Employee Claims Actions — Types, Limitation Periods and Calculation
What is an employee claims action, which claims may be advanced, and what are the limitation periods? A comprehensive guide to severance and notice pay, overtime, annual leave and wage claims, and the types of interest.
What Is an Employee Claims Action?
An employee claims action is an action brought by an employee before the labour court where wages, compensation and other entitlements arising from the employment contract have not been paid, or have been underpaid, by the employer. Labour Law No. 4857, the Turkish Code of Obligations No. 6098 and the still-effective provisions of the former Labour Law No. 1475 form the legal basis of employee claims.
The employee claims action is one of the most frequently brought types of action in labour law. Various heads of claim arise upon the termination of the employment contract. Severance pay, notice pay, overtime pay, annual leave pay, unpaid wages, and national and public holiday pay may be claimed together in a single action.
Before bringing an employee claims action, an application for mandatory mediation must be made under Art. 3 of Labour Courts Law No. 7036. If no agreement is reached in mediation, an action may be brought before the labour court once the record of non-agreement has been drawn up. An action brought without recourse to mediation is dismissed on procedural grounds for want of a condition of action.
The action for an indeterminate claim governed by HMK Art. 107 was repealed on 31 July 2026. The former Art. 107 continues to apply to actions brought before that date. In employee claims actions brought on or after 31 July 2026, the claim must be framed as a full action or under the rules on partial actions in HMK Art. 109. Where only part of a claim has been sued for, the claim may be increased once in the same action, until the close of the investigation stage and without being subject to the prohibition on extending the claim; limitation is deemed to have been interrupted at the date of the action in respect of the increased part as well. This new possibility does not remove the need to frame the claim deliberately and in proper form from the outset.
Types of Employee Claim
The principal claims are severance and notice pay, wages, overtime, weekly rest, national and public holidays, annual leave pay, and bonuses, gratuities and other entitlements arising from a contract or collective agreement. Each head has its own conditions of accrual, proof, deductions and interest. The minimum living allowance (AGİ) was abolished with effect from 1 January 2022 and is not a current employment claim on the payslip; only unpaid AGİ that accrued before its abolition and is not time-barred may be claimed historically.
Limitation Periods
Wages under Labour Law Art. 32 and, as listed in Additional Art. 3, annual leave pay, severance and notice pay, and compensation for bad faith and for unequal treatment, are subject to a five-year limitation period. Other claims are assessed under their own specific provisions; the generalisation that “all employee claims are subject to five years” should not be made. The starting point varies according to the type of claim — the date the wage falls due for wages, and the termination of the contract for leave pay and for compensation dependent on termination.
| Type of claim | Limitation period | General rule as to the starting point |
|---|---|---|
| Wage claims | Five years | The date each wage claim falls due |
| Overtime, weekly rest and national/public holiday pay | Five years | The date the claim for each period falls due |
| Annual leave pay | Five years | The date the employment contract terminates |
| Severance pay | Five years | The date the contract terminates in a manner giving rise to entitlement |
| Notice pay | Five years | The date of the termination made contrary to the notice requirements |
| Compensation for bad faith | Five years | The date of the bad-faith termination |
| Type of claim | Limitation period | General rule as to the starting point |
|---|---|---|
| Compensation for unequal treatment | Five years | The date of the breach or termination on which the claim falls due is determined on the facts. |
| Other employment claims | According to the specific provision | There is no single period and single starting date for all employee claims. |
Types of Interest and Their Application
Severance pay attracts the highest rate of interest applied by banks to deposits, running from the date of termination; claims in the nature of wages attract the highest deposit rate under Labour Law Art. 34; notice pay and annual leave pay attract, as a rule, statutory interest from the date of default. In special cases such as leaving for a reason other than retirement or age, the date on which the necessary document was given to the employer may be significant. The general statutory interest rate was 24 per cent per annum between 1 June 2024 and 30 July 2026 and is 31 per cent per annum from 31 July 2026; special types of interest are governed by their own provisions.
| Type of claim | Interest applied | Note on the starting point |
|---|---|---|
| Severance pay | Highest rate applied by banks to deposits | As a rule from the date of termination; in retirement and similar special terminations the date the necessary document was submitted is examined separately. |
| Type of claim | Interest applied | Note on the starting point |
|---|---|---|
| Wage claims | The highest rate applied by banks to deposits, under Labour Law Art. 34 | The conditions of maturity and default are assessed according to the particular payment period. |
| Overtime, weekly rest and national/public holiday pay | The highest rate applied by banks to deposits, given their character as wages | As a rule applied from the date of default; the distinction between claim and period is observed. |
| Notice pay | Statutory interest | As a rule applied from the date of default. |
| Annual leave pay | Statutory interest | Arises on termination of the contract; interest as a rule runs from the date of default. |
| Statutory interest rate | 1 June 2024 - 30 July 2026: 24 per cent per annum; from 31 July 2026: 31 per cent per annum | The official rate in force during the payment and calculation period must be applied. |
Gross-to-Net Calculation
Deductions are calculated according to the nature of the claim, the date of payment, any tax exemption, the social security ceiling and the employee's personal circumstances. Severance pay is as a rule subject to stamp duty; for notice pay and claims in the nature of wages, the income tax, stamp duty and premium consequences vary by head of claim. A single fixed tax or premium rate should not be applied to all claims.
The Burden of Proof in an Employee Claims Action
The burden of proof in an employee claims action is distributed according to the type of claim advanced. As a general rule, the party claiming a right must prove that the right has accrued. In labour law, however, because the employer is obliged to keep records, the burden of proof passes to the employer in certain situations.
- Severance pay: the employee must prove their length of service and the manner of termination. Where the employer alleges just cause, the burden of proving that just cause lies with the employer.
- Overtime pay: the burden of proof lies with the employee. Because the employer is obliged to produce working records, however, it is in practice shared.
- Annual leave pay: the burden of proving that annual leave was granted lies with the employer, who must establish it by a leave register and signed documents.
- Wage claims: the burden of proving payment of wages lies with the employer, who must establish payment by bank records, signed payslips or receipts.
- National and public holiday pay: the burden of proof lies with the employee, who must prove that they worked on the holidays in question.
Expert Reports and Methods of Calculation
The court may appoint an expert for the technical calculation of wages; the legal characterisation is for the judge. Although a discretionary reduction may be made in calculating long-period overtime based on witness evidence, there is no fixed statutory rate of 25–30 per cent; it is determined with reasons according to the records, the period and the reliability of the evidence. The fact that an expert calculation will be needed does not mean that the conditions of the former HMK Art. 107 are automatically met in a file opened before 31 July 2026. In actions brought after that date Art. 107 is not in force; a full or partial action and the new Art. 109/4 are assessed together.
The Procedure in an Employee Claims Action
An employee claims action is brought before the labour court. Where there is no labour court, the civil court of first instance has jurisdiction in the capacity of a labour court. Venue lies with the court of the defendant's place of residence or of the place where the work is performed.
Proceedings follow the simplified trial procedure. Under that procedure the exchange of pleadings consists of the statement of claim and the defence; there is no reply or rejoinder. Evidence must be submitted at the pleadings stage.
The main stages of the proceedings are as follows:
1. Mediation application: application to mandatory pre-action mediation. 2. Filing the statement of claim: if no agreement is reached in mediation, the statement of claim is filed with the court together with the final record.
3. Defence: the defendant (employer) files its defence.
4. Preliminary examination hearing: the court examines the conditions of action and preliminary objections, identifies the matters in dispute and encourages the parties to settle.
5. Investigation stage: the evidence is examined; witnesses are heard and an expert examination is carried out where necessary.
6. Judgment: the court gives its judgment at the conclusion of the investigation.
An appeal may be brought against the court's judgment to the regional court of appeal. An appeal on points of law against the regional court of appeal's decision may be brought in certain conditions. Such an appeal is examined by the Court of Cassation.
Forfeiture Periods in Employee Claims
Under Labour Law Art. 26, the power to terminate for breach of the rules of morality and good faith must be exercised within six working days of learning of the incident and in any event within one year of the act. The one-year long-stop period does not apply where the employee obtained a financial benefit from the incident. Following a reinstatement judgment the employee must apply to the employer within ten working days of service of the final decision; the period does not run merely from the date of finality.
Set-off and Deduction in Employee Claims
Labour Law Art. 35 provides that no more than one quarter of wages may be attached or assigned to another; it is not a general prohibition on set-off. Set-off by the employer against a wage claim is possible within the limits of TBK Art. 144, the employee's consent, the maturity of the claim and the mandatory limits protecting wages. Special situations such as damage caused intentionally are assessed separately.
Frequently Asked Questions
Is the minimum living allowance a current head of claim?
No; it was abolished on 1 January 2022, although claims for earlier periods may be reserved.
What is the statutory rate of interest?
The general statutory rate was 24 per cent per annum between 1 June 2024 and 30 July 2026 and is 31 per cent per annum from 31 July 2026; special interest provisions are reserved.
Is the overtime reduction a fixed 25 per cent?
No; there is no fixed statutory rate.
When must an application be made after a reinstatement judgment?
Within ten working days of service of the final decision.
This article was prepared by Av. Mehmet Serhat MALGIR.
