How Is Severance Pay Calculated?

In short

Severance is looked at for the statutory kind of termination, the wage with regular extras included, and the periodic ceiling. Not every leaving gives rise to severance. The period of reinstatement is in a separate note.

The payroll, the social-security record, and the notice of termination are the first slip. A release does not, on its own, erase it.

The door of termination for a just cause sits on the termination for a just cause page.

The labour court in Ankara and the mediation bureau are looked at for the service of the termination.

Related notes: notice pay; enforcement of an employment claim.

A look at the calculation of severance pay

One of the questions asked most often at the end of the employment relationship is "how much is my severance pay?". A meaningful answer to this question cannot be given before the period of work, how the contract ended, and which elements the wage consists of become clear. Formulas of a single line circulating on the internet stay incomplete or misleading on most files.

This note explains, for the purpose of information, the general frame of calculation of severance pay, its conditions, and the mistakes often seen. It does not contain a certain figure, a result, or a guarantee of collection. Each concrete event is assessed with its own documents. For a wider frame you can look at the employment law page.

What is severance pay, and when does it come onto the agenda?

Severance pay is an employment claim that a worker who has worked for a certain period, with the conditions provided in the statute, can request upon the employment relationship ending in certain situations. Its purpose is to balance in part the economic return of long work. This institution is not a "gratuity" that arises automatically on every leaving of work.

One of the basic thresholds is that work of at least one year, attached to the same employer, has been completed. In periods shorter than one year, severance pay does not, as a rule, come onto the agenda. In the calculation of the period, facts such as actual work, the start of the contract, interruptions, and a transfer of the workplace should be examined according to the file.

The situation of termination or of ending is the second critical filter. The employer's termination for a valid or a just cause, the worker's termination for a just cause, retirement, military service, a woman worker ending the contract within a certain period because of marriage, and death are often discussed in practice. Against that, the worker's resignation without a just cause does not, as a rule, give rise to a right to severance. The approach "I resigned but I want severance" can stay weak unless the real character of the letter, and the claim of pressure, are proved separately.

The ending of a fixed-term contract of itself by the expiry of the term, and the termination of a contract for an indefinite term, can also produce different results. Not the label of the contract, but the actual relationship and the manner of ending are taken as the basis. Periods spent at more than one workplace of the same employer, and the facts of a transfer and of a merger, can also affect the calculation of severance. In that case the social-security service statement and the payroll calendar should be read side by side.

How is the calculation made? The period, the wage, and the inclusion of extras

The backbone of the calculation is two components: the period taken as the basis of severance, and the wage taken as the basis of severance. The period is determined by taking into account the full years and the extra days. How the extra periods will be reflected is taken according to the concrete practice. On the wage side, not only the net figure on the payroll is spoken of. The gross wage and the regular additional payments are spoken of.

The approach of the wage with regular extras included

In practice the expression "the wage with regular extras included" means that the additional payments the worker benefited from regularly can be added to the basic wage. Transport, meals, a regular bonus, a gratuity, or similar items are examined as to the continuity of the payment, its contractual basis, and whether it was in fact paid. Incidental, conditional, or one-off payments are not taken into the account on every file.

The difference between the payroll and the real wage

A claim that there is a difference between the wage notified to the Social Security Institution and the amount that entered the bank is often seen. In that case the tools of proof come in: account movements, correspondence, a witness statement, the custom of the workplace. The notification being low does not, on its own, add every difference to the account automatically. An element that cannot be proved cannot be written into the account either.

The ceiling and the other limits

In the calculation of severance, the application of a statutory ceiling that is updated periodically can come onto the agenda. The ceiling is an upper limit that limits the result of the calculation. It does not always leave the formula "the gross I want, times the years" as it is. The ceiling line is, as a rule, renewed in the January and July periods. Embedding a fixed figure in this note produces old information in a short time. To try an approximate amount with the current ceiling line, the severance-pay calculator is used. The tool does not give a binding result. Facts such as part-time work, a passage through more than one employer, or a sub-employer relationship also require a separate assessment.

Severance and notice pay should not be mixed. Notice is an item tied to the periods of notification not being complied with. Severance is tied to the period of work and to the condition of ending. Both can be requested on the same file. Their conditions are separate. For the bands of notice, the note what is notice pay and the notice-pay calculator carry a separate intention.

The process: from the documents to mediation and to collection

A sound progress in a severance dispute is generally built with these steps:

1. Gathering the documents of termination or of ending (the notice of termination, the text of resignation or of mutual termination, the date of service)
2. Drawing the period of service on the calendar
3. Listing the wage and the regular additional payments, and matching the payroll and the bank records
4. Examining the release, the payment receipt, and the protocols, if there are any
5. An application for mediation in the compulsory situations
6. If there is no agreement, an action for the claim, and, if needed, the stage of collection or of enforcement

The same frame of procedure applies in employment disputes in Ankara too. The difference is, most of the time, in the character of the document and in the force of proof. Mediation is a condition of the action in many employment claims. The application, and the later periods of the action, should be followed carefully. If an agreement is reached, the payment plan and the scope of the waiver should be written clearly. Uncertain protocols can give rise to a new dispute.

At the stage of collection the creditor worker can go to the path of enforcement on the basis of a judgment or of an agreement. At this point the process of enforcement and bankruptcy law comes onto the agenda as a separate technical field. If the conditions of reinstatement after termination also exist, the strategy should be thought of together with the frame on the page how is an action for reinstatement brought?. Severance and reinstatement do not stand in for each other.

The separation of mutual termination, resignation, and termination for a just cause

The point that creates the most confusion in practice is the naming of how the employment relationship ended. Mutual termination is the parties ending the contract by mutual agreement. If the payment, the waiver, and the items are not written clearly in the text, a discussion of "in fact I did not give up my right to severance" can come out later. Resignation is the worker leaving by a unilateral will. If there is no just cause, severance does not, as a rule, arise. Termination for a just cause is the worker ending the contract because of the heavy breaches counted in the statute. In that case the request for severance can be assessed separately.

In a termination made by the employer, the separation of "a valid reason" and "a just cause" also affects the calculation indirectly. The severance situation of a worker who was terminated for a just cause can be read differently from that of a worker who was terminated for a valid reason. For this reason saying only "I was dismissed" is not enough. The text of the notification, the reason, and the date of service should be read together.

Which documents should be gathered?

For a sound preliminary assessment these documents are useful on most files:

• The employment contract and the additional protocols, if there are any
• The payrolls of the last twelve months
• The bank-account statement (the wage and the additional payments)
• The writings of termination, of resignation, or of mutual termination, and the documents of service
• The release, the payment receipt, the mediation minutes
• The records of annual leave and of overtime (for claims that overlap)

A lack of documents does not make the calculation impossible. It lowers the force of proof. The discussion lengthens especially in items such as transport and meals paid in cash, if a written trace was not left.

The frame of the periods and of limitation

In employment claims, both the periods of mediation as a condition of the action and the periods of limitation should be followed separately. The approach of "let me wait a few months" after termination can put at risk especially the calendar of mediation and of the later action. The calculation of limitation changes according to the item of the claim and to the date of ending. A single general period is not carried to every item.

The start of interest is also often discussed in practice. A request for interest on unpaid severance can be advanced by tying it to the date of termination, or to the fact of default. Because the rate of interest and the moment of the start can change according to the type of file, ready tables on the internet should not be counted as a binding result.

On a transfer of the workplace, a merger, or a change of the sub-employer, with which employer the period of service accumulated is examined separately. Having worked at a last workplace that looks short-term may not mean the earlier periods will be counted as nothing. The proof of this is built with the payroll and with the social-security service statement. In part-time work, or in work on call, how the wage taken as the basis of severance will be determined can be discussed through the actual work and the average of the wage. Taking a single month's payroll as the basis may not be accurate on every file.

Mistakes often made, and points of care

• Taking resignation and termination for a just cause for the same thing
• Making a "multiplication by the years" only over the net salary
• Never taking the regular additional payments into account, or adding incidental payments automatically
• Signing a release without reading it
• Postponing the periods of mediation and of the action
• Gathering severance, notice pay, annual leave, and overtime in a single item
• Losing the date of service, and leaving the calculation of the period uncertain
• Signing without reading the language of waiver in the text of mutual termination
• Ignoring the ceiling and forming an exaggerated expectation

Caution: an incomplete or uncertain release signed early can turn later into a long discussion of proof. Before the signature, the amount, the items covered, and the payment document should be checked together.

On the employer's side too, an incomplete payroll, a custom of an oral additional payment, and an irregular record of termination can weaken the defence. The common interest of the parties is to rest the calculation on documents. Especially in periods of a collective exit or of restructuring, standard release templates can produce a dispute later, because they ignore individual differences.

A note of the result and of information

The calculation of severance pay is built with the trio of the period, the situation of ending, and the components of the wage. Even at the same workplace two files can produce a different result. This note is for general information. The assessment can change according to the features of the concrete event, to the current legislation, and to the state of the evidence. A promise of a certain amount of payment, or of a judicial result, is not given.

For employment claims and the processes of termination you can examine the practice area of employment law, and for the path of job security the note how is an action for reinstatement brought?. If the stage of collection comes onto the agenda, the enforcement and bankruptcy law page is completing.

What is looked at on the severance file

The document of termination, the payroll, and the record of work are read together. The wage with regular extras included is not counted as the same line as the bare wage. The calculation is left to the concrete payroll. The address of the office does not choose the competent authority.

Conclusion

This note is for general information. The document, the period, and the procedure of the concrete event should be read separately. There is no promise of a result by rote.