Severance Pay in Turkey: Eligibility, Calculation and the Current Ceiling
Severance pay (in Turkish, kıdem tazminatı) is one of the most important rights of employees in Turkey and one of the most significant cost items for employers when an employment relationship ends. Whether severance pay is due, how it is calculated and which ceiling applies are frequently disputed by employees and employers alike, including foreign companies operating in Turkey and foreign nationals employed there.
This guide explains the legal basis of severance pay, the conditions for entitlement, the current severance pay ceiling, how severance pay is calculated with examples, the difference between severance pay and notice pay, and what can be done if severance pay is not paid.
In Brief: Severance Pay in Turkey
- An employee who has worked for the same employer for at least one year is entitled to severance pay if the employment contract ends in one of the ways set out in the law.
- Severance pay is 30 days’ gross wages for each full year of service, with partial years calculated proportionally.
- The calculation is based on the gross wage including regular benefits, such as meal and transport allowances.
- The amount per year of service cannot exceed the severance pay ceiling, which is updated twice a year. For 1 July 2026 to 31 December 2026, the ceiling is TRY 73,729.87.
- Severance pay is exempt from income tax; only stamp duty is deducted.
- Claims for severance pay are subject to a five-year limitation period, and mediation is mandatory before filing a lawsuit.
Legal Basis of Severance Pay
Severance pay is still governed by Article 14 of the former Labour Law No. 1475, which was kept in force when the current Labour Law No. 4857 was enacted. The rules apply to all employees covered by the Labour Law, regardless of their nationality; foreign nationals employed in Turkey under a valid work permit therefore have the same severance pay rights as Turkish employees.
Conditions for Severance Pay
For severance pay to be due, the employee must have worked for the same employer for at least one year and the employment contract must have ended in one of the following ways:
Circumstances Giving Rise to Severance Pay
- Termination by the employer without just cause, that is, other than for the reasons relating to immoral, dishonourable or similar conduct set out in Article 25(II) of the Labour Law,
- Termination by the employee for just cause under Article 24 of the Labour Law, such as unpaid wages, harassment or failure to comply with working conditions,
- Termination by the employee for compulsory military service,
- Termination by the employee for retirement, or after completing the required insurance period and number of premium days,
- Termination by a female employee within one year of marriage,
- Death of the employee, in which case severance pay is paid to the legal heirs.
Can an Employee Who Resigns Receive Severance Pay?
As a rule, an employee who resigns without just cause is not entitled to severance pay. However, if the resignation is based on one of the just causes listed in Article 24 of the Labour Law, or on one of the special circumstances listed above, severance pay is due. In practice, the reason stated in the resignation letter and the evidence supporting it are therefore of great importance.
Current Severance Pay Ceiling
The amount of severance pay for each full year of service cannot exceed the annual retirement bonus paid to the highest-ranking civil servant. This upper limit is known as the severance pay ceiling and is updated twice a year.
For the period from 1 July 2026 to 31 December 2026, the ceiling is TRY 73,729.87 per year of service. The ceiling applicable on the date the employment contract ends is taken as the basis. For employees whose gross wage including benefits is below the ceiling, their own wage is used; for employees above it, the ceiling applies.
How Is Severance Pay Calculated?
Severance pay is calculated as 30 days’ gross wages for each full year of service from the employee’s start date. Periods exceeding a full year are calculated proportionally at the same rate.
What Is the Gross Wage Including Benefits?
The calculation is based not only on the basic gross wage but also on regular payments made to the employee in money or kind, such as meal, transport, fuel and child allowances and regularly paid bonuses. Irregular payments, such as overtime pay that is not paid regularly, are not included.
Deductions
Severance pay is exempt from income tax up to the ceiling; only stamp duty at a rate of 7.59 per thousand is deducted.
Calculation Example 1
An employee with a gross wage of TRY 40,000 who regularly receives TRY 5,000 per month in meal and transport allowances is dismissed by the employer without just cause after 6 years and 4 months of service.
- Gross wage including benefits: 40,000 + 5,000 = TRY 45,000 (below the ceiling, so the employee’s own wage is used)
- For 6 full years: 45,000 × 6 = TRY 270,000
- For 4 months: 45,000 × 4/12 = TRY 15,000
- Gross severance pay: TRY 285,000
- Stamp duty (7.59 per thousand): TRY 2,163.15
- Net severance pay: TRY 282,836.85
Calculation Example 2 (Wage Above the Ceiling)
An employee with a gross wage including benefits of TRY 90,000 who has worked for 10 years has their employment contract terminated in October 2026. As the wage is above the ceiling, the ceiling is used in the calculation.
- Wage used for the calculation: TRY 73,729.87 (ceiling)
- Gross severance pay: 73,729.87 × 10 = TRY 737,298.70
- Stamp duty (7.59 per thousand): TRY 5,596.10
- Net severance pay: TRY 731,702.60
Severance Pay and Notice Pay: What Is the Difference?
Severance pay and notice pay are different entitlements. Notice pay is due where an employment contract of indefinite duration is terminated without observing the statutory notice periods. Under Article 17 of the Labour Law, the notice periods are:
- Less than six months of service: two weeks,
- Six months to one and a half years: four weeks,
- One and a half to three years: six weeks,
- More than three years: eight weeks.
An employee dismissed without just cause and without notice may therefore claim both severance pay and notice pay. Unlike severance pay, notice pay is subject to income tax.
What If Severance Pay Is Not Paid?
Severance pay must be paid when the employment contract ends. If it is not paid on time, interest at the highest rate applied to deposits by state banks is payable from the date of termination.
Before filing a lawsuit for severance pay, applying to a mediator is mandatory under the Labour Courts Law No. 7036. If no agreement is reached in mediation, a lawsuit is filed before the labour court. Further information on employees’ other claims is available in our Turkish guide on employee rights and claims. Where an employee wishes to return to work rather than receive compensation, see our guide on unfair dismissal and reinstatement in Turkey.
Limitation Period
Claims for severance pay are subject to a five-year limitation period from the date the employment contract ends.
Points for Foreign Employers and Employees
- Severance pay rules apply to all employment relationships governed by Turkish labour law, regardless of the nationality of the employer or employee.
- Contractual clauses waiving severance pay in advance are not valid.
- Employers should document the reason for termination in writing, as the reason determines whether severance pay is due.
Frequently Asked Questions
Is an employee dismissed before completing one year entitled to severance pay?
No. Severance pay requires at least one year of service with the same employer. However, notice pay and other claims such as unpaid wages may still be due.
Can an employee who retires receive severance pay?
Yes. An employee who terminates the contract to retire, or after completing the required insurance period and number of premium days, is entitled to severance pay.
Can severance pay be paid in instalments?
Severance pay must be paid in full when the employment contract ends. Payment in instalments is possible only with the employee’s agreement; otherwise, interest accrues on the unpaid amount.
Which ceiling applies to the calculation?
The ceiling in force on the date the employment contract ends applies. For terminations between 1 July 2026 and 31 December 2026, this is TRY 73,729.87.
Do foreign employees in Turkey receive severance pay?
Yes. Foreign nationals employed in Turkey under Turkish labour law have the same severance pay rights as Turkish employees.
Conclusion
Severance pay is due where an employee with at least one year of service leaves for one of the reasons set out in the law. The calculation is based on the gross wage including regular benefits and is limited by the severance pay ceiling. Mandatory mediation and the five-year limitation period should be taken into account when pursuing a claim.
Yetkiner Law Firm provides legal support in İzmir in English, French and Turkish to employees and employers in severance pay, notice pay, termination of employment and other labour law matters. The firm can be reached through the channels on the contact page.
The information on this page has been prepared for general informational purposes and does not constitute legal advice. It is recommended to obtain legal support from a lawyer in specific cases.
