Optimizing Severance Pay in the 2025-2026 Transition in Turkey

The severance pay ceiling in Turkey is 64,948.77 TL per completed year of service for the period 1 January to 30 June 2026, up from 53,919.68 TL in the second half of 2025. The ceiling is revised twice a year, on 1 January and 1 July, and the figure in force on the day a contract ends governs the whole payout. For an employee earning above the cap, the exact termination date can swing the lump sum by tens or hundreds of thousands of lira. This guide explains the figures, the calculation, and what foreign employees and employers should weigh before terminating.

Why timing matters for severance pay in Turkey

Severance pay (kıdem tazminatı) is one of the most valuable rights a long-serving employee holds in Turkey, but it is not an open-ended figure. The law caps the amount payable for each completed year of service, and that cap is revised twice a year, on 1 January and 1 July. Because the revision tracks the retirement bonus of the highest-ranking civil servant, and because Turkish wages and indicators have risen sharply with inflation, each six-month step can lift the ceiling by double-digit percentages.

The practical consequence is simple. An employee whose monthly wage sits at or above the ceiling can receive a materially larger lump sum if the contract ends after a ceiling increase rather than before it. For someone with ten or fifteen years of service, the gap across a single boundary can run into hundreds of thousands of lira. The worked example further down shows the exact arithmetic. This is why the timing of a termination is a genuine financial decision, not an afterthought.

How the severance ceiling moved from 2025 into 2026

The severance ceiling (tavan) is a statutory limit on the amount of severance payable per year of service, no matter how high the actual salary is. Here is how it has stepped up across the transition:

For an employee earning above the ceiling, severance for each year of service is paid at the ceiling figure that applies on the date the contract terminates, not the date employment began. An employee leaving on 30 December 2025 is calculated at the 53,919.68 TL ceiling; the same employee leaving a few days later, in January 2026, is calculated at 64,948.77 TL for every qualifying year. This timing rule is settled practice before the Court of Cassation (Yargıtay): the cap in force on the fesih (termination) date governs the entire calculation.

Who qualifies for severance pay

Two conditions must both be satisfied before severance is owed.

1. At least one full year of service

The employee must have completed a minimum of one year (365 days) with the same employer. Service beyond a full year is paid proportionally, so an employee with 4 years and 6 months receives 4.5 years' worth of severance.

2. A qualifying reason for termination

Not every exit triggers severance. Typical qualifying grounds include:

• Dismissal by the employer for any reason other than the employee's own serious misconduct (the employer's just-cause grounds under Article 25/II of Law No. 4857).
• Resignation by the employee for just cause under Article 24 of Law No. 4857, for example unpaid wages, unsafe conditions, or harassment. See our guide on the employee's right to terminate a contract for just cause.
• Reaching retirement eligibility under social security rules.
• Compulsory military service.
• A female employee resigning within one year of marriage.
• The death of the employee (severance passes to legal heirs).

A plain resignation, without just cause and without one of these special grounds, generally does not entitle the employee to severance. For how the employment relationship is set up and ended, see our guide to the hiring and employment process in Turkey.

How severance and notice pay are calculated

Severance pay (kıdem tazminatı)

The base unit is 30 days of the employee's last gross wage for each completed year of service. The wage used is the giydirilmiş brüt ücret, the "dressed" gross wage, not the bare salary. Regular, recurring benefits are added on top.

• Counted in: food and transport allowances, fuel or accommodation support, and bonuses or premiums paid on a regular, repeating basis.
• Left out: genuinely one-off or irregular payments, expense reimbursements that simply cover a cost, and discretionary sums with no fixed pattern.

Which items belong in the base is a frequent dispute, because adding a recurring bonus raises the per-day figure. The total per-year amount is then capped at the prevailing ceiling. Severance is exempt from income tax and from social-security (SGK) deductions; only stamp tax at 0.759% (binde 7.59) applies.

Notice pay (ihbar tazminatı)

Where a contract is ended without observing the statutory notice period under Article 17 of Law No. 4857, the party ending it owes notice pay equal to the wage for that period:

• Less than 6 months' service: 2 weeks.
• 6 months to 18 months: 4 weeks.
• 18 months to 3 years: 6 weeks.
• More than 3 years: 8 weeks.

Notice pay is conceptually separate from severance. Unlike severance, it is not income-tax exempt and the severance ceiling does not cap it.

Worked example: leaving before vs after the boundary

Take an employee with 10 completed years of service whose giydirilmiş monthly wage sits above the ceiling, so each year is paid at the cap:

The same ten years of work, separated by only a few days, produce roughly 110,000 TL more on the later side of the boundary, before the modest stamp-tax deduction. The longer the service and the higher the wage above the cap, the larger the gap.

Practical strategy across the transition

Optimization is about aligning the termination date with the calculation rules, lawfully, and without manufacturing a sham. Points to weigh include:

• For employees above the ceiling: if a separation is already on the table near a period boundary (late June or late December), completing it just after the new ceiling takes effect can increase the lump sum for every year of service.
• Crossing a full-year mark: staying until another complete year of service is reached adds a full year, or a proportional fraction, to the calculation.
• Mutual termination agreements (ikale): a negotiated exit can fix both the date and the package, but a poorly drafted ikale may waive severance and notice rights. Have a Turkish lawyer review your termination or ikale agreement before signing.
• Don't ignore notice and other claims: annual leave pay, overtime, and notice pay are calculated separately and are not capped by the severance ceiling.

The ikale tax point

An ikale can include a payment described as a severance-equivalent. Under the income-tax rules in force, the part of that payment up to the amount of statutory severance the employee would have received is treated like severance and is income-tax exempt; any excess above that amount is taxed as ordinary wage income. Getting the split right in the agreement protects the net figure the employee walks away with.

For employers: provisioning across the boundary

From the employer's side, the same timing rule drives the accrual. Because the ceiling that applies is the one in force at termination, severance provisions and cash-flow plans for employees above the cap should be modelled on the likely future ceiling, not today's, where a departure is expected after the next 1 January or 1 July step. Building the boundary into separation planning avoids an under-provisioned surprise.

Late payment, interest, and deadlines

Severance pay is due in full on the date the contract ends. If the employer delays, the employee is entitled to interest from the date the debt became due, calculated at the highest bank deposit interest rate applied to one-year time deposits during the delay period, a rate considerably higher than ordinary statutory interest. This follows Article 14 of Law No. 1475, read with Article 120 of Law No. 4857.

Severance and notice claims are pursued before the labour courts (iş mahkemeleri), and since 1 January 2018 a compulsory mediation step usually precedes litigation. For how these disputes proceed and where they are heard, see our overview of Turkish labour courts, scope, jurisdiction and legal processes.

What this means for foreign employees

Foreign nationals working in Turkey under a valid work permit and a Turkish employment contract enjoy the same severance and notice protections as Turkish employees. Nationality does not reduce these rights. Where the relationship has cross-border features, such as a foreign parent company, dual contracts, or pay made partly abroad, the applicable law and the competent court can become contested, and the Turkish Private International Law Act (MÖHUK) No. 5718 may come into play.

There is one extra layer foreign employees should plan for. A work permit is tied to a specific employer; when the employment that supports it ends, the permit and the residence status built on it can be affected, which has consequences for how long you may remain in Turkey and how you transition to a new role. Read more on how termination can affect your work and residence permit before you finalise an exit.

If you are facing dismissal, negotiating an exit, or unsure whether your resignation will preserve your severance, get advice before you sign anything. Recent legislative shifts also affect these calculations; see our note on recent developments in Turkish employment law. To review your specific situation, contact Lexin Legal or browse our services.

Frequently asked questions