Severance Pay in Turkish Law
Severance pay is an amount of money, which is calculated according the employee’s wage and seniority, that has to be paid to the employee with at least 1-year seniority by the employer due to the termination of the employment contract for reasons listed in the law or to the employee’s family due to the employee’s death.
Severance pay is a right entitled by the employee under certain conditions and it is not only paid to employees under labor law but also employees under different laws such as;
- Seamen under Marine Labor Law
- Journalists under Press Labor Law
- Employees, who are not under the scope of Labor Law but subject to Obligations Law, of agriculture and forestry enterprises with at least 50 employees as long as there is a specific provision in this regard in the employment contract
THE CONDITIONS OF ENTITLING SEVERANCE PAY
In Turkish law, an employee under the scope of Labor Law should satisfy certain conditions to entitle severance pay. These conditions are; constantly working at a workplace, the termination of the employment contract for certain reasons and the seniority of the employee.
WORKING AT A WORKPLACE THAT IS SUBJECT TO LABOR LAW
The first condition of entitling severance pay is to work at a workplace that is subject to Labor Law. At this point, it is essential to determine what businesses are under Labor Law. Article 4 of the Turkish Labor Law No.4857 lists the exceptions of being subject to Labor Law as follows;
- Sea and air transport businesses
- Agriculture and forestry enterprises with fewer than 50 employees
- Any agriculture and forestry activity limited to family economy
- Activities performed at home and as handcraft by a family without having an employee out of home.
- Household employees
- Apprentices as long as the provisions of Labor Health and Security Law are complied with
- Rehabilitated people
- Workplaces with 3 employees operating in accordance with Article 2 of Craft and Related Trades Workers Law No.507
THE TERMINATION OF THE EMPLOYMENT CONTRACT FOR CERTAIN REASONS
The law listed certain reasons for the termination of the employment contract in order to entitle severance pay. These are; the death of the employee, the termination of the employment contract by the employer without a justified reason, the termination of the employment contract by the employee with a justified reason, the termination of the employment contract due to doing obligatory military service, the termination of the employment contract in order to entitle pension from Social Security Institution or other pension funds and the termination of the employment contract due to getting married.
ENTITLEMENT OF SEVERANCE PAY IN CASE OF THE EMPLOYEE’S DEATH
If the employee who dies has worked at the workplace at least for one year, its heirs are entitled severance pay.
ENTITLEMENT OF SEVERANCE PAYMENT DUE TO THE UNJUST TERMINATION OF THE EMPLOYMENT CONTRACT BY THE EMPLOYER
If the employer terminates the employment contract for any reason other than ‘situations contrary to ethics and goodwill rules’, the employee is entitled severance pay.
Under the situations stipulated in Article 25 of the Law, the employer may terminate the employment contract immediately with a justified reason. These situations are as follows;
- Health reasons
- Situations contrary to ethic and goodwill rules
- Force majeure
- If the employee is taken into custody or arrested, the discontinuance to work exceeds the time set out in Article 17.
In these situations, the employer may terminate the employment contract immediately, and the employee is not entitled severance pay.
SEVERANCE PAY DUE TO THE TERMINATION OF THE EMPLOYMENT CONTRACT BY THE EMPLOYEE WITH A JUSTIFIED REASON
If the employee terminates the employment contract with a justified reason, the employee is entitled severance pay. This entitlement is regulated in Article 25 of the Turkish Labor Law. Regardless of the employment contract is definite or indefinite, the employee may terminate the contract and is entitled severance pay under the following situations; health reasons, the behaviors of the employer contrary to ethic and goodwill rules or force majeure events.
SEVERANCE PAY FOR LEAVING THE JOB DUE TO DOING COMPULSORY MILITARY SERVICE
If the employee leaves the job due to compulsory military service, the employee is entitled severance pay. Regardless of the employment contract is terminated by the employer or employee, the employee is entitled severance pay. It is not important how the military service is performed.
To entitle severance pay due to compulsory military service, there should be a reasonable time between leaving the job and starting the military service. Yargıtay provides that the employee is not entitled severance pay if there is a long time between leaving the job and joining the army.
SEVERANCE PAY FOR LEAVING JOB IN ORDER TO ENTITLE SALARY FROM SOCIAL SECURITY INSTITUTIONS OR RELEVANT PENSION FUNDS
As per Article 14 of the Turkish Labor Law, if the employee terminates the employment contract to entitle old age pension, invalidity pension or retirement pension bonus from pension institutions or funds, the employee is entitled severance pay. In order to entitle severance pay, the employee should document that the employment contract is terminated for pension, pension or pension bonus is entitled or pension or pension bonus payment is received.
SEVERANCE PAY FOR LEAVING JOB DUE TO GETTING MARRIED
Labor law provides that the employee is entitled severance pay if it leaves the job due to getting married. In case of getting married, only women are eligible for receiving severance pay. Thus, the law constitutes a positive discrimination against women.
These are the conditions for being eligible for severance pay for leaving job due to getting married;
- The employee gets married in the presence of a valid employment contract
- The contract is terminated by the employee
- The contract is terminated within 1 year upon the marriage
SENIORITY CONDITION SHOULD BE SATISFIED
The seniority condition is that the employee should have worked at the workplace at least for 1 year. The employee should complete this time in order to entitle severance pay. This time includes not only working days but also other times when the employee does not work such as leaves and vacations.
THE CALCULATION OF SEVERANCE PAY
The amount of severance pay is the amount of the last paid 30-day gross vested wage for each one full year starting from the date when the employee starts the job and as long as the employment contract lasts. If it exceeds one full year, the fraction is also calculated proportional to the exceeding time. The last paid wage is the basis of calculating severance pay. In addition, all payable bonuses, premiums, child and spouse allowances, food and transportation allowances and other monetary allowances are included in the wage.
THE PAYMENT OF SEVERANCE PAY
The beneficiary of severance pay is the employee on the condition that the conditions listed in the law are satisfied and the employee is entitled severance pay. In case of the employee’s death, the beneficiaries of severance pay will be its heirs.
Severance pay is regarded as wage, and therefore can be partially or fully transferred to third parties. Because of that, it can be also confiscated.
The law does not set forth the definite time when severance pay should be paid. Despite this, it is provided that “when the employment contract is terminated, all pecuniary interests and all other interests measurable in money arising out the law or contract should be fully paid.” Therefore, it is understood that severance pay should be paid immediately after the employment contract is terminated.
Unless the employer pay severance pay, the employee may claim that interest should be charged on severance pay because of delay. This interest will be the highest interest charged on deposit from the date when the employment contract is terminated until the payment date. This practice prevents possible damages of the employee because of the lengthy legal process.
MEDIATION AND FILING A CASE FOR SEVERANCE PAY
According to the new legal application in Turkish law, the employee first should resort to mediation remedy for severance pay. Unless the employer and employee come to agreement on severance pay in mediation, the legal action can be taken .
The component court for this case is labor courts. The case can be filed in the court in the place where the employee works. The opinion of Yargıtay is in that way.
TIME BAR IN SEVERANCE PAY CASES
In the old law, this time was 10 years. After the amendment in the law, this time is reduced to 5 years. With the expiry of this time without making a claim, the employee is disentitled severance pay.
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