What is Severance Pay?
Statutory redundancy pay, of employees subject to Labour Law No. 4857 It is compensation that must be paid by the employer in the event of the termination of the employment contract for various reasons. Its purpose is to pay the employee, upon the termination of the employment contract, in return for the contribution they have provided and the wear and tear they have experienced during their period of work.
In Which Circumstances Can Severance Pay Be Claimed?
To be entitled to severance pay, the following conditions must be met:
- Being an employee subject to the Labour Act.
- Having worked at the same workplace for at least 1 year.
- Termination of the employment contract for one of the following reasons:
- The employer terminating the employment contract without a valid reason.
- Termination of the employment contract by the employee for a valid reason.
- Resignation of a female employee within one year of marriage.
- An employee leaving work by becoming entitled to a pension.
- The employee going for military service.
- Death of the employee.
How is severance pay calculated?
- Statutory redundancy pay, 30 days' gross salary for each full year calculated from.
- If worked for more than 1 year, a pro-rata calculation is made for the excess period.
- Determined for each year statutory redundancy pay ceiling must not be exceeded.
- Last received gross salary that is taken as a basis.
- If the worker's salary is paid on a piece-rate or time-based system, the severance pay is determined by calculating the average wage.
Payments Included in the Gross Salary When Calculating Severance Pay
In the calculation of severance pay not just the base salary, provided to the worker continually fringe benefits are also taken into account. Some of these are:
- Basic pay
- Food, travel, clothing, housing, fuel, child and family allowance
- Premiums and continuously paid social benefits
- Cash desk compensation, title compensation, health allowance, financial liability compensation
Which Deductions Are Made When Paying Severance Pay?
- Severance pay only to Stamp Duty (0.759 percent) Here you are.
- No Social Security Institution (SSI) premiums and income tax deductions are made.
Statute of Limitations for Severance Pay
- numbered 6098 According to the Code of Obligations, severance pay claims are subject to a five-year statute of limitations.
- From the date the employment contract is terminated Within 5 years A lawsuit must be filed.
The Effects of Severance Pay on Working Life
- It encourages employees to stay in the same workplace for a long time.
- For employers increases the cost of dismissal, makes it difficult to dismiss employees arbitrarily.
- If the workplace goes bankrupt, difficulties may arise in collecting severance pay.
- Employees may avoid changing jobs to prevent losing their severance pay.