Severance Pay: Conditions, Calculation, and Current Guide

October 3, 2025 |

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| 12 minutes

Introduction: What is Severance Pay?

Severance pay is a lump sum paid by the employer when the employment contract is terminated under certain conditions, as compensation for the worker’s labor, loyalty, and wear during their employment. The Supreme Court defines severance pay as a guarantee against the difficulties of finding a new job in case of job loss and a reward for past services.

Therefore, severance pay is not only a financial right but also a special type of compensation with a job security and social protection function. It was first introduced into our legal system with the Labor Law No. 3008 in 1936 in Turkey and has been expanded in favor of workers over time to reach its current structure.


An MFY Legal attorney explains the conditions and calculation method for severance pay.

Who is Entitled to Severance Pay?

Severance pay is not a right automatically granted to every departing employee. Certain conditions specified by law must be met:

  1. Valid Employment Contract: The worker must be employed under a valid employment contract within the scope of Labor Law No. 4857. Certain exceptions specified in the law, such as workplaces employing fewer than 50 workers in agricultural work, are excluded.
  2. At Least 1 Year of Employment: The worker must have worked continuously for at least one year in the same employer’s workplace (even if within the same holding).
  3. Termination of the Contract for Reasons Other Than Just Cause:
    • The employer dismisses the worker for reasons other than those regulated in Article 25/II of the Labor Law, “immoral and malicious behavior”.
    • If the worker terminates the contract for health, morality, or compelling reasons under Article 24 of the Labor Law, the right to severance pay arises.
  4. Special Cases:
    • Marriage of a Female Worker: She can receive severance pay if she leaves the job within 1 year from the date of marriage.
    • Military Service of a Male Worker: A worker leaving the job due to military service is entitled to severance pay if he has at least 1 year of seniority.
    • Retirement, Old Age, or Disability Pension: A worker entitled to these rights from the Social Security Institution can receive severance pay upon presenting the document to the employer.
    • Death of the Worker: If the worker has at least 1 year of seniority, their legal heirs can claim the severance pay.

Unless these conditions are met, the worker cannot claim severance pay. However, in practice, there are cases where employers pay severance pay as a gesture of “goodwill” to the worker, even if not legally required.


2025 Current Regulations

Each year, the Ministry of Treasury and Finance announces the ceiling amount applicable for severance pay through a communiqué. As of 2025, you can access the current ceiling amount and details via this link: 2025 Severance Pay Ceiling Amount

Severance Pay Conditions

Severance pay is not a right automatically granted to every departing employee. For a worker to benefit from this right, the conditions explicitly specified in the law must be met. According to the provisions of Article 14 of Labor Law No. 1475 and Labor Law No. 4857, the following conditions must be fulfilled to be entitled to severance pay:

1. At Least One Year of Employment Condition

The most fundamental condition for severance pay is that the worker must have worked continuously for at least one year under the same employer. This period is calculated from the date the employment contract is signed and includes the probationary period. If the worker continues to work in the same holding or group companies without changing the employer, the Supreme Court accepts that these periods are evaluated together and give rise to the right to severance pay.

2. Reasons for Termination of the Employment Contract

To be entitled to severance pay, the employment contract must have been terminated under certain conditions.

  • Termination by the Employer: If the employer dismisses the worker for reasons other than those regulated in Article 25/II of the Labor Law, “immorality and breach of good faith rules”, the worker is entitled to severance pay.
  • Termination by the Worker: If the worker terminates the employment contract for health issues, the employer’s breach of moral rules, or compelling reasons under Article 24 of the Labor Law, they are entitled to severance pay.

3. Status of the Resigning Worker

Workers who resign of their own accord are generally not entitled to severance pay. However, the law provides for certain exceptions. These exceptions are:

  • A female worker leaving the job due to marriage,
  • A male worker leaving to fulfill military service,
  • Entitlement to retirement, old age, or disability pension,
  • In the event of the worker’s death, the heirs can make a claim.

4. Special Cases (Marriage, Military Service, Retirement, and Death)

  • Marriage: A female worker can receive severance pay if she leaves the job within 1 year from the date of marriage.
  • Military Service: Male workers are entitled to severance pay when they leave the job for compulsory military service.
  • Retirement: Workers entitled to old age, retirement, or disability pension from the Social Security Institution can claim their severance pay upon presenting these documents to the employer.
  • Death: In the event of the worker’s death, their legal heirs can claim the severance pay.

Severance Pay Calculation Method

  • Gross salary → not just the worker’s base salary; it also includes continuous additional payments such as transportation, meals, and bonuses.
  • Service period → the total number of years the worker has worked for the same employer is considered.
  • Formula: 👉 Severance Pay = Years of Service × Gross Salary

For example; for a worker who has worked for 10 years and has a gross salary of 50,000 TL, the severance pay calculation is:

10 × 50,000 TL = 500,000 TL (without considering the ceiling limit).

Severance Pay Ceiling

According to the law, the severance pay to be paid to workers cannot exceed the maximum retirement bonus paid to civil servants .

📌 As of July 1, 2025, the severance pay ceiling for one year of service is 53,919.68 TL.

This amount is updated annually through an official communiqué announced by the Ministry of Treasury and Finance.

Example Calculation (2025 Data)

  • Employment Period: 8 years
  • Gross Salary: 60,000 TL
  • Total Entitlement: 8 × 60,000 = 480,000 TL
  • However, due to the ceiling limitation, the worker can be paid 8 × 53,919.68 = 431,357.44 TL.

As can be seen from this example, the ceiling application limits severance pay for high-salary employees.

2000–2025 Severance Pay Ceiling: TL and Dollar Equivalent with Inflation Rates

YearCeiling (TL)USD EquivalentTL Increase (%)USD Increase (%)Inflation (%)
2000861.00 TL1,377.60 $%39.0
20011,091.00 TL890.61 $%26.7%-35.4%68.5
20021,320.00 TL875.91 $%21.0%-1.7%29.7
20031,470.00 TL983.28 $%11.4%12.3%18.4
20041,574.00 TL1,106.89 $%7.1%12.6%9.3
20051,727.15 TL1,287.96 $%9.7%16.4%7.7
20061,770.62 TL1,239.93 $%2.5%-3.7%9.7
20072,030.19 TL1,555.70 $%14.7%25.5%8.4
20082,173.19 TL1,682.04 $%7.0%8.1%10.1
20092,260.05 TL1,461.87 $%4.0%-13.1%6.5
20102,517.01 TL1,670.21 $%11.4%14.3%6.4
20112,731.85 TL1,632.90 $%8.5%-2.2%10.4
20122,917.27 TL1,627.94 $%6.8%-0.3%6.2
20133,129.25 TL1,641.79 $%7.3%0.9%7.4
20143,438.22 TL1,573.56 $%9.9%-4.2%8.2
20153,709.98 TL1,361.96 $%7.9%-13.4%8.8
20164,092.53 TL1,354.25 $%10.3%-0.6%8.5
20174,426.16 TL1,212.98 $%8.2%-10.4%11.9
20185,434.42 TL1,126.30 $%22.8%-7.1%20.3
20196,017.60 TL1,059.25 $%10.7%-6.0%11.8
20207,117.17 TL1,015.43 $%18.3%-4.1%14.6
20218,284.51 TL932.31 $%16.4%-8.2%36.1
202215,371.40 TL927.66 $%85.5%-0.5%64.3
202323,489.83 TL984.07 $%52.8%6.1%64.8
202441,828.42 TL1,286.63 $%78.1%30.7%44.4
202553,919.68 TL1,497.77 $%28.9%16.4

TAx, Interest, and Payment Process

1. Is There a Tax Deduction on Severance Pay?

One of the most important features of severance pay is that it is exempt from income tax. According to Article 25 of the Income Tax Law, severance pays paid under Labor Law No. 1475, Maritime Labor Law No. 854, and Press Labor Law No. 5953 are exempt from tax within certain limits.

📌 For the period from July 1 to December 31, 2025, the tax-exempt amount for severance pay is set at 53,919.68 TL.

The portion exceeding this amount is considered as salary and is subject to income tax.

Important Note: Only stamp duty (0.759%) is deducted from severance pay. No other tax deductions are made.


2. Delay Interests and Supreme Court Decisions

If the employer does not pay the severance pay on time, the worker can claim legal interest for their receivable.

  • According to Supreme Court precedents, since severance pay becomes due on the date the employment contract is terminated, the highest interest rate applied to deposits is applied from this date.
  • This allows the worker to compensate for the damage caused by the late payment of their receivable.

3. Employer’s Payment Obligation

  • The employer is obliged to pay the severance pay immediately and in cash when the employment contract ends.
  • Payment in installments or delaying payment is not legally possible.
  • If payment is not made, the worker must first apply for mediation, and if no result is achieved, they must file a lawsuit in the labor court.

4. Worker’s Right to Sue

  • If severance pay is not paid, the worker has two options:
    1. Mediation: This is the mandatory first step. If the worker cannot reach an agreement with the employer, they can file a lawsuit.
    2. Labor Court: If no agreement is reached at the end of the mediation process, the worker can file a lawsuit to claim both severance pay and delay interest.

Supreme Court decisions state that if the worker’s severance pay claim is not paid, the employer may also face other obligations such as bad faith compensation or reinstatement.

Lawsuit Process and Mediation

1. Time Limit for Filing a Lawsuit for Severance Pay (Statute of Limitations)

Severance pay claims must be made within 5 years from the date the employment contract is terminated.

📌 According to Labor Law No. 4857, the worker can apply for mediation or file a lawsuit within this period. Lawsuits filed after the statute of limitations are dismissed.


2. Mandatory Mediation and Pre-Lawsuit Application

With the regulation made in 2018, mediation has become a condition for filing a lawsuit in labor claims (including severance pay).

  • The worker must first apply to the mediation office and try to reach an agreement with the employer.
  • If an agreement is reached, a lawsuit cannot be filed, and the parties are bound by the agreement document they signed.
  • If no agreement is reached, the worker can file a lawsuit in the labor court with the final report prepared at the end of the mediation.

3. Lawsuit Process in Labor Court, Costs, and Attorney Fees

  • If a lawsuit is filed after mediation, the process is conducted in the labor court.
  • In the lawsuit, the worker can claim both severance pay and delay interest.
  • Costs: The worker pays the fees, expert fees, and notification expenses; if they win the case, the employer is obliged to cover these costs.
  • Attorney Fees: Determined according to the Minimum Attorney Fee Tariff of the Union of Turkish Bar Associations.

4. Current Examples from Supreme Court Precedents

  • Supreme Court 9th Civil Chamber: It has ruled that severance pay must be paid if the employment contract is terminated by the worker for just cause.
  • Supreme Court 22nd Civil Chamber: It emphasized that lawsuits filed without reaching an agreement in mediation should be dismissed on procedural grounds.
  • Supreme Court 7th Civil Chamber: It stated that if the employer does not pay severance pay, the highest deposit interest rate should be applied to the worker’s receivable from the date of termination of the employment contract.

Special Cases

Severance Pay for Subcontracted Workers

In the case of a subcontractor–main contractor relationship, the responsibility for severance pay has a different structure. Even if the worker works for different subcontractors under the same employer, the employment period is considered as a whole. According to Supreme Court precedents, the main employer and the subcontractor are jointly responsible. In the event of a severance pay claim, both the subcontractor and the main employer are jointly liable.

Severance Pay for Public Employees

For public employees not covered by Labor Law No. 4857 (e.g., civil servants subject to the Civil Servants Law No. 657), there is no severance pay in the classical sense. However, these individuals benefit from retirement bonuses or other payments based on their service period. Contracted public workers employed under the Labor Law are entitled to severance pay under general provisions.

Severance Pay in Mass Layoffs

In the case of mass layoffs, termination procedures are subject to Article 29 of Labor Law No. 4857. According to this article, the employer may conduct mass layoffs due to economic, technological, structural, or similar business requirements. However, the severance pay rights of the dismissed workers are preserved. Supreme Court decisions also clearly emphasize that individual severance rights of workers are protected in the event of mass layoffs.

Severance Pay Liability in Case of Transfer of Workplace

In the event of a transfer of the workplace to another employer, the worker’s seniority period is not reset. According to Article 6 of Law No. 4857, the worker’s seniority period is transferred to the new employer as is. In this case, the responsibility for severance pay lies with both the transferring and the receiving employer. According to the Supreme Court, the transferring employer is held responsible only for their own period, while the receiving employer is responsible for the total period.

Frequently Asked Questions

How is severance pay calculated?

Severance pay is calculated based on the worker’s 30 days of gross salary for each year of service. In addition to the salary, regularly paid bonuses, transportation, and meal allowances are included. However, the amount to be paid is limited by the severance pay ceiling determined annually by the Ministry of Treasury and Finance.

What is the maximum number of years for which severance pay can be received?

There is no upper limit in terms of years for severance pay in the law. Even if a worker works for the same employer for 20 years, they are entitled to severance pay for the entire period. The only limitation is the ceiling application that determines the maximum amount payable for each year.

What if the employer does not pay?

If the employer does not pay the severance pay, the employee must first apply for mediation. If no agreement is reached in mediation, the employee may file a lawsuit in the labor court and may also claim default interest in this case. According to Supreme Court precedents, interest accrues from the date the employment contract is terminated.

What is the statute of limitations for severance pay?

For severance pay receivables, the statute of limitations is 5 years. This period starts to run from the date the employment contract is terminated. If mediation is not initiated or a lawsuit is not filed within 5 years, the employee cannot claim severance pay.

Can a female employee who marries receive severance pay?

Yes. If a female employee resigns of her own will within 1 year from the date of marriage, she becomes entitled to severance pay. This right is secured under Article 14 of Labor Law No. 1475. The female employee may request severance pay from the employer by presenting her marriage certificate.

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