1- What is severance pay?

If the employee leaves the job without complying with the notice requirement, or if the employer terminates the employee’s contract without adhering to the notice requirement, the compensation paid based on the duration of employment is called severance pay.

2- Who is entitled to severance pay?

Employees working under an indefinite-term employment contract can receive severance pay. Employees under a fixed-term employment contract are not entitled to severance pay.

3- What are the notice periods?

Employment contracts are deemed terminated:

a) After two weeks from the date of notification to the other party, for employees who have worked less than six months.

b) After four weeks from the date of notification to the other party, for employees who have worked between six months and one and a half years.

c) After six weeks from the date of notification to the other party, for employees who have worked between one and a half years and three years.

d) After eight weeks from the date of notification to the other party, for employees who have worked more than three years.

4- Can notice periods be extended?

The notice periods are minimums and can be extended by contract.

Example: The Labor Law No. 4857 stipulates a two-week notice period or severance pay for employees who have worked up to six months. Parties may agree to extend this period to three weeks or more.

5- Does the employee pay severance to the employer, or does the employer pay it to the employee?

If the employer terminates the employee without a valid reason and without providing notice, the employer pays severance to the employee. Similarly, if the employee leaves without valid reason and without notice, the employee pays severance to the employer.

6- Are there deductions from severance pay?

Income tax and stamp duty are deducted from severance pay. However, insurance premiums and unemployment insurance premiums are not deducted.

7- Which wages are taken into account when paying severance?

In calculating severance pay, in addition to the wage specified in the first paragraph of Article 32 of the Labor Law No. 4857, other monetary or contractually obligated benefits provided to the employee are also taken into account. Payments considered in the calculation of severance are also considered in severance pay.

8- What issues are not considered valid reasons for termination?

The following are not valid reasons for termination:

a) Union membership or participating in union activities outside working hours or with the employer’s consent during working hours.

b) Serving as a workplace union representative.

c) Filing complaints with administrative or judicial authorities to pursue rights derived from law or contract, or participating in such processes.

d) Reasons such as race, color, gender, marital status, family responsibilities, pregnancy, childbirth, religion, political opinion, and similar reasons.

e) Not attending work during periods when it is prohibited for female workers to work under Article 74.

f) Temporary absenteeism due to illness or accident within the waiting period stipulated in Section 25(1)(b).

9- What rules must be followed when terminating an employee’s contract under job security?

The employer must provide the termination notice in writing and clearly and definitively state the reason for termination.

The indefinite-term employment contract cannot be terminated based on the employee’s conduct or performance without giving the employee a chance to defend themselves.

10- What is the time limit for filing a lawsuit against a termination notice?

An employee whose contract has been terminated may file a lawsuit with the labor court within one month from the date of notification, claiming that no reason was provided, or that the reason given was not valid.

11- If the court rules for reinstatement, how soon must the employee apply to return to work?

The employee must apply to the employer within ten working days from the date of notification of the final court decision.

12- What happens if the employee does not return to work after the court’s reinstatement decision?

If the employee does not apply within the prescribed period, the termination made by the employer is deemed valid, and the employer is only liable for the legal consequences.

13- How long does the employer have to implement the court’s reinstatement decision?

If the court or private arbitrator determines that the termination is invalid, the employer must reinstate the employee within one month.

14- What happens if the employer does not reinstate the employee despite the court’s decision?

If the employer does not reinstate the employee within one month, the employer must pay compensation equal to at least four months’ and up to eight months’ wages and all other entitlements for up to four months until the court ruling.

15- Are prior payments deducted if the employee returns to work following reinstatement?

If the reinstated employee returns to work, the wages for the notice period and severance paid in advance are deducted from the payments due. If the employee is not reinstated and no notice period or payment in lieu of notice was provided, the wage for these periods must also be paid.

16- Are other rights beyond wages paid during the four-month period?

In addition to wages, any other entitlements accrued during the four-month period following reinstatement must also be paid.

Example: If the employee receives fuel assistance or bonuses every three months, these must also be paid to the reinstated employee.

17- Are insurance premiums paid for the four-month period counted as worked time?

Whether the employee is reinstated or not, insurance premiums, including short-term insurance and unemployment insurance, must be deducted for up to four months of unpaid time, which is also counted as worked time.

18- Can delay interest be applied to the four-month wage?

Delay interest may be applied to the four-month wage from the date the invalidity of the termination is finalized.

___________________ / _______________________

Account 770 General Administrative Expenses

770.02 Severance Pay

Account 360 Taxes Payable

360.01 Income Tax: 420 TL

360.02 Stamp Duty: 21.25 TL

Account 335 Liabilities to Personnel

Severance Pay Accrual Record

___________________ / _______________________

Source: Istanbul Chamber of Certified Public Accountants
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

Employers have to give notice to employees before dismissing them.

The notice period is;

• 2 weeks for 6 months of employment,
• 4 weeks for 6 – 18 months of employment,
• 6 weeks for 18 – 36 months of employment,
• 8 weeks for more than 36 months of employment.

The Party who does not abide by the regulation has to pay the wage amount that covers the notice period as compensation.

Source: Ministry of Labor and Social Security
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

If the employer rejects to employ the employee back within 1 month following the court’s re-employment decision, s/he will be subject to pay compensation to the employee in the amount of 4 to 8 month’s wage. The court or the special referee also decides on how much compensation the employer would be subject to pay if s/he rejects to abide by the decision. The employee will be paid 4 months of wage at most and also his/her other rights for the period where s/he was not employed during the decision process.

Source: Ministry of Labor and Social Security
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

No discrimination based on;
–Language,
–Race,
–Color,
–Sex,
–Disability,
–Religion and denomination,
–Political thought,
–Philosophical view,
is permissible in the business relationship.

-With the exception of reasons related to the nature of the job, the employer cannot make any discrimination even if labor agreements of the employees are different. (For example, the employer cannot make any difference between full-time employee and part-time employee.)
-Different salaries for similar jobs/works of equal value are not permissible.
–Employer cannot put on protective covenants because of employee’s sex.

2- WHAT IS THE PENALTY OF EMPLOYER’S BIASED BEHAVIOR?
If the employer violates principle of equal treatment;
– The employee has to proof that violation of principle of equal treatment.
– On condition of the proof of such a violation, the employee has right to demand compensation up to his/her 4 months’ salary. On the other hand, he/she may demand other claims of which he/she has been deprived.

Source: article 5 of Labor Law No.4857

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

In determining taxable amount of salaries and wages, the following expenditures are allowed to be deducted from gross amount:
– Legal deduction made according to various laws or regulations,
– Payments made for pensions,
– Payments made for various insurances,
– Payments made for labor union membership.

Source: Revenue Administration

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.