Precedent-setting ruling from the Court of Cassation: New decision regarding severance pay

The 9th Civil Chamber of the Court of Cassation has issued an important ruling concerning employees placed on unpaid leave by their employers during the pandemic period.

In its decision dated May 29, 2025, the Chamber determined how periods of unpaid leave are to be taken into account in the calculation of an employee's severance pay and annual leave rights.

UNDER WHAT CONDITIONS WILL UNPAID LEAVE BE INCLUDED IN THE CALCULATION ACCORDING TO THE RULING?

According to the Court of Cassation's ruling, in accordance with the temporary Article 10/2 added to Labor Law No. 4857 during the pandemic process, periods spent on unpaid leave will be taken into account in the calculation of an employee's severance pay and annual paid leave rights under specific conditions. According to the ruling, periods of unpaid leave will be counted as part of the length of service, provided they do not exceed the 6 weeks added to the notice period.

UNPAID LEAVE EXCEEDING THIS LIMIT WILL NOT BE INCLUDED

However, unpaid leave exceeding this period will not be taken into account in the calculation of severance pay and annual leave. This situation introduces a significant change in the calculation of severance pay and annual leave rights for employees who were placed on unpaid leave for long periods during the pandemic.