financial security in cases where employment ends for reasons beyond the employee’s fault. Together, these mechanisms reflect the balance Turkish law seeks to maintain between business efficiency and employee protection.
Legal Framework
The principal legislation regulating termination-related compensation in Türkiye includes:
- Article 17 of the Labour Law No. 4857 – Governing notice periods and compensation.
- Article 14 of the former Labour Law No. 1475 (still in effect) – Governing severance pay.
- Social Security and General Health Insurance Law No. 5510 – Regulating the declaration of termination and related reporting obligations.
These statutes collectively establish a structured and protective framework defining how employers must compensate employees upon lawful termination.
Notice Pay (Termination Notice Compensation)
Definition and Purpose
Notice pay is the compensation owed to an employee when an employer terminates an indefinite-term employment contract without just cause and without observing the mandatory notice period.
The objective of notice pay is to safeguard employees from sudden income loss, allowing them sufficient time to secure alternative employment, or to ensure fair financial compensation if employment ends immediately.
Notice Periods under Turkish Labour Law
The minimum statutory notice periods are determined by the employee’s length of service:
| Length of Service | Minimum Notice Period |
| Less than 6 months | 2 weeks |
| 6 – 18 months | 4 weeks |
| 18 – 36 months | 6 weeks |
| More than 36 months | 8 weeks |
Employers may either allow the employee to work during the notice period or pay compensation in lieu of notice. During the notice period, employees are entitled to two hours of paid job-search leave per day.
Calculation Method
Notice pay is calculated on the basis of the employee’s average daily gross wage, which includes fixed and regular payments such as base salary, allowances, and bonuses.
Formula:
Notice Pay = (Gross Monthly Salary ÷ 30) × Number of Notice Days
Example:
If an employee earning TRY 60,000 per month with 2 years of service (entitled to 6 weeks’ notice) is dismissed without notice, the employer must pay:
(60,000 ÷ 30) × 42 = TRY 84,000 as notice pay.
Even if the employee is not required to work during the notice period, this compensation remains payable in full.
Tax Treatment
Unlike severance pay, notice pay is treated as a taxable wage component.
It is subject to income tax and stamp duty, as it is considered part of the employee’s earned remuneration.
Severance Pay
Definition and Purpose
Severance pay represents a statutory right that compensates employees who have completed at least one year of continuous service.
It reflects the employee’s tenure, loyalty, and contribution to the enterprise, and is payable upon termination of employment for reasons other than serious misconduct.
Eligibility Conditions
Employees are entitled to severance pay in the following cases:
- Termination by the employer for reasons other than those listed under Article 25/II (immoral or dishonest conduct).
- Resignation by the employee for just cause, such as unpaid wages or unsafe working conditions.
- Completion of compulsory military service (for male employees).
- Retirement or entitlement to a pension under social security law.
- Death of the employee (payment made to legal heirs).
- Resignation by a female employee within one year of marriage.
Calculation Method
Severance pay is calculated based on the employee’s final gross monthly salary and total years of service.
Formula:
Severance Pay = (Last Gross Monthly Salary × Years of Service)
Each full year of service corresponds to 30 days of gross salary, while any partial year is calculated proportionally.
The daily wage is determined by dividing the last gross salary by 30.
Example:
An employee earning TRY 60,000 per month with 5.5 years of service is entitled to:
(60,000 × 5.5) = TRY 330,000 severance pay,
subject to the official ceiling announced biannually by the Ministry of Treasury and Finance.
Taxation and Deductions
- Exemptions: Severance pay is exempt from income tax.
- Applicable deduction: Only stamp duty (0.759%) is withheld.
- Employer obligation: The employer must provide a written statement detailing the severance calculation and ensure immediate payment upon termination.
Compliance and Employer Obligations
Employers are legally obligated to:
- Pay both notice and severance pay promptly upon termination, unless a justified exemption applies.
- Provide a written breakdown of each payment to the employee.
- Record all termination payments in the personnel file and report the termination to the Social Security Institution (SGK) within 10 days.
- Avoid delays or underpayment, which can result in penalties, litigation, or reinstatement claims.
Importance of Accurate Calculation and Timely Payment
Precise calculation and timely payment of termination-related compensation are crucial for both compliance and corporate integrity.
They ensure:
- Adherence to statutory obligations and avoidance of fines.
- Mitigation of litigation and mediation risks.
- Preservation of trust between employers and employees.
- Protection of the company’s reputation in labour and regulatory matters.
The Turkish Labour Law provides a comprehensive and transparent framework for the calculation of notice and severance pay.
Employers who diligently observe these provisions uphold not only the letter of the law but also the ethical principles of fair employment.
By ensuring correct computation, timely disbursement, and accurate documentation of these payments, businesses in Türkiye can maintain compliance, strengthen employee relations, and foster a workplace culture grounded in accountability and respect.
