Severance pay in Turkey (Kıdem Tazminatı) is one of the most important financial obligations employers must consider when terminating an employment relationship.
While the general principles of Turkish severance pay may appear straightforward, several situations require particular attention. Can severance pay be paid while an employee is still working? Is an employee leaving for paid military service entitled to severance? What happens when a fixed-term employment contract expires? How is severance calculated for part-time employees?
For international companies employing workers in Turkey, understanding these specific rules is essential for maintaining compliance with Turkish labor law and payroll regulations.
This guide explains the main special cases, calculation methods and statutory limitations applicable to severance pay in Turkey.
Can Severance Pay Be Paid to an Employee Who Is Still Working?
Under Article 14 of former Labour Law No. 1475, which remains applicable to severance pay, entitlement to severance is generally connected to the termination of the employment relationship.
In other words, as a general principle, the employment contract must end before statutory severance pay becomes due.
However, Turkish legislation does not contain an absolute provision expressly prohibiting an employer from making a severance-related payment while the employment relationship continues.
This distinction has important consequences.
Payments Made During Employment May Be Considered an Advance
According to Turkish Court of Cassation case law, payments described as severance pay but made while the employee continues working may be treated as an advance payment rather than final severance pay.
When the employee ultimately leaves the company, the final severance entitlement must therefore be recalculated based on the employee’s latest applicable salary.
Amounts previously paid may then be deducted from the final severance amount, taking the applicable legal interest into consideration.
This approach was addressed by the 9th Civil Chamber of the Turkish Court of Cassation in Decision No. 2022/8962 (File No. 2022/8934).
Consequently, employers should be cautious about making periodic severance payments to employees whose employment relationships remain active.
Can an Employer Pay Severance Every Year by Terminating and Restarting the Employee’s Social Security Registration?
Some employers may attempt to close an employee’s social security registration each year, pay an amount labelled as severance pay and then register the employee again while the employment relationship effectively continues.
Turkish case law does not generally treat this arrangement as a genuine termination of the employment relationship when the employee’s work continues uninterrupted.
The Court of Cassation has considered such arrangements potentially simulated transactions, meaning that the payment does not necessarily become definitive severance simply because an SGK exit and re-entry were processed.
Instead, amounts paid during the continuing employment relationship may retain the legal character of an advance against future severance pay.
This principle was addressed by the 9th Civil Chamber of the Court of Cassation in File No. 2012/18282, Decision No. 2013/10813.
For employers, the practical point is important: administrative termination and re-registration should not be used as a substitute for correctly determining an employee’s actual period of continuous service.
Is Severance Pay Due When an Employee Leaves for Paid Military Service in Turkey?
Military service represents another important exception under Turkish severance pay rules.
Article 14 of former Labour Law No. 1475 provides for severance entitlement where an employee leaves employment due to compulsory military service (muvazzaf askerlik hizmeti).
The question becomes more complex in the context of paid military service (bedelli askerlik).
Turkish labor legislation does not contain an explicit provision stating that an employee participating in paid military service is excluded from severance pay.
Court Decisions on Paid Military Service
Turkish Court of Cassation case law has recognized severance entitlement for an employee resigning because of paid military service, including in a case where the employee did not actually perform even one day of active compulsory military duty.
This position can be found in the 9th Civil Chamber of the Court of Cassation, File No. 2014/15064, Decision No. 2015/31360.
Regional Courts of Appeal have also issued decisions supporting severance entitlement for employees leaving employment for paid military service.
Accordingly, where the legal conditions are satisfied, an employee with at least one year of service who terminates employment because of paid military service may be entitled to severance pay.
Employers should nevertheless examine the documentation and circumstances of each individual termination before processing the employee’s final payroll.
Are Fixed-Term Employees Entitled to Severance Pay in Turkey?
The treatment of fixed-term employment contracts in Turkey depends primarily on how and when the contract ends.
Automatic Expiration of a Fixed-Term Contract
As a general rule, when a valid fixed-term employment contract reaches its agreed expiry date and terminates automatically, the employer is not required solely because of that expiration to pay severance pay or notice compensation.
This principle has been addressed by the General Assembly of Civil Chambers of the Turkish Court of Cassation in File No. 2014/391, Decision No. 2014/710.
The distinction between automatic expiration and termination initiated by one of the parties is therefore important.
Employer Announces Non-Renewal Before the Contract Expires
The legal assessment may differ where, before the contractual expiry date, the employer expressly declares that the contract will not be renewed.
Court of Cassation case law has recognized that, depending on the circumstances, an employee with more than one year of service may become entitled to severance pay and, where the relevant conditions are satisfied, notice compensation.
This issue was addressed by the former 22nd Civil Chamber of the Court of Cassation in File No. 2016/1725, Decision No. 2019/14022.
Employers should therefore distinguish carefully between the natural expiration of a fixed-term contract and an employer-driven termination process.
Successive Fixed-Term Employment Contracts
Turkish employers should also pay attention to repeated renewals of fixed-term employment contracts.
A fixed-term arrangement cannot necessarily be extended indefinitely simply by signing successive fixed-term contracts.
Depending on the circumstances and the existence of an objective reason for maintaining fixed-term status, successive renewals may result in the employment relationship being regarded as an indefinite-term employment contract.
Court of Cassation case law has also addressed long-duration and repeatedly renewed fixed-term arrangements, including the 9th Civil Chamber’s File No. 2007/19368, Decision No. 2008/15558.
This classification is particularly important because it can affect both termination procedures and employee compensation rights.
What Is the Severance Pay Ceiling in Turkey?
Turkish severance pay is subject to a statutory maximum known as the severance pay ceiling (Kıdem Tazminatı Tavanı).
Article 14 of former Labour Law No. 1475 provides that the annual severance amount payable to employees covered by the Labour Law may not exceed the maximum retirement bonus payable for one year of service to the highest-ranking civil servant subject to the Civil Servants Law, calculated according to the relevant statutory framework.
The severance pay ceiling is generally announced by the Turkish Ministry of Treasury and Finance for six-month periods.
This means that even where an employee’s actual gross monthly remuneration exceeds the statutory ceiling, the tax-advantaged statutory severance calculation is limited by the ceiling applicable on the termination date.
International employers should therefore verify the current Turkish severance pay ceiling whenever an employee leaves the company.
Can an Employer Pay More Than the Severance Pay Ceiling?
Yes. An employer may decide to make a payment exceeding the statutory severance ceiling.
However, the amount exceeding the statutory ceiling does not necessarily receive the same payroll and tax treatment as statutory severance pay.
The excess amount may instead be treated as salary/remuneration, potentially making it subject to applicable income tax and social security contributions.
This distinction is important when structuring termination packages or negotiated settlements for highly paid employees.
Employers should therefore separate the statutory severance component from any additional contractual or discretionary termination payment when preparing the employee’s final payroll.
How Is Severance Pay Calculated in Turkey?
The basic severance calculation starts with two essential elements:
Total length of service × applicable final gross monthly remuneration
The employee’s complete service period should first be determined.
For example, an employee who has completed 1,000 days of service has approximately:
1,000 ÷ 365 = 2.7397 years of service
If the employee’s final monthly gross remuneration, including the relevant benefits included in the severance basis, is TRY 30,000, the gross severance calculation would be:
2.7397 × TRY 30,000 = approximately TRY 82,191.78
The statutory severance ceiling must, however, always be checked before determining the final amount payable.
Which Benefits Are Included in the Severance Pay Calculation?
The severance calculation may not be limited to the employee’s basic gross salary.
Certain benefits that can be measured in monetary terms and are provided to the employee on a regular basis may need to be included when determining the remuneration used for severance purposes.
Depending on the employee’s compensation package, these can potentially include regular benefits such as:
- Meal allowances;
- Transportation benefits;
- Regular cash allowances;
- Certain recurring bonuses or benefits;
- Other regular benefits measurable in money.
The precise treatment depends on the nature, regularity and legal classification of each payment.
Converting Non-Salary Benefits Into a Monthly Amount
For relevant benefits that are not paid as ordinary monthly salary, the total applicable amount may need to be converted into a daily and subsequently monthly value.
A commonly applied method is:
Annual benefit amount ÷ 365 × 30
The resulting amount can then be incorporated into the monthly remuneration used for the severance calculation where legally appropriate.
This methodology has been addressed in Court of Cassation case law, including 7th Civil Chamber File No. 2015/2861, Decision No. 2015/1523.
What Deductions Apply to Severance Pay?
Statutory severance pay benefits from a specific tax treatment in Turkey.
Within the applicable statutory framework and ceiling, severance pay is generally not treated in the same manner as ordinary salary for income tax and social security purposes.
Stamp tax is generally deducted from the statutory severance payment.
Employers must nevertheless distinguish between genuine statutory severance and additional termination compensation exceeding the applicable statutory limits, because different tax and social security treatment may apply.
The applicable rates and limits should always be verified for the relevant payroll period before processing the payment.
How Is the Employee’s Final Monthly Gross Salary Determined?
Correctly identifying the employee’s final gross monthly remuneration is essential because the severance calculation is generally based on the remuneration applicable at the end of employment.
For hourly paid employees, Court of Cassation case law indicates that the monthly remuneration should be determined by multiplying the hourly wage by the standard 7.5-hour daily working time and then by 30 days.
The calculation is therefore:
Hourly gross wage × 7.5 × 30
The calculation should not simply be based on the number of days the employee happened to work during the final partial month.
Example
Consider an employee whose gross hourly wage is TRY 88.90.
If the employee leaves on the 20th day of a month, multiplying the hourly wage by 7.5 hours and 20 days would produce:
TRY 88.90 × 7.5 × 20 = TRY 13,335
However, this represents remuneration corresponding to 20 days, not the employee’s monthly wage for severance purposes.
The monthly gross wage should instead be calculated as:
TRY 88.90 × 7.5 × 30 = TRY 20,002.50
This distinction prevents an employee’s severance entitlement from being artificially reduced merely because employment ended before the last day of the month.
How Is Severance Pay Calculated for Part-Time Employees in Turkey?
Part-time employees can also qualify for severance pay.
According to Turkish Court of Cassation case law, eligibility is not determined simply by counting the number of days actually worked each month.
If one year has elapsed between the employee’s employment start date and termination date, a part-time employee may satisfy the one-year seniority requirement even though they worked only certain days each week or month.
This approach has been recognized by the 9th Civil Chamber of the Court of Cassation in File No. 2007/31462, Decision No. 2008/108.
The same principle is relevant to annual leave eligibility.
Part-Time Severance Pay Calculation Example
Suppose a part-time employee works from 1 January 2022 until 1 January 2024.
The employee works only 10 days per month, and their final gross remuneration for those 10 working days is TRY 15,000.
Their service period is two years.
The severance calculation would therefore be:
2 years × TRY 15,000 = TRY 30,000
The employee’s actual part-time monthly remuneration is used. It is not automatically converted into the hypothetical salary the employee would have earned by working 30 days per month.
This approach has also been addressed in Court of Cassation case law, including 9th Civil Chamber File No. 2010/35184, Decision No. 2013/596.
Key Severance Pay Risks for Employers in Turkey
For international companies, severance calculations should never be treated as a simple multiplication of salary by years of service.
Before completing a termination, employers should verify:
- The employee’s actual and continuous length of service;
- Whether the termination legally creates a severance entitlement;
- Whether previous severance-related payments were made during employment;
- Whether a fixed-term contract genuinely qualifies as fixed-term;
- Whether successive contracts could be considered an indefinite-term relationship;
- The employee’s final gross remuneration;
- Regular benefits that must be included in the severance basis;
- The statutory severance ceiling applicable on the termination date;
- The appropriate tax and social security treatment;
- Any special circumstances such as military service or part-time employment.
A mistake in any of these elements can lead to an incorrect final payroll calculation and potentially create employment disputes.
Severance Pay Compliance for International Employers in Turkey
International companies employing personnel in Turkey often encounter severance issues because Turkish employment law combines statutory rules with extensive Court of Cassation case law.
This is particularly important when dealing with unusual termination scenarios.
A company may, for example, have an employee who received previous severance advances, works part-time, has been employed through successive fixed-term contracts or is leaving for military service.
Each case requires an individual assessment.
Working with a local payroll and Employer of Record (EOR) provider in Turkey can help foreign companies determine the appropriate termination procedure, calculate employee entitlements and process final payroll in accordance with Turkish requirements.
Azkan Group provides payroll, HR administration and Employer of Record services in Turkey, supporting international companies throughout the employment lifecycle, from onboarding and monthly payroll to employee termination and statutory compensation calculations.
Frequently Asked Questions About Severance Pay in Turkey
Can severance pay be paid while an employee is still working?
Payments can be made, but Turkish case law may characterize severance payments made during continuing employment as advances rather than final severance payments. Final severance may need to be recalculated when employment actually ends.
Can an employer pay severance every year?
Periodic payments labelled as severance do not necessarily eliminate future severance liability if the employment relationship continues. Previous payments may instead be treated as advances against the employee’s final entitlement.
Does an employee leaving for paid military service receive severance pay?
Court decisions have recognized severance entitlement for qualifying employees leaving employment due to paid military service. The employee should generally have at least one year of service and satisfy the applicable legal conditions.
Does a fixed-term employee receive severance pay when the contract expires?
As a general rule, the automatic expiration of a valid fixed-term employment contract does not, by itself, require payment of severance or notice compensation. Different consequences may arise depending on how the employment relationship actually ends.
Is severance pay capped in Turkey?
Yes. A statutory severance pay ceiling applies and is generally updated for six-month periods. Employers should check the ceiling applicable on the employee’s termination date.
Can an employer pay more than the statutory severance ceiling?
Yes, but the amount exceeding the statutory ceiling may receive different income tax and social security treatment from statutory severance pay.
Are meal and transportation benefits included in severance pay?
Regular benefits measurable in monetary terms may be included in the remuneration used for calculating severance, depending on their nature and frequency.
Do part-time employees qualify for severance pay?
Yes. Part-time employees may qualify when the statutory conditions are satisfied. Their seniority is generally assessed according to the duration of the employment relationship rather than simply the number of days physically worked each month.
Conclusion
Severance pay in Turkey involves much more than multiplying an employee’s salary by the number of years worked.
The employee’s termination reason, continuous service period, contractual status, remuneration structure and working arrangement can all influence both entitlement and calculation.
Special attention is required for employees who remain employed after receiving severance-related payments, workers leaving for paid military service, fixed-term employees and part-time workers.
For international employers, accurate termination management requires both payroll expertise and a strong understanding of Turkish employment law and Court of Cassation decisions.
Properly reviewing these factors before processing a termination can help companies calculate severance accurately, maintain Turkish labor law compliance and reduce the risk of future employment disputes.
