Notice and Severance Pay

1) Conceptual Framework: Legal Nature of Severance and Notice Pay

Severance payis a social benefit, a form of compensation, paid to an employee when their employment contract is terminated for specific reasons, based on their seniority (equal to 30 days' wages for each full year of service). It is based Article 14 of Law No. 1475 and remains in effect. Its constituent elements are: (i) at least one year of seniority, (ii) the termination grounds listed in the law (e.g., unfair dismissal by the employer; justified dismissal by the employee under Article 24/II; marriage, military service, retirement/old age/contribution conditions; death), (iii) the severance pay ceiling and only stamp duty deduction (not subject to income tax).

Severance pay arises from failure to comply with the notice periods stipulated in Article 17 of Law No. 4857 and is calculated based on "the amount of wages corresponding to the notice period determined according to the length of service." The distinction between irregular and unfair termination is important: Irregular termination, whether valid or invalid , without providing notice, gives rise to severance pay; unfair termination may also open the door to other compensation liabilities (such as termination/period of unemployment, reinstatement processes, etc.).

The intersection of the two institutions: Severance pay and notice pay arise independently; however, they can be claimed together if certain conditions are met. For example, an employer's termination without notice and unfair dismissalcan trigger both severance pay and notice pay. Conversely, an employee's immediate termination for just cause (Article 24/II of Law No. 4857) entitles them to severance pay but not notice pay; because notice pay is, as a rule, directed to the party who violated the notification obligation.

2) Eligibility Requirements for Severance Pay and "Seniority Calculation Period"

2.1. Minimum seniority and grounds for termination

A minimum of one year of seniority is required for severance pay . Seniority includes the combination of periods of service at the same or different workplaces belonging to the same employer (the principles of workplace/business unity and organic link are established in the Supreme Court). Key headings in termination cases:

Unjustified termination by the employer (failure to provide a valid reason, failure to allow a defense, procedural irregularities, etc.),
Justifiable termination by the employee (non-payment of wages, violations of health and moral/good faith rules – Article 24 of Law No. 4857),
Military service of male workers, marriage of female workers (within 1 year from the date of marriage),
Eligibility for retirement/old-age pension or fulfillment of premium/day/age requirements (as documented by the Social Security Institution),
Death (payment to legal heirs).

2.2. Calculation of seniority period and situations considered as "worked"

Seniority calculations consist of the actual working time plus periods legally considered as worked time . Article 55 of Law No. 4857 specifies that a broad list of these periods (annual paid leave, weekly rest days, public holidays, excused absences, portions of sick leave, etc.) will be included in the seniority calculation. Thus, the employee's annual leave readiness periods are also added to seniority (detailed below under the heading "30 Days of Annual Leave"). In cases of changes in subcontractors and takeovers, the preservation of seniority is also essential according to the provisions of Article 6 of Law No. 4857; the Supreme Court's practice allows for the merging of periods by determining the continuity and organic link between them.

2.3. Part-time work, trial period, suspension of employment

Seniority based on the calendar ; the calendar period is also used as the basis for part-time work. Probationary periods (Article 15 of Law No. 4857) are included in seniority. Unpaid leave (suspension) is not generally added to seniority; however, the law, collective agreement, or employment contract stipulates otherwise. Special provisions and case law regarding unpaid leave in case of maternity, the effect of time spent in military service on seniority, and the continuation of seniority upon return from compulsory military service are important.

3) Calculation of Severance Pay: “Gross Salary (including benefits)” and its Components

3.1. Main formula and ceiling

Basic principle: 30 days' gross salary for each full year , plus proportional increases for extended periods (e.g., 3 years and 8 months for 3 x 30 + (8/12) x 30 days). Payment is based on gross salary ; only stamp duty is deducted. Furthermore, the severance pay ceiling (parallel to the civil servant bonus ceiling announced every six months by the Ministry of Treasury and Finance) is the upper limit. Any amount exceeding the salary ceiling is disregarded.

3.2. “Seniority-based wage” – The Supreme Court's approach to gross wages

In its established jurisprudence, the Court of Cassation does not limit the base wage for seniority calculations solely to the basic wage; that are continuous and measurable in monetary also added. The main items are:

Travel and meal assistance (cash or in-kind – monetary value can be calculated),
Regular bonus/performance bonus (if not incidental),
Regular bonus (annual/semi-annual/quarterly – continuity criterion),
Fuel, clothing, family/child support, social assistance,
The market monetary value of tangible benefits such as services and accommodation ,
Any fuel cards or mobile phone lines (subject to mandatory limits).

Conversely , purely incidental or conditional and interruptible payments (one-off bonuses, exceptional payments of the "if a target is met" type), and benefits received in different periods and lacking continuity are not included in seniority calculations . Overtime pay, if it has become predictable and regular (e.g., a certain amount/average each month), may be added to the base salary for seniority calculations according to case law ; however, completely variable and irregular overtime is often not included .

3.3. Monthly and daily reporting techniques

Recurring annual payments (e.g., two bonuses per year) are calculated by dividing the annual total by 12 , then monthly ; the daily rate is then calculated based on 30 days and multiplied by the number of days of service. For in-kind benefits, the market value is determined (e.g., daily unit price for meals × actual/assumed number of working days; per-person cost for transportation; comparable rent for housing). This approach is known as the "dressed wage" / "joint benefit" system in both the Supreme Court and legal doctrine.

4) The Relationship Between 30 Days of Annual Leave and Severance Pay

4.1. Statutory annual leave periods and the "30-day" practice

According to Article 53 of Law No. 4857, minimum annual leave periods are determined as follows: 14 days for 1-5 years of service , 20 days for 5-15 years of service , and 26 days for 15 years and over ; and at least 20 days for workers under 18 and over 50 years of age . An additional 4 days apply to underground work . In practice, many employers/collective bargaining agreements allow for more than the minimum limit , for example, "30 days of annual leave" . This is a regulation in favor of the worker .

4.2. Will 30 days of annual leave be added to seniority?

What is important for calculating seniority is that the periods during which annual leave is taken are considered as time worked. Annual paid leave is included within the "situations considered as time worked" under Article 55 of Law No. 4857. Therefore, an employee taking 30 days of leavedoes not deduct from their seniority; on the contrary, the leave period is included in the. In other words, an employee who has worked for 10 years and taken 30 days of leave each year 10 years; the leave does not interrupt or suspend seniority.

4.3. Does "30 days of leave" affect seniority-based salary?

Although annual leave is included in the seniority calculation, the "30-day" rule does not automatically increase the base salary components for seniority . The impact on the base salary for seniority arises not from the leave itself, but from the composition of the salary (transportation, meal, bonuses, incentives, continuity of social benefits). However, in practice, when calculating annual leave pay (for unused leave after leaving the job), the "dressed pay" approach is applied; therefore, the "30-day leave" regime at the workplace can indirectly affect the calculation size when a separate leave pay item is created ( the total amount owed increases when there is a large amount of unused annual leave). This difference is another item independent of the severance pay calculation .

4.4. 30 days leave + severance pay + notice period: practical scenarios

Scenario A (Unfair termination by the employer) : An employee who has worked for 9 years and 4 months, taking 30 days of leave each year, will have their seniority calculated as 9 years and 4 months upon termination . Severance pay is based on gross salary, including benefits . There is an 8-week notice period based on the length of service ; failure to comply results in notice pay equivalent to 8 weeks' wages .
Scenario B (Employee's justified termination – non-payment of wages): The employee terminates the contract immediately for just cause. They are entitled to severance payand cannot claim notice pay; however, payment for unused annual leave (including gross wages).
Scenario C (Retirement): An employee who retires due to meeting the retirement/conditions severance payno notice period applies. Unused vacation days are also paid separately.

5) "Wage Used as the Basis for Severance Pay" in Supreme Court Decisions

For years, the Supreme Court the "benefit provided to the employee that is continuous and measurable in monetary terms" test. Within this framework:

Transportation and meals: If provided regularly (card, cash, delivery), monetized and added to the total fare. The monetary value of the service is determined based on the cost per person/comparable market rate.
Bonus: continuity (paid monthly/quarterly/half-yearly and performance criteria are predictable), the average bonus amount is included in the gross salary. Purely incidental bonuses are generally excluded .
Bonus: Annual/semi-annual bonuses are divided by 12 and calculated monthly.
In-kind donations (fuel, clothing, mobile phone, vehicle): These are included if they are stable and their monetary value can be determined.
Overtime: regular (e.g., an average of a certain number of hours per month), the average can be added; generally excluded in cases of purely variable/natural fluctuations.
Performance/achievement bonuses: Included if based on objective criteria and consistent; excluded if awarded only once at the discretion of manager.
Sales commissions/fees: In sales work, systematic and measurable , they can be considered part of the gross salary.

The Supreme Court also emphasizes the principle that "payroll must reflect reality" : If the benefit does not appear on the payroll at all, it is still added to the base wage for seniority calculation if the actual payment can be proven through witness testimony, correspondence, cards/receipts, or internal workplace regulations . If the item on the payroll is not actually provided to the employee, it is not added simply because it appears on the payroll. The essential elements are truth and continuity .

6) Severance Pay Calculation: Notice Periods, Gross Wage, and Statute of Limitations

Notification periods (Article 17 of Law No. 4857):

Less than 6 months of seniority: 2weeks
6 months–1.5 years: 4weeks
1.5–3 years old: 6weeks
3 years and older: 8 weeks.

The amount of severance pay the gross salary (including benefits) to its weekly equivalent (weeks × 7 days = number of days; multiply by the daily gross salary). Severance pay is subject to income tax (unlike seniority pay), not, and stamp duty is deducted.

Statute of Limitations: The general statute of limitations for labor claims 5 years(including severance/notice pay) – it starts from the date of termination. Mandatory mediation (Law No. 7036) may affect the calculation of time limits; issues of suspension/interruption of the time limit must be carefully considered.

7) Calculation Steps: A Practical Guide (Checklist) for Lawyer Practice

Determine the reason for termination that entitles the employee to seniority (does it fall under Article 14 of Law No. 1475?)
Calculate the seniority period as follows: Actual work + periods deemed worked under Article 55 (annual leave, legally recognized portions of sick leave, weekend/public holiday leave, excused absences, etc.).
Specify the gross salary including benefits :
- Last wage level (bare gross)
- Regular benefits (travel, meals, bonuses, incentives, social benefits, monetary value of transportation/accommodation)
- Convert annual/quarterly payments to monthly payments; convert in-kind payments to monetary terms.
Severance pay: 30 days for each full year; increasing proportionally; ceiling control; only stamp duty deduction.
Severance pay (if applicable): 2–8 weeks × dressed daily wage based on length of service; income tax + stamp duty.
Unused annual leave pay : Based on gross salary; a separate item from severance and notice pay .
Other receivables (overtime, UBGT, weekend pay, etc.) and types of interest (distinction between legal and maximum deposit interest rates – the highest deposit interest rate is the established practice for seniority).
Amendment and pre-amendment interest rates, ceiling changes, mediation applications, and statute of limitations interruptions/suspensions.
Evidence plan: Payroll, timekeeping records, internal regulations, benefits policies, collective bargaining agreement, witnesses, correspondence, cards/receipts/service lists.
Taxes and deductions: Stamp duty; income tax plus stamp duty.

8) Sample Calculation (Representative, not bound by ceiling and current rates)

Seniority: 7 years 6 months
Gross nakedness: 45.000
Monthly benefits: travel 2,000; food 3,000; bonus (2 bonuses per year totaling 40,000 ⇒ 3,333 per month); average premium 2,500 ⇒
Gross monthly salary including allowance ≈ 45,000 + 2,000 + 3,000 + 3,333 + 2,500 = 55,833
Daily ≈ 55,833 / 30 = 1,861.1

severance pay:

A full year: 7 × 30 = 210 days
Expired time: 6/12 × 30 = 15 days
Total days: 225
Amount: 225 × 1,861.1 = 418,747.5 (excluding stamp duty deduction; subject to ceiling )

Severance pay (assuming 56 days for severance pay after 3 years of service → 8 weeks):

56 × 1.861,1 = 104.,? (excluding income tax and stamp duty deductions)

(Note: Figures are for illustrative purposes only; current ceiling and tax factors should be considered in the actual calculation.)

9) Common Mistakes and Points to Consider in Judicial Review

Calculation based solely on basic salary: The Court of Cassation considers the exclusion of regular fringe benefits reversal .
The distinction between incidental and permanent benefits should not be made: The nature of the bonus/incentive should be examined; the regular historical flow, domestic politics, and payrolls should be evaluated together.
Non-monetary valuation of in-kind benefits: For items such as services, housing, mobile phone services, and fuel/clothing, comparable values should be determined.
Deducting annual leave from seniority: This is against the law; leave is included in seniority calculations.
Do not confuse the notice period and severance pay deduction regime: Severance pay only includes stamp duty; notice period includes income plus stamp duty.
Failure to apply the ceiling or incorrect period ceiling: The ceiling for the period applicable at the termination date/date will be taken as the basis.
Statute of limitations and interest type: For seniority, generally the highest deposit interest rate; for notice period, the legal interest rate is applied (application variations and periodic regulations should be checked).

10) The Effects of 30-Day Annual Leave Policies on Employers and Employees

From the employer's perspective:

An employee experience element that attracts skilled labor; however, it risks productivity loss if planning and handover processes are not managed well
Accumulating unused leave days can result in substantial leave payment obligations upon departure . Leave planning and transfer (within the legal framework) should be regulated in the internal guidelines.
Aligning the wage system with the leave policy; the gross wage method for seniority/notice and leave pay reduces disputes.

From the worker's perspective:

Effective use of the right to rest; health and productivity.
If unused vacation pay is included in the gross salary upon departure , this may increase the total amount owed
Payroll accuracy and documentation of benefits (cards, receipts, instructions) provide probative value in favor of the plaintiff.

11) Evidence and Proof Strategy

Evidence of wages and benefits: Payrolls, collective bargaining agreements/contracts, fringe benefit policies, internal correspondence, meal/transportation/accommodation lists, bonus/incentive payment schedules.
Continuity analysis: Bank records, regular payment dates, performance criteria, averages from previous years.
Leave records: Leave logbook/schedules, HR system logs; written document of the 30-day policy.
Witness: Workplace witnesses who can confirm the continuity of the practice, especially regarding items such as bonuses, transportation, and meals.
Expert review: Detailed breakdown of the gross salary based on components, using monthly/daily calculations; ceiling and tax calibration.

12) FAQ – Regarding Seniority and 30 Days of Leave

Q: Does 30 days of annual leave increase seniority?
A: No; seniority according to the calendar . The leave period is included in seniority calculation; it does not reduce it.

Q: Does being granted 30 days of leave automatically increase the amount of severance pay?
A: The amount of severance pay the gross wage and the number of days on which seniority. 30 days of leave alone does not increase the amount; however, since gross wages are applied in the calculation of unused leave pay, it may affect the total amount to be received.

Q: What fringe benefits are included in severance pay? A: The Supreme Court includes recurring benefits such as travel, meal, bonuses, incentives, social assistance, and in-kind benefits whose monetary value can be determined . It does not include incidental/one-off payments .

Q: What is the tax on severance pay and notice pay?
A: Only stamp duty; income tax plus stamp duty is deducted for notice pay.

Q: How is the severance pay ceiling determined? A: The severance pay ceiling is announced every six months ; no payment will be made above the ceiling.

13) Conclusion and Evaluation

Severance pay is one of the most protective institutions of Turkish labor law. Its calculationrequires meticulous attention to two main aspects: (i) the seniority-based periodincluding the periods considered worked under Article 55; (ii) the gross salary used as the basis for senioritywith the correct components (continuity and monetary measurability tests). The 30-day annual leave policy is an extension of the employee's right to rest; it is included in seniority but does not, by itself, increase the salary used as the basis for seniority. However, unused leave pay item can significantly affect the total amount to be received at the time of departure.

In practice, most disputes arise regarding the continuity of fringe benefits , the monetary value of in-kind benefits , the proof of premium/bonus stability , and details of ceilings/taxation . The Supreme Court's line is consistent around the principles of reality, continuity, interpretation in favor of the employee , and the concretization of proof . Therefore, (1) workplace fringe benefit policies should be in writing and transparent, (2) a solid chain of evidence should be established in the payroll-bank-internal regulations triangle, and (3) the termination account file should be prepared by component-component and period-period separation is of critical importance.

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