Quick Calculation
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Notice pay is the compensation that the party who does not terminate the employment contract in accordance with procedure is obliged to pay the other party under Article 17 of Labor Law No. 4857. When the employer dismisses the employee, or when the employee leaves the job, a certain notice period must be given. If this notice period is not observed, notice pay is paid to the other party.
What is notice pay?
Notice pay is a type of compensation that arises when an employment contract is ended without notice of termination. The Labor Law grants the parties a notice period for giving advance notice that the employment relationship will end. This notice period varies between 2 and 8 weeks according to the employee's seniority.
In practice, there are two possibilities: (1) One of the parties gives the notice period and the contract ends by itself at the end of the period; in this case no notice pay arises. (2) The contract is terminated immediately without a notice period; in this case the terminating party must pay the other party the wage corresponding to that notice period as notice pay.
Legal Basis
Labor Law No. 4857 Art. 17, TCO No. 6098 Art. 435 et seq. and the case law of the 9th and 22nd Civil Chambers of the Court of Cassation.
Notice periods
Notice periods are determined according to the employee's total length of service with the same employer:
| Length of Service | Notice Period | In Days |
|---|---|---|
| 0 – 6 months | 2 weeks | 14 days |
| 6 months – 1,5 years | 4 weeks | 28 days |
| 1,5 – 3 years | 6 weeks | 42 days |
| 3 years and above | 8 weeks | 56 days |
These periods are minimums and can be increased in favor of the parties by an employment contract or collective bargaining agreement. However, a reduction that is not in the employee's favor is not valid.
Notice pay calculation formula
Gross Notice Pay = Gross Wage Including Fringe Benefits × (Notice Period / 30 days)
The gross wage including fringe benefits in the formula is found by adding all additional benefits the employee regularly receives to the employee's last gross wage (transport, meals, bonus, premium, etc.). This calculation method is exactly the same as for severance pay.
Attention
Notice pay is a type of compensation paid without work being performed. Since the employee does not actually work during this notice period, the employer has no obligation to pay SGK premiums on notice pay.
Sample notice pay calculation
The example below shows the notice pay calculation for an employee who has worked for 2 years 4 months.
Unlike severance pay, income tax is also deducted from notice pay. The difference between gross and net is therefore much larger than for severance pay.
Deductions from notice pay
- Income tax: Deducted. Since notice pay is in the nature of a wage, it is subject to income tax.
- Stamp tax: Deducted. Stamp tax is applied at a rate of 7,59 per mille.
- SGK premium: Not deducted. Notice pay is not included in earnings subject to premiums.
Gross → Net Formula
Net Notice Pay = Gross Notice Pay − Income Tax − Stamp Tax
Court of Cassation decisions on the subject
- The terminating party pays: Notice pay is the compensation paid to the other party by the party that does not give a notice period. In a mutual termination, as a rule, no notice pay arises.
- Termination for just cause by the employee: If the employee terminates the employment contract for just cause (non-payment of wages, etc.), the employee cannot claim notice pay but can claim severance pay.
- Termination for just cause by the employer: If the employer terminates for just cause, the employer does not pay notice pay.
- Work during the notice period: If the employer gives the notice period and has the employee work, no notice pay arises; only the wage for the time worked is paid.
Calculate your notice pay now
The notice period, gross wage including fringe benefits, income tax and stamp tax are applied automatically.
Open the calculatorFrequently asked questions about notice pay
How is notice pay calculated?
Notice pay is calculated by multiplying the employee's gross wage including fringe benefits by the number of notice period days determined by length of service, and dividing by 30. Formula: Gross wage including fringe benefits × (Notice period in days / 30).
How long are the notice periods?
Notice periods: 2 weeks for 0-6 months, 4 weeks for 6-18 months, 6 weeks for 18-36 months, and 8 weeks for service of more than 3 years.
What deductions are made from notice pay?
Income tax and stamp tax are deducted from notice pay. Unlike severance pay, it is also subject to income tax deduction. SGK premium, however, is not deducted.
Can an employee who resigns receive notice pay?
As a rule, an employee who resigns may have to pay notice pay to the employer for leaving the job without giving a notice period. However, in cases of termination for just cause (non-payment of wages, mobbing, etc.), the employee does not pay notice pay.
What is the statute of limitations for notice pay?
The statute of limitations for notice pay for contracts ending on or after 25.10.2017 is 5 years, running from the termination date. For contracts ending before 25.10.2017 the period is, as a rule, 10 years; under the transitional provision, however, the limitation period for these claims expired no later than 25.10.2022.
What is the difference between notice pay and severance pay?
Severance pay is paid when the employment contract of an employee who has worked for at least 1 year ends for reasons set out in the law, and is exempt from income tax. Notice pay, on the other hand, is paid on termination without a notice period and is subject to income tax.