What is Severance Pay, Who Can Receive It and Under What Conditions?

One of the important topics in working life, severance pay is a legal right that employees can request from their employers in case of termination. However, it is often confused who can benefit from this right and how the compensation is calculated. In this article, we clearly address what severance pay is, under what circumstances it will be paid, and how the calculation is made.

What is Severance Pay?

Severance pay is a compensation that is calculated based on the last gross salary at the time of termination, under certain conditions, after an employee has worked for the same employer for at least 1 year and leaves or is terminated.

Who Can Receive Severance Pay?

An employee is entitled to severance pay when one of the following conditions occurs:

• Unlawful termination by the employer

• Leaving due to military service (for male employees)

• Female employees leaving within 1 year after marriage

• Leaving due to retirement (completing age and premium days)

• Death of the employee

📑 Conditions for Those Who Leave Voluntarily by Obtaining a Letter from SGK:

• Those who were insured before 08.09.1999: 15 years of insurance + 3600 days of premium

• Those who were insured between 08.09.1999 and 30.04.2008:

  • 7000 premium days or

  • 25 years of insurance + 4500 premium days

• Between 01.05.2008 – 31.12.2008: 4600 premium days

• Between 01.01.2009 – 31.12.2015: 4600–5300 premium days (increasing by +100 days each year)

🔴 IMPORTANT WARNING:
When an employee resigns voluntarily, they lose their right to severance pay except for the special circumstances mentioned above.
Therefore, it is essential to obtain a compatibility letter from SGK before resigning.

📌 What is the Severance Pay Ceiling?

Severance pay is calculated based on the employee's gross salary. However, there is a limit to this calculation:
📉 The government sets an annual "ceiling amount" for severance pay.
This amount limits the maximum severance pay amount that can be paid for a year of service, regardless of how high the employee's salary is.

🔍 Example:

Severance pay ceiling for the period between 01/01/2025 – 30/06/2025: 46,655.43 TL

This means that even if your gross salary is 60,000 TL, the maximum severance pay that can be paid for each year of service is 46,655.43 TL. The remaining amount is not considered.

⚖️ How is the Severance Pay Ceiling Applied?

• If the employee's gross salary is below the ceiling → The actual gross salary is taken into account.

• If the employee's gross salary exceeds the ceiling → Only the ceiling amount is used in the severance pay calculation.

⛔ This is particularly an important limitation for managers and high-income employees.

Tax and SGK Applications

Severance pay is exempt from income tax under Article 25/7 of the Income Tax Law (KGVM).

However, this exemption is only valid for the amount up to the ceiling. Any amount exceeding the ceiling is not considered as severance pay. In addition, severance pay is not subject to SGK premiums.
This means that only stamp duty (0.759%) deduction is made for severance pay.

How is Severance Pay Calculated?

The following formula is used to calculate severance pay:

Severance Pay = (Years Worked x 30 Days Gross Salary)

• (If applicable) Proportional Daily Wage for Fractional Months

💡 The gross salary is included in the compensation. Additionally, regular allowances such as meals and transportation can also be added to the gross salary.

Question:

An employee who has worked for 3 years and 6 months has a gross salary of 55,000 TL, a transportation allowance of 2,500 TL, and a meal allowance of 7,500 TL. How much would this employee's severance pay be?

In calculating severance pay, the employee's duration is calculated using the formula year + month/12 + day/365.

Calculate Your Severance Pay Easily

Calculating your severance pay manually can be complex. Therefore, you can quickly learn your estimated severance pay by using the reliable calculation tool below:

🔗 VergiNet Severance and Notice Compensation Calculation Tool

In this tool:

• Enter your duration of service (as years, months, days),

• Your gross salary,

So you can easily calculate your estimated gross and net severance pay amounts.

ℹ️ Note: The results provided by this calculation tool are for informational purposes. The final amount may vary depending on the detailed calculation to be made by the employer.

Conclusion

Severance pay is a guarantee given for the employee's labor. However, the ceiling limit, stamp duty, SGK exemption, and legal grounds must be taken into account for accurate calculation.

For employees considering leaving the job or those at risk of termination, knowing this information in advance provides a significant advantage.

Frequently Asked Questions (FAQ)

📌 Is my severance pay calculated for each year I worked?
Yes, for each full year, 30 days of gross salary is paid.

📌 If I resign without receiving compensation, can I file a lawsuit later?
If you believe you have a right, you can file a lawsuit within 5 years.

📌 The severance pay ceiling is 46,655.43 TL (updated twice a year)

💼 If You Need Support for Your Human Resources Processes

In technical and sensitive human resources processes such as severance pay, accurate calculations and compliance with regulations are of great importance.
If you want to ensure that you properly manage;

 ✅ Severance and notice pay processes,
✅ Adjust allowances and payroll calculations in compliance with regulations,
✅ Organize hiring and termination procedures,
✅ Get professional HR consulting

we are here for you as Keiken Human Resources.

📬 Contact us: www.keiken.com.tr
📩 info@keiken.com.tr
📞 0507 355 0068

📚 References

• Labor Law No. 4857

• Labor Law No. 1475 – Article 14

• Income Tax Law – Article 25/7

• PwC Turkey – Severance Pay Ceiling 2025

• Turkish Social Security Institution (SGK)

• VergiNet Calculation Tool: verginet.net