Severance Pay in Turkey — Istanbul Severance Pay Lawyer
Severance pay (kıdem tazminatı) is the lump-sum entitlement of an employee with at least 1 year of service when the employment contract ends for one of the statutorily listed reasons. Under Article 14 of Law No. 1475 — preserved in force by Article 120 of Law 4857 — severance equals 30 days of fringe-loaded gross wage per completed year of service. As an Istanbul severance pay lawyer, accurate characterisation of the termination, computation of the fringe-loaded wage and the ceiling check are decisive.
Triggering Events (Law 1475 Art. 14)
- Termination by the employer without just cause
- Termination by the employee with just cause under Labor Law Art. 24 (unpaid wages, mobbing, worsened conditions, health, etc.)
- Retirement or qualifying departure (15 years + 3,600 premium days included)
- Resignation due to military service
- Marriage: female employee resigning within 1 year
- Employee's death (paid to heirs)
Calculation: Fringe-Loaded Gross Wage and Ceiling
Calculated as 30 days of fringe-loaded gross wage for each completed year. Fringe-loaded wage includes the bare wage plus bonuses, premiums, transport / meal allowances, fuel-clothing aid and social benefits. The ceiling is updated every January and July at the level of the highest civil-servant salary; the annual amount cannot exceed it. Periods beyond a full year are computed pro rata. For a quick estimate use our Severance Pay Calculator.
Tax: Stamp Duty Only
Under Income Tax Law Art. 25/7, severance pay up to the ceiling is exempt from income tax; only stamp duty (0.759%) is withheld. Amounts above the ceiling are subject to income tax.
Limitation Period and Default Interest
The statute of limitations is 5 years (per Law 7036 amendment), running from the termination date. Late-paid severance bears the highest deposit interest rate from the date of termination (Law 1475 Art. 14/11).
Mandatory Mediation and Competent Court
Under Article 3 of Law 7036, mediation is a condition precedent for severance disputes. If mediation fails, the lawsuit is filed within 2 weeks at the Labor Court of the employer's domicile or the workplace. We represent clients before the Anadolu and Çağlayan Labor Courts in Istanbul.
Key Legal Basis
Law 1475 Art. 14 · Labor Law 4857 Arts. 24, 25, 120 · Law 7036 Art. 3 · Income Tax Law Art. 25/7 · TBK Art. 146