HOW IS SEVERANCE PAY CALCULATED IN TURKEY?
In Turkey, severance pay is calculated based on 30 days’ gross wage for each full year of employment under the Turkish Labor Law. As of 2025, the calculation is based on the employee’s last gross wage at the time the employment contract is terminated.
For example, if an employee worked at a workplace for 6 years and had a final gross monthly salary of 40,000 TL, the severance pay calculation for 2025 would be as follows:
6 years × 30 days × 1,333 TL (daily gross wage) = 239,940 TL
In this calculation, not only the base gross salary is considered, but also additional benefits such as transportation and meal allowances. Therefore, the “dressed” gross wage, which includes all such benefits, is used as the basis for calculating severance pay in Turkey. To avoid calculation errors and prevent the loss of legal entitlements, it is advisable to consult a labor law expert.
The Severance Pay Calculation Tool can be used to accurately calculate severance pay in Turkey.
WHAT IS THE SEVERANCE PAY CAP IN TURKEY?
In Turkey, under Law No. 5434, the Turkish Republic Retirement Fund Law, a cap is applied to dismissal compensation calculations. The amount of severance pay for each year of service cannot exceed the retirement bonus granted to the highest-ranking civil servant.
This cap is updated every January and July. As of January 2025, the severance pay cap in Turkey has been set at 46,655.43 TL. For comparison, this amount was 41,828.42 TL in July 2024.
Even if an employee’s gross salary exceeds this limit, severance pay in Turkey will be calculated based on the cap. However, if there is a mutual agreement between the employer and the employee, the employer may choose to pay severance above the legal ceiling.
WHAT DEDUCTIONS ARE MADE FROM DISMISSAL COMPENSATION IN TURKEY?
Dismissal compensation in Turkey is a lump-sum compensation paid by the employer to an employee who has worked for a certain period, upon termination of the employment contract or due to reasons such as retirement. However, this payment is subject to certain legal deductions.
Income Tax Deduction: According to Article 25/7 of the Income Tax Law, severance pay in Turkey is exempt from income tax. That means the portion of the severance pay up to the severance pay ceiling is not subject to income tax. However, if the employer pays an amount exceeding this ceiling, the excess portion is subject to income tax.
Stamp Tax Deduction: A stamp tax of 0.759% is deducted from the dismissal compensation in Turkey. This tax is calculated over the total amount of the severance payment.
Social Security Premium: Since severance pay is made due to the termination of the employment contract, it is not subject to social security premiums. Therefore, no SGK (Social Security Institution) premium is deducted from this payment, regardless of the employment termination code.
In summary, while dismissal compensation in Turkey is largely exempt from taxation, income tax is applied to amounts exceeding the legal ceiling, and stamp tax is deducted from the total payment. To ensure accurate calculation of these legal deductions, it is advisable to consult a tax lawyer in Turkey.
WHICH PERIODS OF EMPLOYMENT ARE CONSIDERED IN SEVERANCE PAY CALCULATION IN TURKEY?
In Turkey, the calculation of severance pay is based on the total duration of the employee’s service at the workplace. However, this duration may vary depending on the nature of employment and the type of employment contract.
Full-Time Employment
The entire period from the employee’s start date to the termination date is considered without interruption. Periods of paid annual leave or medical leave are not excluded from the total working period.
Part-Time and Seasonal Employment
If the employee worked part-time, on a reduced schedule, or seasonally during certain periods, those durations are included in the calculation but are prorated based on full-time work. For example, if an employee worked 3 days per week, their total working period is evaluated as two-thirds of that of a full-time employee.
Accurately determining the total period of service is essential in dismissal compensation calculations in Turkey. Whether certain periods are included or excluded depends on the terms of the employment contract and applicable legal regulations. Seafarers, for instance, are subject to Maritime Labor Law, and different calculation methods apply for them.
ARE EMPLOYER-PROVIDED BENEFITS (TRANSPORTATION, MEALS, ETC.) CONSIDERED IN SEVERANCE PAY CALCULATIONS IN TURKEY?
In Turkey, severance pay is not calculated solely on the employee’s base gross salary; regular benefits provided by the employer are also included. These benefits—such as transportation assistance, meal allowances, housing support, and similar cash or in-kind payments—are considered within the concept of the “dressed gross wage” when calculating severance pay.
The dressed gross wage includes not only the employee’s base salary but also any continuous, regularly provided benefits. Accordingly, the following payments are generally included in the dismissal compensation calculation in Turkey:
- Transportation allowance (in cash or company shuttle services)
- Meal allowance (cash or meals provided at the workplace)
- Housing assistance
- Regular bonuses or performance premiums
- Employer-paid contributions to private health insurance or pension plans
However, these payments must be of a continuous nature. Occasional or discretionary payments, such as irregular overtime pay, are not included in the severance pay calculation in Turkey. Therefore, overtime wages that do not reflect a regular and ongoing practice are excluded.
In conclusion, all regular and continuous monetary or in-kind benefits provided to the employee are added to the dressed gross wage and are included in the severance pay calculation.
CAN AN EMPLOYEE CLAIM DISMISSAL COMPENSATION AFTER RESIGNING IN TURKEY?
In general, an employee who voluntarily resigns from their job is not entitled to severance pay in Turkey. Severance pay is usually granted when the employment contract is terminated by the employer or ends under specific legal conditions. Since resignation implies that the employee ends the contract by their own will, it does not typically result in worker compensation entitlement. To qualify for severance pay in Turkey, the employee must be dismissed by the employer without a justified reason.
However, under Article 24 of Turkish Labor Law No. 4857, an employee may resign for just cause and still be eligible for dismissal compensation in Turkey. These just causes include:
- Health Reasons: If the work endangers the employee’s health, or workplace conditions are hazardous to their well-being.
- Violation of Ethics and Goodwill: If the employer insults the employee, subjects them to harassment (e.g., mobbing), fails to pay wages, or breaches the employment contract.
- Compelling Reasons: Natural disasters, war, pandemics, or other extraordinary events that make continued work impossible.
- Retirement or Military Service: Employees who retire or leave due to compulsory military service are entitled to severance pay.
- Marriage (for Female Employees): A female employee who resigns within one year of marriage is entitled to severance pay.
In conclusion, employees who resign without just cause are not entitled to severance pay in Turkey. However, if one of the legally recognized just causes is present, the employee may rightfully claim dismissal compensation and other employment-related entitlements.