Severance and Notice Pay in Türkiye: How Employer Indemnities Work

When a job ends in Türkiye, a foreign employer’s first question is usually the wrong one. It is not “how much notice do I have to give?” but “which of these two payments do I owe, and why?” Turkish law separates the cost of ending employment into two distinct indemnities — severance pay (kıdem tazminatı) and notice pay (ihbar tazminatı) — that answer to different triggers, run on different clocks, and are calculated in different ways. A termination can attract both, only one, or neither. Knowing which is the difference between a predictable line item and an unbudgeted claim that surfaces months later through mandatory mediation.

This guide takes both indemnities apart for an employer planning a workforce in Türkiye. It sits alongside our broader guide to employing staff in Türkiye and our companion piece on terminating an employee in Türkiye, which covers the procedure and the reinstatement risk. Here the focus is narrower: the money, and how to budget it.

Two Indemnities, Two Different Questions

Both payments arise under the Labour Act No. 4857, but they compensate different things. Severance pay rewards accumulated service — the employer’s payment for the years the employee gave the business, owed only once the relationship reaches a threshold and ends in a qualifying way. Notice pay is different in character: it compensates the absence of warning that the job is ending. Whoever ends an indefinite-term contract without giving the other side the statutory heads-up must pay the wage for that missing period.

Because the triggers are independent, the two do not move together. An employee who resigns without cause after five years, giving no notice, owes the employer notice pay yet receives no severance. An employer who dismisses a two-year employee without just cause, with no warning, owes both. Keeping the two questions — “has service and qualifying cause triggered severance?” and “was notice given?” — separate is the whole discipline.

	Severance pay (kıdem)	Notice pay (ihbar)
What it compensates	Length of service	Lack of advance warning
Service threshold	At least 1 full year	None
Depends on how job ends?	Yes — must be a qualifying termination	Owed by whoever ends it without notice
Amount	30 days’ all-in wage per year	2 / 4 / 6 / 8 weeks’ wage
Statutory ceiling	Yes, revised twice a year	No

Severance Pay: The One-Year Gate

The first hurdle for severance is time. An employee acquires no severance entitlement at all until they have completed one full year of service. Below that line, however the job ends, no severance is due. This is why the gate matters so much in the early months of a hire, and why the anniversary of a start date is a genuine cost event an employer should track.

Passing the one-year mark is necessary but not sufficient. Severance is owed only when the termination itself qualifies. Broadly, it qualifies where:

• the employer terminates for any reason other than the employee’s serious misconduct — that is, a dismissal for a valid reason, or for operational and business grounds, still pays severance; or
• the employee resigns for a qualifying justified reason — the employer’s material breach or non-payment of wages, entry into compulsory military service, qualifying for retirement, a woman resigning within one year of marriage, or the employee’s death (in which case it is paid to the heirs).

The critical exclusion sits at the other end. Where the employer terminates for just cause based on the employee’s misconduct under Art. 25/II of the Labour Act — theft, a serious breach of trust, unauthorised absence, and the like — no severance is owed at all. That is the single most consequential distinction in this area, and it is why a dismissal’s classification is fought over so hard.

The right to dismiss for just cause is time-boxed and easy to forfeit. It must be exercised within six working days of learning the facts, and within one year of the underlying event. Miss that window and the just-cause ground evaporates — the dismissal is treated as an ordinary termination, and severance becomes payable after all.

Because the classification decides whether severance is paid, the evidence and the timing have to be assembled before the decision to dismiss, not reconstructed afterwards. Our termination and severance practice exists precisely to get that record right before an employer acts.

Severance Pay: The Formula

Once the gate and the qualifying test are cleared, the calculation is mechanical in shape but wider in base than most foreign employers expect.

The formula is 30 days’ gross wage for each full year of service, pro-rated across the remaining months and days. Ten years and three months of service, for example, yields ten full 30-day units plus a proportionate slice for the extra quarter-year.

The variable that catches employers out is the wage the 30 days are measured against. Severance runs not on bare base salary but on the all-in wage (giydirilmiş ücret) — the gross base plus the money value of the regular, continuous benefits the employee actually received: recurring bonuses, meal allowances, transport, fuel, and standing accommodation. One-off, discretionary or genuinely irregular payments are not. The consequence is blunt: an employer that provisions only on headline salary will under-reserve every time.

Finally, the result is subject to a statutory ceiling (kıdem tazminatı tavanı). The ceiling caps the monthly wage figure used in the calculation, so it bites hardest on higher earners with long service. Crucially, that ceiling is not a fixed number — it is revised twice a year, tracking a public-sector benchmark, and any figure you see quoted is out of date within six months. Budget the mechanism, not a number: assume a cap that moves upward semi-annually and confirm the current level at the point of termination.

Notice Pay: The Graduated Periods

Notice runs on an entirely separate track, and it does not care how long the employee has worked in the “one year” sense — even a short-service employee is owed a notice period, and even a just-cause-free resignation obliges the employee to give one.

The required notice for an indefinite-term contract is graduated by length of service:

Length of service	Notice period
Less than 6 months	2 weeks
6 months to 1.5 years	4 weeks
1.5 to 3 years	6 weeks
More than 3 years	8 weeks

The party ending the contract has a choice: work the period out, keeping the employee on and paying normally through the notice window, or terminate immediately and pay the wage for that period as notice indemnity (ihbar tazminatı) — the classic “pay in lieu of notice.” Either route discharges the obligation. Note that these are statutory minimums; a contract may lengthen them, but not shorten them to the employee’s disadvantage.

Two points foreign employers regularly miss. First, the obligation is reciprocal: an employee who walks out without serving notice can be liable to the employer for notice pay, which is often set off against other sums owed. Second, notice pay is not subject to the severance ceiling — it is simply the wage for the bracket, on the same all-in basis, uncapped.

Worked Logic: Budgeting Without the Exact TL

Because the minimum wage and the severance ceiling both move at least annually, no responsible figure can be printed and left to age. What is stable is the logic — and the logic is what an employer needs.

Take an employee dismissed for a valid operational reason after four years and six months of service, on an all-in monthly wage below the current ceiling. Severance accrues: it is not a just-cause misconduct dismissal, and one year is long past. The provision is four-and-a-half units of 30 days’ all-in wage. Because service exceeds three years, the notice bracket is the top one, eight weeks; dismissing with immediate effect adds eight weeks’ all-in wage in lieu. On top of both, accrued-but-unused annual leave is cashed out at the final wage.

Now change one fact. If the same employee were instead dismissed for a proven Art. 25/II breach, within the six-working-day window, the severance line falls away entirely and — because just-cause termination is immediate — so does notice pay. Only the leave payout survives. The whole difference between the two scenarios turns on a single classification, which is exactly why it is litigated. The reliable way to budget, then, is to model three envelopes for any planned exit — severance, notice, and leave — and confirm the two moving inputs (the current ceiling and the current all-in wage) at the moment of termination.

Where the Money Is Actually Lost

The formulas are simple; the losses come from around them. Three patterns recur. The first is under-provisioning on base pay — both indemnities run on the all-in wage, so a reserve built on net base salary is structurally short. The second is misjudging the just-cause window: an employer sits on a genuine misconduct ground past the six working days, loses the just-cause classification, and converts a no-severance dismissal into a full one. The third is treating a signed release as final — Turkish courts scrutinise quit-claims closely, and a waiver signed under pressure is often set aside, so the sum you thought you had settled reappears.

Every severance and notice claim is a monetary employment claim, which means it must pass through mandatory mediation before any lawsuit under the Labour Courts Act No. 7036. That is not merely a hurdle for the employee — it is the employer’s best structured chance to resolve a disputed calculation on controlled terms before the labour court reopens it.

For an employer building a team, the indemnity arithmetic is not an afterthought to be run at exit; it is a design input at the point of hiring, sitting alongside the contract itself. Getting the wage definition, the service record and the termination classification right in advance is handled through our employment contracts and labour law practices — because in Türkiye, the cheapest severance dispute is the one you priced correctly before anyone was hired.