The severance pay is referred to as the payment made upon the termination of the employment contract based on the seniority of the employee within the framework of the reasons specified in the Turkish Labor Law. There are quite different discussions with respect to the qualifications of the severance pay and its definition in the Turkish Labor Law. Within the framework of the different opinions[1] such as the consideration of the severance pay as a premium or whether severance pay is a compensation, requirement for the assessment of the severance pay as a part of the salary of the employee or consideration of the severance pay as a system substituting unemployment insurance, the severance pay foundation has taken its place in the Turkish Labor Law with its development as a right entitled to the employee[2]. At this point, among the various opinions in the literature, when considering the purpose of the severance pay foundation, it can be deemed as compensation earned by the employee against his wearing during the employment[3]; according to another opinion, the severance pay foundation can be defined as a part of the unemployment insurance foundation and qualified as a source that can be used by the employee until finding a new job[4]. Differently, especially according to the opinion defended by the Confederation of Turkish Trade Unions, the severance pay can be deemed as a part of the deferred payment; there is another opinion in the literature considering the severance pay as a premium awarding the employee for his employment for a long time and his commitment. The predominant opinion in the literature is the consideration of the severance pay as an exclusive payment due to the fact that it is not based on the fault of the employee or the employer[5]. The Turkish severance pay foundation is subject to Article 14 of the Turkish Labor Law No. 1475[6]. Though all provisions of the Law No. 1475 have been abolished with Article 120 of the Law No. 4857 with the enforcement of the Turkish Labor Law No. 4857 in 2003, in accordance with the Provisional Article 6 of the Law No. 4857, Article 14 of the Turkish Labor Law No. 1475 is still in force as to ensure the legal infrastructure of the severance pay foundation[7]. On the other hand, the aforementioned regulation of the severance pay shall remain in force until the creation of a severance pay fund in accordance with the Provisional Article 6 of the Law No. 4857.
SCOPE AND CONDITIONS OF THE SEVERANCE PAY
In addition to the employees included generally within the framework of Article 1 of the Labor Law No. 4857, despite of the exemptions specified in Article 4, the employees employed in workplaces or enterprises which are involved in farming and forestry and employ less than 50 (including 50) employees and are outside the scope of the Labor Law can be entitled to severance pay on condition of having the relevant provisions in the employment contracts or collective labor agreements[8]. On the other hand, the ship’s crew subject to the Maritime Labor Law[9] and employees subject to the Press Labor Law No. 5953[10] in accordance with Article 20 of the Law No. 854 shall be entitled to severance pay in accordance with Article 6 of the aforementioned Law under the conditions specified in the relevant legislations[11].
Within the framework of the Turkish Labor Law, the severance pay is based on two conditions. In accordance with Article 14 of the Turkish Labor Law No. 1475, in order for an employee included within the framework of the Labor Law to be entitled to severance pay, first of all, the employee shall complete the minimum service period specified in the Law in the same or different workplaces of the employer and on the other hand, the employment relation between the employee and employer shall terminate due to the reasons specified in accordance with Article 14 of the Labor Law No. 1475.
SERVICE PERIOD SUBJECT TO THE SEVERANCE PAY
In accordance with the provision within the framework of Article 14 of the Labor Law No. 1475 stating that “For each full year during the continuation of the employment contract as from the starting day of employment, the employer shall pay severance pay to the employee in the amount of 30 days salary. For the periods exceeding one year, the payment shall be made over the same ratio.”, the first condition for being entitled to severance pay is the employment for at least one full year (365 days). In this respect, in accordance with the Supreme Court’s decisions, especially for the situations with no opportunity to work full-time such as part-time employees and seasonal workers, the service period to be used for the calculation of the severance pay shall be determined with the division of the total employment to 365 days[12]. At this point, the other important issue is the consideration of the total employment period of the employee in the same or different workplaces of the employer for the calculation of the service period.
For the calculation of the service period subject to the severance pay, the situations deemed as worked within the framework of the Labor Law shall also be included in the service period. Within this scope, the situations included in the term of employment in accordance with Article 66 and situations deemed as worked in terms of the annual leave in accordance with Article 55 of the Law No. 4857 shall be taken into consideration for the calculation of the severance pay. Therefore, the situations deemed as leave of absence in terms of the Labor Law, annual leaves, rest reports not exceeding six weeks of notice period, weekends, official and national holidays shall be included in the service period of the employee[13].
TERMINATION OF THE EMPLOYMENT RELATION
The second fundamental condition for being entitled to severance pay is the termination of the employment relation between the employee and employer in accordance with the provisions of Article 14 of the Law No. 1475. Accordingly, in the case of the termination of the employment contract by the employer for any reason other than the immediate termination of the employment contract due to reasons contradicting with the moral and good faith principles specified in the second paragraph of Article 25 of the Labor Law No. 4857, immediate termination of the employment contract by the employee in accordance with the provisions of Article 24 of the Labor Law No. 4857, termination of the employment contract due to compulsory military service, termination of the employment contract in order to receive old age, retirement fund or disability pension or full payment from the associated legal institutions or pension funds, leave of employment at the own requests of the employees fulfilling the conditions other than the ages stipulated in sub-paragraphs (a) and (b) of the first paragraph (A) of Article 60 of the Social Insurance Law No. 506 or insurance period stipulated for the old age pension and number of premium payment days in accordance with the Provisional Article 81 of the same Law, termination of the employment contract by the female employee within one year as of the date of marriage at her own request and termination of the employment contract due to the death of the employee, it is possible to be entitled to severance pay[14].
As it is seen, the severance pay can be deserved by the employee with the termination of the employment contract for various reasons both by the employee and employer. In the case of the termination of the employment contract by the employee due to health problems, reasons contradicting with the moral and good faith principles or force majeure, and termination of the employment contract by the employer due to other than* reasons contradicting with the moral and good faith principles, the employee shall be entitled to the severance pay. In this sense, the employee shall not be entitled to the severance pay in the case of resignation. Besides, due to the termination of the employment contract based on reasons as the resignation of the female employee due to marriage at her own request, compulsory military service or fulfillment of the necessary retirement conditions within the framework of the social security system apart from the age limit, the employee shall be entitled to the severance pay.
CALCULATION OF THE SEVERANCE PAY
The severance pay shall be calculated based on the gross salary of the employee for the month before leave of employment. The severance pay is exempted from the income tax and is only subject to the stamp tax[15]. For the calculation of the severance pay, in addition to the monthly gross salary, all payments with respect to the salary including the money earned by the employee during the employment showing the continuation of the employee or allowances, premiums, benefits and similar payments which can be measured with money shall be taken into consideration[16].
Within the framework of the provision of Article 14 of the Law No. 1475, it is stated that the annual amount of the severance pays shall not exceed the maximum retirement bonus to be paid for one service year to a highest civil servant subject to the Civil Servants Law in accordance with the provisions of the Republic of Turkey Retirement Funds Law N0. 5434. For this reason, the gross salary used in the calculation of the severance pay cannot exceed the maximum amount determined by the Ministry of Labor and Social Security once in six months. Between the dates of Jan 01, 2023 and June 30, 2023, the maximum severance pay has been determined as 19.982,83 Turkish Liras [17]. The basic formula for the calculation of the severance pay is to divide the gross salary to 365 days and multiple with the total number of employment days of the employee and deduct the stamp tax from the amount achieved.
CONCLUSION
The severance pay foundation, as discussed, is quite complex and dynamic structure as well in terms of issues such as its purpose, scope, qualification, implementation and calculation. Especially, with the Supreme Court’s decisions, in accordance with today’s sense and conditions of work and changing business world, Article 14 of the Law No. 1475 is interpreted. In the employee and employer relations, the severance pay, in one aspect, is an appropriate job security measure in accordance with certain opinions[18]. The fact that the severance pay cannot be ignored by the employee in the employment relation ensures the continuation of the employment since the employment contract cannot be easily terminated by the employer and from this aspect, is qualified as an important foundation for the job security. On the other hand, due to the difficulties encountered in the implementation, the failure of employees to benefit from the severance pay foundation due to the failure to comply with the conditions specified within the framework of their contracts and Laws, causes personal problems such as the leave of employment without receiving any payment or compensation with respect to the severance pay in the termination of the long-term employment contracts by causing inequities in the implementation. And in another aspect, by causing the continuation of the undesired employment relations both by the employers and employees in consideration of the severance pay, can trigger unproductivity. Without any doubt, the severance pay foundation shall continue to be one of the important building blocks of a more productive and fair employee and employer relations with the establishment of a transparent, predictable and current infrastructure by the mutual agreement of all parties.
[1] Nurdoğan, A, Dur, A, Öztürk, M. “Türkiye’de ve Dünyada Kıdem Tazminatı Fonu”. Süleyman Demirel Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 21 (4) (2016): p. 1154
[2] Limon, R. “Türkiye’de Kıdem Tazminatının Tarihi Gelişimi ve Kıdem Tazminatı Fonu”. İş ve Hayat 1 (2015): p. 148
[3] Birinci Gemici, N. Gemici, C. “5853 Sayılı Basın İş Kanunu’nda Kıdem Tazminatı Düzenlemesi”. İş ve Hayat 3 (2017): p. 277
[4] Akbıyık, Koç, D. “Kıdem Tazminatı ve Kıdem Tazminatı Fonunun İktisadi ve Sosyal Sonuçları”. Süleyman Demirel Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 16 (3) (2011): p. 256 – 258
[5] Akbıyık, Koç, D. “Kıdem Tazminatı ve Kıdem Tazminatı Fonunun İktisadi ve Sosyal Sonuçları”: p. 256 – 258
[6] Labor Law No. 4857, Official Gazette dated June 10, 2003 and numbered 25134
[7] Labor Law No. 1475, Official Gazette dated September 01, 1971 and numbered 13943
[8] Limon, R. “Türkiye’de Kıdem Tazminatının Tarihi Gelişimi ve Kıdem Tazminatı Fonu”: p. 148
[9] Law No. 5953 on the Compensation of the Relations between the Emplyees and Employers in the Press Profession, Official Gazette dated June 20, 1952 and numbered 8140
[10] Martime Labor Law No. 854, Official Gazette dated April 29, 1967 and numbered 12586
[11] Limon, R. “Türkiye’de Kıdem Tazminatının Tarihi Gelişimi ve Kıdem Tazminatı Fonu”: p. 148
[12] Court of Appeals for the 9th Circuit dated October 10, 2018 and numbered E. 2007/27615, K. 2008/26209
[13] Court of Appeals for the 9th Circuit dated June 24, 2020 and numbered E. 2016/18182, K. 2020/6283
[14] Labor Law No. 1475, Official Gazette dated September 01, 1971 and numbered 13943
[15] Parlakkaya, R. “Yasal Mevzuat ve TMS-19: Çalışanlara Sağlanan Faydalar Türkiye Muhasebe Standardında Kıdem Tazminatı ve Muhasebe Uygulaması” Sosyal Ekonomik Araştırmalar Dergisi 10 (2010): p. 277
[16] Court of Appeals for the 7th Circuit dated March 07, 2016 and numbered E. 2015/6012, K. 2016/5580 (Çalışma ve Toplum Dergisi). “The amount to be taken into consideration for the calculation of the severance pay is the gross salary of the employee… In the determination of the amount subject to the severance pay, in addition to the base pay stated within the framework of Article 32 of the Labor Law No. 4857, the money provided to the employee or benefits which can be measured with money shall be considered. Accordingly, bonus, ongoing premium, fuel allowance, clothing support, rent, lighting, transportation allowance, food allowance and similar payments shall be taken into consideration in the calculation of the severance pay.”
[17] Ministry of Treasury and Finance, Circular no.01 on Financial and Social Rights, Date Accessed: January 22, 2022
[18] Akbıyık, N., Koç, D. “Kıdem Tazminatı ve Kıdem Tazminatı Fonunun İktisadi ve Sosyal Sonuçlar”: p. 258
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