Severance pay ceiling increased! How is severance pay calculated?

Hürriyet columnist Noyan Doğan explained the details regarding severance pay in his article today.

WHAT IS THE SEVERANCE PAY CEILING?

"The Ministry of Treasury and Finance has published the Social Rights Circular for the January-June 2025 period, and the new severance pay ceiling for employees has been determined. The upper limit for severance pay for employees under worker status in the first half of 2025 has been announced as 46,655 liras. In the July-December 2024 period, the severance pay ceiling was set at 41,828 liras. Accordingly, the severance pay ceiling has increased by 11.54 percent. Thus, the severance pay that high-earning employees will receive has also increased. While the severance pay ceiling was calculated based on 41,828 liras in the second half of 2024, it will be calculated based on 46,655 liras starting from January 2025."

IT WAS DETERMINED TWICE IN 2024

Let me also provide this information regarding severance pay. Since the minimum wage was determined twice a year in 2022 and 2023, the severance pay that employees would receive was also increasing. However, because the minimum wage was increased only once in 2024, even though the severance pay ceiling was increased twice during the year in January and July, the severance pay was calculated based on 20,000 liras for the entire year. If the minimum wage is not increased a second time in July 2025, the severance pay for a minimum-wage employee will be calculated based on 46,655 liras for the entire year.

WHO IS ENTITLED TO SEVERANCE PAY?

Who is entitled to severance pay? First of all, the employee must have been dismissed by the employer. An employee becomes entitled to severance pay after working at the workplace for one year. Severance pay can be received in cases of leaving the job due to military service for men, and due to marriage for women. Employees also receive severance pay when they become eligible for retirement. Apart from these, there is one more exceptional situation. Those who were insured before September 8, 1999, can receive severance pay and leave their job once they have completed 15 years of service and 3,600 premium days.

Those whose first date of insurance is between September 8, 1999, and April 30, 2008, can either receive severance pay when they have worked for 25 years and completed 4,500 premium days, or they can receive severance pay from their workplace and leave their job when they have completed 7,000 premium days, regardless of the number of years worked.

HOW IS SEVERANCE PAY CALCULATED?

One point where employees are mistaken regarding compensation is the belief that compensation can be received based on the entire gross salary. Severance pay is calculated based on the 30-day grossed-up wage (the wage including all payments such as bonuses, premiums, transportation, and fuel allowances) for each full year worked, and the total severance pay to be received is reached by multiplying the gross wage by the number of years worked.

For example, a minimum-wage employee (26,005 TL) today is entitled to 130,000 liras if they have been working at the workplace for 5 years, and 260,000 liras if they have been working for 10 years. A stamp tax deduction of 7.59 per thousand is made from the severance pay.

CRITICAL POINT IN SEVERANCE PAY

The point to pay attention to in compensation calculation is the ceiling amount. The newly announced severance pay ceiling is 46,655 liras. Even if the employee's salary is above this figure, the severance pay will be calculated based on 46,655 liras. For instance, your gross salary is 50,000 liras and you have been working at the same workplace for 10 years; you will not receive 500,000 liras in severance pay when you leave the job; since the ceiling amount is 46,655.43 liras, the employer will pay 466,554 liras as the compensation amount.