When severance pay and notice pay arise

An employee who signs the resignation letter placed in front of them often learns afterwards that the same signature also gave up the right to severance pay. Because severance pay and notice pay come up at the same moment, they are taken for a single entitlement. In fact the conditions that create them and the methods used to calculate them are separate.

When severance pay arises

Two conditions are required together: at least one year of service with the same employer, and termination of the employment contract for one of the reasons listed in the legislation. If the year has not been completed, severance pay (kıdem tazminatı) cannot be claimed however the contract ends.

The main qualifying ways in which the contract may come to an end:

• Termination by the employer for any reason other than conduct of the employee contrary to the rules of morality and good faith
• Immediate termination by the employee for just cause (wages not paid, social security contributions declared short, a fundamental change in working conditions, harassment at the workplace and similar)
• Departure of a male employee for compulsory military service
• Departure in order to receive an old age, retirement or invalidity pension, or a lump sum payment
• Resignation by a female employee within one year of the date of her marriage
• Death of the employee, in which case the payment goes to the heirs

A resignation letter that gives no reason falls outside this list. Even where the employee in truth left for a just cause, the burden of proof becomes far heavier if the document in the file says "resignation".

The two elements of the calculation

Severance pay is calculated on thirty days' wages for each full year worked, and the part of a year left over is added on the same basis.

The wage used is not the bare wage but the gross wage including regular benefits. Transport, meals, a bonus paid regularly, a fuel allowance and similar benefits that are continuous and measurable in money are added to the wage. One-off payments and overtime pay do not enter this calculation.

A ceiling set by statute applies to severance pay and is updated twice a year; if the daily figure calculated exceeds the ceiling, the ceiling applies. No deduction other than stamp duty is made from the payment.

Notice pay is a separate head of claim

Notice pay (ihbar tazminatı) is the sum paid by the party who brings the employment contract to an end without just cause and without observing the notice period. The notice periods vary with length of service: two weeks for service of less than six months, four weeks between six months and one and a half years, six weeks between one and a half and three years, and eight weeks for service of more than three years.

Two points matter. First, notice pay is not only the employee's entitlement; an employer may also claim it from an employee who walks out without observing the notice period. Second, an employee who terminates immediately for just cause is entitled to severance pay but cannot claim notice pay, since immediate termination removes the notice period altogether.

Release documents and limitation periods

A release document (ibraname) signed at the moment of termination is not always effective. To produce its intended result it must be given after a set period has passed since the contract ended, be in writing, list each head of claim and each amount separately, and be matched by payment made through a bank. A document that does not meet these conditions counts only as a receipt for the sum actually paid.

Claims for severance pay and notice pay are subject to a statute of limitations that runs from the date of termination. Because different heads of claim carry different periods, bringing the claim as a whole in good time carries real weight.

This article is for general information only and does not constitute legal advice on any specific matter.