Severance Pay — Conditions, Calculation and Entitlement (2026)

The conditions for severance pay, the 2026 ceiling, the gross wage including benefits, a worked example, notice periods and the conditions for reinstatement.

In Brief

Severance pay arises where the employment contract of an employee who has worked for at least one year at one or more workplaces of the same employer ends for one of the reasons listed in the statute. It is based on 30 days of the last gross wage including benefits for each full year; periods beyond a full year are calculated pro rata. The statutory severance pay ceiling applies to the calculation.

For the period 1 July - 31 December 2026 the annual severance pay ceiling is, under the circular of the Ministry of Treasury and Finance, TRY 73,729.87. This amount applies to each year of service and changes periodically.

Legal Basis

Article 14 of Labour Law no. 1475, which remains in force, applies to severance pay. An employee's service with the same employer is assessed together under the principles laid down in the statute, regardless of whether it was spent at the same or different workplaces.

Basic Conditions for Entitlement

At least one year's service with the same employer.
Termination of the employment contract for a reason giving rise to severance pay under art. 14 of Law no. 1475.
Determination of the last wage forming the basis of the calculation and of the regular benefits consisting of money or measurable in money.

The Principal Forms of Termination That Can Give Rise to Severance Pay

Termination by the employer for a reason other than the grounds of breach of morality and good faith in art. 25/II of Labour Law no. 4857.
Termination by the employee on one of the just causes in art. 24 of Law no. 4857.
The employee leaving on account of compulsory military service.
A female employee terminating her contract of her own will within one year of the date of her marriage.
Leaving in order to receive an old-age, retirement or invalidity pension, or a lump-sum payment, from the institution or fund to which the employee belongs.
Leaving because the retirement conditions other than age have been completed under the relevant social security legislation.
The death of the employee; the resulting payment is made to their statutory heirs.

The “15 years and 3,600 days” requirement is not the single retirement condition applicable to all insured persons. Depending on the date of first insurance and the transitional provisions that apply, different conditions such as 3,600, 4,500, 5,400 or 7,000 days may arise. For that reason, before leaving, the employee should obtain from the Social Security Institution a letter reflecting their own position, and should expressly base the notice of termination on that legal ground.

Method of Calculation

The simplified formula is as follows:

Last monthly gross wage including benefits × length of service

Payment is made at 30 days' wages for each full year and at the same rate for any additional period. In files requiring a calculation in days, the length of service is determined by calendar days. The wage calculated for each year of service may not exceed the severance pay ceiling in force at the date of termination.

The Gross Wage Including Benefits

The wage taken as the basis is the gross, not the net, wage. Contractual and statutory benefits consisting of money or measurable in money that are provided to the employee continuously and regularly are taken into the calculation. Regular meal and travel allowances, bonuses and continuing premiums are examples. Occasional payments, genuine reimbursements of expenses and benefits that are not continuous are not added to the calculation in every case; the character of the payment must be examined.

A Worked Example

A simplified calculation for an employee whose last gross basic wage is TRY 35,000, with a regular gross travel allowance of TRY 3,000, a regular gross meal allowance of TRY 2,000 and total annual gross bonuses of TRY 70,000, who has worked for 7 years and 3 months:

Monthly equivalent of the bonus: 70,000 / 12 = TRY 5,833.33
Monthly gross wage including benefits: 35,000 + 3,000 + 2,000 + 5,833.33 = TRY 45,833.33
Approximate length of service: 7.25 years
Gross severance pay: 45,833.33 × 7.25 = TRY 332,291.64

In this example the monthly figure used in the calculation remains below the 1 July - 31 December 2026 ceiling. An actual calculation takes as its basis the exact dates of starting and leaving work, the deductions, the character of the wage components and the ceiling in force at the date of termination. The figure in the example is not a net payment.

The 2026 Severance Pay Ceiling

Under the circular of the Ministry of Treasury and Finance dated 3 July 2026, the annual ceiling from 1 July 2026 is TRY 73,729.87. For terminations in the period 1 January - 30 June 2026, the lower ceiling in force for that period applies. What matters is not the date of payment but, as a rule, the ceiling in force on the date the employment contract ended.

Severance Pay Compared with Payment in Lieu of Notice

Criterion	Severance pay	Payment in lieu of notice
Legal basis	Law no. 1475 art. 14	Law no. 4857 art. 17
Minimum service	At least one year	The statutory notice period arises according to the length of service
Basis of calculation	Last gross wage including benefits × length of service; a ceiling applies	The wage for the notice period, taking benefits consisting of money or measurable in money into account
Ceiling	Yes	The severance pay ceiling does not apply
Tax	Severance pay within the statutory limits falls within the income tax exemption; stamp duty and payments exceeding the exemption limit are assessed separately	The income tax and stamp duty rules apply
Limitation	Five years, subject to the transitional provisions	Five years, subject to the transitional provisions

Notice Periods

Employee's length of service	Minimum notice period
Less than 6 months	2 weeks
6 months - 1.5 years	4 weeks
1.5 - 3 years	6 weeks
More than 3 years	8 weeks

These periods are minimums and may be increased by contract. A party that fails to observe the notice requirement pays in lieu of notice an amount equal to the wages for the notice period. Cases of immediate termination for just cause are assessed separately.

The Basic Conditions of Reinstatement Protection

The employee falls within the job security provisions of Law no. 4857 and works under a contract of indefinite duration.
At least 30 employees work at the workplace; the total for the same employer's workplaces in the same branch of activity is taken into account.
As a rule at least six months' service; this requirement does not apply to employees working underground.
The contract is terminated by the employer and the termination does not rest on a valid reason.
The employee does not fall within the statutory exception of being an employer's representative who directs the whole undertaking, or their assistant, or an employer's representative who directs the whole workplace and has the power to hire and dismiss employees.

An application must be made to a mediator seeking reinstatement within one month of service of the notice of termination. If no settlement is reached, proceedings may be brought in the labour court within two weeks of the date of the final record. These periods are specific to reinstatement disputes.

Mediation and Limitation

For employment claims such as severance pay and payment in lieu of notice, applying to a mediator before bringing proceedings is a condition of the action. For an ordinary severance pay claim there is no separate one-month forfeiture period for applying, as there is in reinstatement; the limitation period applies instead.

For severance pay and payment in lieu of notice arising from employment contracts that ended after 25 October 2017, the limitation period is five years. For contracts that ended earlier, the transitional provision of Law no. 7036 applies; a period that has already expired does not revive, and the remaining period is calculated by reference to the specific dates.

Common Mistakes

Using the net wage as the basis of the calculation: Severance pay is calculated on the last gross wage including benefits.
Applying the 15 years / 3,600 days rule to every insured person: The retirement conditions vary with the date of first insurance and the transitional provisions.
Treating a resignation letter obtained under pressure as valid in every case: Defects of intention and the true intention to terminate are assessed on the evidence; the heading of the letter alone does not determine the outcome.
Looking only at the one-month period in a release: Under art. 420 of the Code of Obligations a release must be in writing, at least one month must have passed since the termination, the type and amount of the claim must be expressly stated, and payment must be made in full through a bank in accordance with the amount due. A release not meeting these conditions is void; a document containing an incomplete payment may have the effect of a receipt.
Treating all mediation and litigation periods as forfeiture periods: The reinstatement periods are forfeiture periods; for monetary claims, a distinction must be drawn between mediation as a condition of the action and limitation.

Conclusion

In severance pay, the reason for termination, at least one year's service, the last gross wage including benefits, the length of service and the ceiling in force at the date of termination are examined together. For the period 1 July - 31 December 2026 the annual ceiling is TRY 73,729.87. Leaving on account of retirement, releases and the reinstatement periods must be assessed separately according to the person and the date.

Official sources: Law no. 1475 art. 14, Labour Law no. 4857, July 2026 Circular on Financial and Social Rights, Turkish Code of Obligations no. 6098