Severance pay is the monetary compensation to which an employee who has worked for the same employer for at least one year becomes entitled when the employment contract ends for reasons set out in law, under Art. 14 of Labor Law No. 1475, which remains in force (Law No. 4857 Art. 120). It is paid by the employer in return for the employee's labor.
What is severance pay?
Severance pay is calculated on the basis of 30 days' worth of the employee's last gross wage including fringe benefits for each full year worked at the workplace. Periods exceeding a full year are paid proportionally. For example, an employee who has worked for 8 years 6 months becomes entitled to severance pay equal to a total of 255 days' wages: 8 × 30 = 240 days' wages for the 8 full years and 6 × 30/12 = 15 days' wages for the 6 months.
Legal Basis
Labor Law No. 1475 Art. 14 (in force under Labor Law No. 4857 Art. 120), Labor Law No. 4857, the relevant provisions of TCO No. 6098, and the case law of the 9th and 22nd Civil Chambers of the Court of Cassation.
Conditions of entitlement to severance pay
There are two basic conditions for entitlement to severance pay:
- Having worked for at least 1 year: The employee must have worked for the same employer without interruption for at least 1 year. Periods spent with different employers are, as a rule, not combined.
- Occurrence of one of the grounds for ending set out in law: The employment contract must end in one of the following ways.
Endings that give rise to entitlement
- Unjust termination by the employer (without showing a valid reason)
- Termination of the employment contract by the employee for just cause (non-payment of wages, mobbing, health reasons, etc.)
- Leaving employment for military service
- Voluntary departure of a female employee within 1 year of the date of marriage
- Retirement (award of an old-age or disability pension)
- Death of the employee (paid to the heirs)
- Completion of the insurance period and premium day conditions required for retirement, other than age (e.g. 15 years of insurance and 3600 days)
Severance pay calculation formula
The basic formula for calculating severance pay is as follows:
Gross Severance Pay = Gross Wage Including Fringe Benefits × (Total Period of Employment / 30 days)
What is the gross wage including fringe benefits?
The gross wage including fringe benefits is found by adding to the employee's last gross wage all additional benefits the employee regularly receives. These additional benefits are:
- Travel allowance (if paid regularly)
- Meal allowance (if paid regularly)
- Bonus (if paid regularly)
- Heating allowance
- Family allowance
- Cash handling allowance
- Regular incentive payments
Attention
Payments such as incentives and bonuses that are paid once a year and are irregular in nature are not included in the gross wage including fringe benefits. The Court of Cassation takes into account additional benefits that are "continuous in nature".
Severance pay ceiling
In the severance pay calculation, the gross wage including fringe benefits is limited by an upper limit for each year. This upper limit is called the severance pay ceiling. The ceiling amount is updated every year in January and July according to the civil servant salary coefficient.
| Condition | Amount Used |
|---|---|
| Gross wage including fringe benefits < Ceiling | Gross wage including fringe benefits |
| Gross wage including fringe benefits ≥ Ceiling | Severance pay ceiling |
The Tazminat.com calculation module automatically updates the current 2026 ceiling amount and the ceiling figures for all periods.
Example severance pay calculation
The example below shows the severance pay calculation for an employee who has worked for 8 years 4 months 12 days.