Who qualifies for severance pay under Article 14 of Law No. 1475, how the amount is calculated on the dressed gross wage, the 2026 cap, tax deductions, and how severance differs from pay in lieu of notice.

2026 Severance Pay Cap and Calculator

The severance pay cap for the second half of 2026 is TRY 73,729.87 gross. After stamp duty, the net cap is TRY 73,170.26. This figure applies to terminations between 1 July 2026 and 31 December 2026 and will be updated in January 2027 in line with the civil servant salary coefficients.

Our calculator works out severance pay, pay in lieu of notice and unused annual leave pay together, using the current 2026 cap, Labor Law No. 4857 and the case law of the 9th Civil Chamber of the Court of Cassation (Yargıtay). It needs the type of employment contract, the way the contract ended and, for retirement cases, the date of first social security registration. The calculator itself is available on the Turkish page: Kıdem Tazminatı Hesaplama (in Turkish).

The three items are treated differently:

Severance pay: the cap applies; no income tax, only stamp duty.
Pay in lieu of notice: no cap; income tax applies on a progressive scale.
Annual leave pay: unused leave days multiplied by the daily gross wage.

In short: one year of service plus a statutory ground for termination gives the right to severance pay. Resignation without cause does not. The limitation period is five years from the date of termination. Severance pay is exempt from income tax and social security contributions; only stamp duty of 0.759% is deducted.

1. Legal Nature and Basic Framework of Severance Pay

Severance pay (kıdem tazminatı) is one of the oldest and most debated institutions in Turkish labor law. It is the compensation an employee earns, once the statutory conditions are met, in return for the loyalty and labor given to the employer. It builds the employee's future financial security, and for the employer it is a significant financial obligation, a liability in accounting terms.

General Assembly of Civil Chambers of the Court of Cassation (HGK):

Severance pay is a compensation of its own kind (sui generis). It is neither a wage in the strict sense nor classic damages; it is a hybrid that carries features of both. It compensates the employee for wear and tear and for loyalty.

Today, severance pay is governed by Article 14 of the repealed Labor Law No. 1475, which remains in force by reference under Provisional Article 6 of Labor Law No. 4857. This is why a dual structure persists in the legislation. One view in legal doctrine treats severance pay as a reward for past service; another sees it as a "wage supplement" or a form of "unemployment benefit" that compensates for the wear of working life.

2. Conditions for Entitlement to Severance Pay

To qualify for severance pay, the conditions listed in Article 14 of Labor Law No. 1475 must be met cumulatively, that is, all together.

2.1. Being an Employee under the Labor Law and One Year of Service

The person must first be an employee covered by Labor Law No. 4857, Maritime Labor Law No. 854 or Press Labor Law No. 5953. Apprentices, interns and people working under the Code of Obligations (domestic workers, for example) cannot claim this right directly. The second basic condition is that the employee must have worked at least one full year at one or more workplaces of the same employer. The probation period counts toward this one-year service requirement.

2.2. Termination of the Employment Contract on a Ground Listed in the Law

A) Termination by the Employer, with or without Just Cause

If the employer dismisses the employee for any reason other than the breaches of morality and good faith listed in Article 25/II of Labor Law No. 4857 (theft, absenteeism, disloyalty), the employee is entitled to severance pay.

B) Termination by the Employee for Just Cause (Art. 24)

As a rule, resignation does not give rise to severance pay. However, if the employee terminates the contract for reasons such as health, the employer's conduct contrary to morality and good faith, non-payment of wages or failure to apply the working conditions, the employee receives severance pay.

C) Termination for Compulsory Military Service

Male employees who leave their job to perform compulsory military service are entitled to severance pay.

D) Leaving for Retirement

Severance pay is due when the employee leaves in order to receive an old-age, retirement or disability pension or a lump-sum payment.

E) Marriage of a Female Employee (Marriage Severance)

A female employee who ends her employment contract of her own will within one full year of the date of her marriage is entitled to severance pay, provided she has at least one year of service.

F) Death of the Employee

If the employee dies, severance pay is paid to the legal heirs.

3. Leaving for Retirement without Waiting for the Age Requirement

One of the most common issues in labor law practice is that employees who have met all retirement conditions except age can leave their job and collect severance pay. In line with changes in social security legislation, these conditions fall into three periods depending on the date of first insurance registration:

3.1. Insured before 8 September 1999: 15 Years and 3,600 Days

Employees whose insurance began on or before 8 September 1999 can leave of their own will and collect severance pay once they have completed 15 years of insured status and 3,600 premium days, using the letter from the Social Security Institution (SGK) confirming that they "may receive severance pay".

This is the rule popularly known as "collecting severance at 3,600 days".

3.2. Between 8 September 1999 and 30 April 2008: 4,500 Days / 7,000 Days

Those first insured in this period have two alternatives:

Completing 25 years of insured status plus 4,500 premium days
Paying premiums for 7,000 working days, regardless of the length of insured status

An employee in this group can collect severance pay without waiting for the age requirement either by reaching 7,000 premium days or by completing 4,500 days within the 25-year band.

3.3. Insured on or after 1 May 2008

Law No. 5510 made the conditions stricter. For those insured after this date, a gradual transition applies: in general, 25 years of insured status is required together with a premium-day requirement that starts at 4,600 days and rises to 5,400 days.

Important note:

Employees who have met the retirement conditions other than age may lose their right to severance pay if they leave their job without first obtaining the "may receive severance pay" letter from the SGK. The rule is: first the letter, then the resignation.

4. Notice Periods and the Relationship with Pay in Lieu of Notice

In labor law, termination with notice is the rule. A party that terminates the employment contract without just cause must comply with the notice periods set by law. The notice period depends on the employee's length of service:

Length of Service	Notice Period	In Days
0 to 6 months	2 weeks	14 days
6 months to 1.5 years	4 weeks	28 days
1.5 years to 3 years	6 weeks	42 days
3 years or more	8 weeks	56 days

A Critical Distinction

An employee who leaves for retirement, military service or marriage, or who terminates immediately for just cause, is entitled to severance pay but cannot claim pay in lieu of notice. Pay in lieu of notice arises only in wrongful terminations made without observing the notice requirement.

5. Method of Calculating Severance Pay and the Dressed Gross Wage

Severance Pay = Dressed Gross Wage × Years of Service

Thirty days' gross wage for each full year; remaining periods are calculated pro rata.

5.1. What Is the Dressed Gross Wage?

Severance pay is not calculated on the "bare salary" alone. By law, money and benefits measurable in money that are provided to the employee must also be included. This total is known as the dressed gross wage (giydirilmiş brüt ücret):

Included

Monthly gross salary
Regularly paid bonuses
Meal allowance (cash or meal cards such as Sodexo/Ticket)
Transport allowance or shuttle service cost
Regular fuel allowances
Private health insurance premiums

Not Included

Overtime pay
Annual leave pay
Irregular or performance-based bonuses
Weekly rest day pay
One-off payments

5.2. Minimum Wage and Severance Pay

Even if the employee worked for years at the minimum wage, severance pay is calculated on the last gross minimum wage in force on the date the employee left and applied to all past years. This is an important doctrinal rule that protects employees in inflationary conditions.

6. The Severance Pay Cap and Its Limits

No matter how high the employee's gross salary is, there is a maximum limit set by the state every six months. This is the severance pay cap, and it cannot exceed the maximum retirement bonus payable to the highest-ranking civil servant for one year of service.

Wage below the cap

The calculation is made on the employee's actual dressed wage.

Wage above the cap

The calculation is made on the cap; no legal claim can be made for the excess.

6.1. Deductions

Tax advantage

Severance pay is exempt from income tax and social security (SGK) contributions. The only lawful deduction is stamp duty (0.759%). Pay in lieu of notice, by contrast, is subject to both income tax and stamp duty.

7. Severance Pay under Fixed-Term Employment Contracts

A common legal misconception in practice is that no severance pay is due when a fixed-term contract ends automatically on expiry. The Court of Cassation has clear criteria:

Genuine Fixed-Term Contracts

Where a contract is genuinely fixed-term by its nature (for example, the completion of a construction project) and ends on expiry without renewal, as a rule no severance pay is due.

Chain Contracts (Private School Teachers)

Fixed-term contracts that are renewed one after another without an objective reason are, according to the Court of Cassation, treated as indefinite-term contracts from the outset. If the employee has completed one year, the right to severance pay arises.

8. Limitation Period for Severance Pay

A ten-year limitation period used to apply. Law No. 7036 on Labor Courts, which entered into force on 25 October 2017, reduced this period to five years. For severance pay claims arising from employment contracts that ended after that date, the limitation period is five years.

5 YEARS

Limitation period (Law No. 7036, for terminations after 12 October 2017)

Highest bank interest rate

In case of late payment, the highest interest rate applied to bank deposits accrues.

If the employee does not file a claim within five years of the date of resignation for just cause, the right becomes time-barred. Default interest starts to run from the date of termination.

9. Mandatory Mediation and the Court Process

To prevent labor disputes from dragging on for years, applying to mandatory mediation before filing a lawsuit is a precondition for severance and notice pay claims. To collect these amounts, the employee must first apply to the mediation office at the courthouse.

Steps of the Mediation Process

After leaving the job, the employee applies to the mediation office.
The mediator invites the employer and a meeting is held.
If an agreement is reached, minutes are drawn up and have the force of a court judgment.
If no agreement is reached, a lawsuit is filed before the labor court together with the final minutes.

Because these calculations are highly technical, corporate employers use payroll and personnel systems to work on a zero-error basis. In a legal dispute, however, it is essential that the process be handled by a lawyer practicing in labor law and based on a correct calculation.

10. Common Calculation Errors

Severance pay and pay in lieu of notice arise from the same termination, so the two items are often calculated as if they were subject to the same rules. In fact, they differ in taxation and in the application of the cap. The following four distinctions are where calculations most often go wrong.

1. Severance pay carries no income tax; pay in lieu of notice does

Severance pay is exempt from income tax; only stamp duty of 0.759% is deducted from the gross amount, and no social security contribution is taken. Pay in lieu of notice is treated as a wage and is subject to both income tax and stamp duty. Tables that apply a single deduction rate to both items therefore produce a wrong net figure.

2. Tax on pay in lieu of notice is progressive, not flat

Income tax on pay in lieu of notice is not found by applying a single rate to the whole amount. The tariff in Article 103 of the Income Tax Law (GVK) is progressive: the amount is split into brackets and each bracket is taxed at its own rate. In addition, the bracket thresholds differ for wage income and non-wage income; severance, notice and leave pay are wages under Article 61 of the Income Tax Law and fall under the wage tariff. In 2026, the threshold of the third bracket for wage income is TRY 1,500,000.

The difference is not small. For an employee with ten years of service and a dressed gross wage of TRY 90,000, applying a flat 27% rate to the pay in lieu of notice gives a tax of TRY 45,360; under the progressive tariff the correct figure is TRY 25,200. The difference of TRY 20,160 comes straight out of what the employee takes home. The calculator on this page applies the progressive tariff and shows on screen which year's tariff it is using.

3. The cap applies only to severance pay

The severance pay cap is the upper limit of the calculation for high earners and depends on the period in which the termination falls (1 January to 30 June 2026: TRY 64,948.77; 1 July to 31 December 2026: TRY 73,729.87). There is no such cap on pay in lieu of notice; it is calculated on the employee's actual dressed gross wage. Applying the cap to both items understates the notice pay of high-earning employees.

4. Under one year of service there is no severance pay, but there is notice pay

Severance pay requires at least one full year of service with the same employer; seven or eleven months of work does not give rise to it. Pay in lieu of notice, by contrast, can arise even with less than six months of service, because the notice periods start at two weeks. Annual leave pay is a separate claim and is subject to the one-year condition; it is claimed together with severance and notice pay but is not part of the same calculation.

11. Conclusion and Legal Recommendations

Severance pay and pay in lieu of notice sit at the center of labor law practice. They form a complex structure that requires many parameters to be assessed together: the dressed gross wage, the cap, termination for just cause and the limitation period, among others.

Our recommendation at İlme Law Office is that, whether you are an employee or an employer, you obtain a lawyer's opinion before an employment contract is terminated. A faulty severance calculation or a defective termination notice can expose companies to serious burdens and can cause employees to lose the reward of years of labor.

"The law protects the employee, but procedural mistakes cost rights."

— Att. Mesut İLME

The calculator at the top of the Turkish page gives an estimated result for preliminary information purposes, based on the most current data entered. For a definitive legal assessment and representation in litigation or mediation, you can contact our office.

Relevant Legislation

Labor Law No. 1475, Art. 14 (Severance Pay)
Labor Law No. 4857, Art. 24 (Termination by the Employee for Just Cause)
Labor Law No. 4857, Art. 25 (Termination by the Employer for Just Cause)
Law No. 7036 on Labor Courts (Limitation Period / Mediation)
Law No. 5510 (Social Security Law) (Start of Insured Status and Premium-Day Requirements)

Frequently Asked Questions about Severance Pay

Is severance pay due after seven months (less than a year) of work?

No. Severance pay requires at least one full year of service with the same employer; seven or eleven months of work does not give rise to it. This does not mean you have no claims at all: pay in lieu of notice can arise even with less than six months of service (notice periods start at two weeks), and if the termination is wrongful, bad-faith compensation may also be claimed. Where the termination comes a few days short of the one-year mark, whether the employer intended to avoid severance pay is assessed separately.

Are severance pay, notice pay and annual leave calculated together?

All three can arise from the same termination, but they are separate claims subject to separate rules. Severance pay is exempt from income tax and subject to the cap; pay in lieu of notice is subject to income tax and has no cap; unused annual leave pay is a separate wage-type claim and is also subject to income tax. Tables that apply a single deduction rate to all three produce a wrong net figure. The calculator on the Turkish page calculates severance and notice pay with the correct distinction; your annual leave claim needs a separate assessment.

Is severance pay due on retirement, and is notice pay paid as well?

An employee who leaves for retirement is entitled to severance pay. Those who leave with the SGK letter while waiting for the age requirement (having met the 15-year insured status and 3,600 premium-day conditions) have the same right. Pay in lieu of notice, on the other hand, is not paid: it is compensation paid by the party that fails to observe the notice period, and since the employee leaves voluntarily, no notice pay claim arises against the employer.

How is severance pay calculated?

Severance pay equals one dressed gross monthly wage for each full year of service. Remaining months and days are added pro rata. Formula: (Years × Wage) + (Months × Wage/12) + (Days × Wage/365). The dressed wage includes regular payments such as salary, meal and transport allowances and bonuses.

What is the 2026 severance pay cap?

For the second half of 2026 (July to December), the severance pay cap is TRY 73,729.87. The net cap after stamp duty is TRY 73,170.26. The cap for the first half (January to June) was TRY 64,948.77; the calculator automatically applies the correct period's cap according to the date of leaving. If the dressed gross wage exceeds the cap, the calculation is made on the cap. It will be updated again in January 2027 in line with civil servant salary coefficients.

Is tax deducted from severance pay?

Only stamp duty (0.759%) is deducted from severance pay. No income tax or social security contribution is deducted. This differs from pay in lieu of notice, from which both income tax and stamp duty are deducted.

Can I get severance pay if I resign without cause?

No. Resignation without cause, such as "I found another job" or "I got bored", does not give rise to severance pay. But if you resign for just cause under Article 24 of Labor Law No. 4857, such as unpaid wages, mobbing or under-reported social security contributions, you receive severance pay.

Can I get severance pay with 3,600 days?

Those whose insurance began on or before 8 September 1999 can leave of their own will and collect severance pay once they have completed 15 years of insured status and 3,600 premium days, using the "may receive severance pay" letter from the SGK. For those first insured between 1999 and 2008, the requirement is 4,500 days with 25 years, or 7,000 days.

How is severance pay obtained on grounds of marriage?

A female employee who ends her employment contract of her own will within one full year of her marriage date is entitled to severance pay if she has at least one year of service. This right is set out in Article 14 of Law No. 1475. The one-year period is a forfeiture period.

What is the limitation period for severance pay?

Under Law No. 7036 on Labor Courts, the limitation period for severance pay is five years for employment contracts that ended after 12 October 2017. The period runs from the date of termination. Default interest also runs from the termination date at the highest bank deposit rate.

Is mediation mandatory before filing a severance pay lawsuit?

Yes. Labor law claims, including severance pay, are subject to mandatory mediation before a lawsuit can be filed. If no agreement is reached, a lawsuit can be filed before the labor court together with the final minutes.

Can an employer receive severance pay?

No. Severance pay is paid only to the employee (or to the heirs in case of death). An employer cannot claim severance pay. Unlike pay in lieu of notice, this right is one-sided.

How many years do I need to work to get severance pay?

You must have worked at least one year (365 days) for the same employer. Below this, no right to severance pay arises. The probation period counts toward the one-year service requirement.

Severance Pay Calculation in Türkiye: 2026 Cap, Conditions and Tax Rules