SEVERANCE PAY

WHAT IS SEVERANCE PAY?

Severance pay is a type of compensation given to an employee who has worked for a certain period at a workplace, when their employment contract is terminated under certain conditions, as a reward for their labor. The application of severance pay is based on the Labor Law No. 4857 and Article 14 of the Labor Law No. 1475.

CONDITIONS FOR SEVERANCE PAY

To be eligible for severance pay, an employee must have worked at the same workplace for at least one year. This one-year period does not need to be continuous. If the employee returns to the same workplace after leaving, the total duration of employment is considered. Furthermore, if the employee works in different branches of the same employer, the total duration of employment is taken into account when calculating severance pay. Severance pay accrues only if the employee terminates the employment contract for just cause or the employer terminates it unjustly. Examples of justified termination include the employee's health being negatively affected by the work, conduct contrary to moral and good faith principles, and compelling reasons. In cases of unjustified termination by the employee or justified termination by the employer, the employee loses their right to severance pay. However, the employee becomes entitled to severance pay upon retirement and receiving an old-age pension, leaving their job to go to military service, and, for a female employee, leaving her job within one year of marriage.

CALCULATION OF SEVERANCE PAY

Severance pay is calculated based on the employee's last gross salary. Regular additional payments are also included. Regular bonuses, transportation and meal allowances, and social benefits are considered regular additional payments. Irregular payments and fringe benefits are not included in this calculation. Overtime pay and one-time bonuses are examples of irregular payments. Furthermore, the employee's length of service is also necessary for calculating severance pay. To calculate severance pay, the employee's last gross salary is divided by thirty. The result is then multiplied by twenty and the length of service. The formula for severance pay is: (Monthly gross salary / 30) x 20 x number of years worked. The maximum amount of severance pay is determined according to the highest retirement bonus paid to civil servants. If the employee's last gross salary exceeds this limit, the upper limit is used in the calculation of severance pay.

PAYMENT OF SEVERANCE PAY AND THE LITIGATION PROCESS

Severance pay must be paid within one month of the termination of the employment contract. If severance pay is not paid on time, the employee can apply to the labor courts. A prerequisite for filing a lawsuit for severance pay is applying to a mediator. Since mediation is mandatory, the employee cannot file a lawsuit without applying to a mediator. The mediation process lasts three weeks from the date of application. If the mediation process is successful, an agreement report is drawn up. If the mediation process ends negatively, the employee can apply to the labor court with the report stating that the negotiation ended negatively. The application must be made within two weeks of the report being drawn up. The court will decide whether the employee is entitled to severance pay based on the evidence presented, and if it decides that the employee is entitled to severance pay, it will also determine the amount of severance pay. The competent court is the court of the place where the work was performed or the court of the defendant's place of residence. The statute of limitations for severance pay is 5 years from the date of termination of the contract.