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Severance and Notice Pay Calculator: Rights and Taxes
Estimate severance and notice pay using service dates, gross salary, benefits, and termination type. Review legal eligibility, caps, and tax deductions.
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Severance and Notice Pay Guide: Legal Conditions, Pay Including Benefits, and Deductions
Ending an employment contract has significant financial consequences for employees and employers, especially severance and notice pay. But not every departure creates an entitlement; length of service, reason for leaving (SGK, Social Security Institution, exit code), contract type, and pay structure must be assessed together.
HesapYap Severance and Notice Pay Calculator; calculates your statutory compensation in seconds using start and end dates, basic gross salary, regular benefits, and termination type, with current caps and tax deductions.
1. What Is Severance Pay and Who Can Receive It?
Severance pay is a lump sum paid to an employee whose contract ends under legally specified conditions, based on service with the same employer. Its legal basis, still in force, is Article 14 of the İş Kanunu (Labor Law), Law No. 1475.
Basic Conditions:
- Continuous service at workplaces belonging to the same employer for at least 1 full year is required.
- The contract must end for a reason that legally permits compensation:
- Dismissal by the employer without a justified reason (breach of morality and good faith rules - Code 46, etc.),
- Immediate termination by the employee for justified reasons such as unpaid wages, workplace bullying, or harsh working conditions (4857/24),
- Leaving for compulsory military service,
- A female employee voluntarily leaving within 1 year of her marriage,
- Leaving for retirement, or after completing insurance duration and contribution days excluding the age requirement (for example, 15 years and 3600 days), with an SGK letter confirming severance eligibility,
- Payment to legal heirs if the employee dies.
2. How Is Severance Pay Calculated?
Severance calculations consider more than basic gross salary on the payroll. All regular, ongoing benefits with a monetary value provided during the year are added to pay; this is called gross pay including benefits .
What Is Included in Gross Pay Including Benefits?
- Regular cash or card meal and transport allowances,
- Recurring performance bonuses and bonuses (annual total divided by 365 and added to daily pay),
- Heating, housing, holiday, or education allowances. (Irregular bonuses, overtime pay, and reimbursements such as travel allowances are excluded).
Calculation Formula
For every full year worked, 30 days of gross pay including benefits is used. Remaining months and days are added proportionally:
Bru¨t Kıdem Tazminatı=Giydirilmis¸ Bru¨t U¨cret×(Yıl Sayısı+365Artan Gu¨n Sayısı)
Severance Pay Ceiling and Tax Deduction
- Statutory Ceiling: Regardless of gross pay including benefits, severance for one year of service cannot exceed the statutory ceiling announced every 6 months by Hazine ve Maliye Bakanlığı (Ministry of Treasury and Finance). If pay including benefits exceeds the ceiling, the ceiling is used directly.
- Tax Deduction: SGK contributions and income tax are not deductedfrom severance pay. Only stamp tax of 7.59 per thousand is deducted.
3. What Is Notice Pay and When Is It Paid?
Under Article 17 of the İş Kanunu, Law No. 4857, the party wishing to end an indefinite-term employment contract must notify the other party in writing before the statutory notice period.
If an employer dismisses an employee without allowing this period, or an employee resigns immediately without observing it, the pay corresponding to the notice period is paid upfront as notice pay in compensation.
Statutory Notice Periods Table
Length of Service | Minimum Notice Period | Compensation Days |
|---|---|---|
Less than 6 months | 2 weeks | 14 Days of Gross Pay |
6 months – 1.5 years | 4 weeks | 28 Days of Gross Pay |
1.5 years – 3 years | 6 weeks | 42 Days of Gross Pay |
More than 3 years | 8 weeks | 56 Days of Gross Pay |
Notice Pay Calculation and Deductions
- No Ceiling: Unlike severance pay, notice pay has no upper cap; it uses the employee's actual gross pay including benefits.
- Tax Deductions: SGK contributions are not deducted from notice pay; however, income tax (15%-40% depending on the employee's cumulative bracket) and stamp tax of 7.59 per thousand are deducted.
4. Key Differences Between the Two Payments
Criterion | Severance Pay | Notice Pay |
|---|---|---|
Legal Basis | Law No. 1475 (Article 14) | Law No. 4857 (Article 17) |
Minimum Service Requirement | At least 1 full year | None (after probation) |
Ceiling | Yes (Civil servant retirement bonus ceiling) | None (Actual gross pay including benefits) |
SGK Contribution Deduction | None | None |
Income Tax Deduction | None | Yes (15% - 40% depending on bracket) |
Stamp Tax | 7.59 per thousand | 7.59 per thousand |
Who Can Claim It? | Only the employee | Both employee and employer |
5. How to Use the Calculator
HesapYap Severance and Notice Pay Calculator helps calculate your net entitlement with these steps:
- Enter the Start and End Dates: The system automatically calculates total service days, full years, and remaining days.
- Specify Your Gross Salary: Enter the basic gross pay on your final payroll.
- Add Regular Benefits: Enter monthly cash/card meal allowances, transport allowances, and any annual average bonuses (the tool calculates gross pay including benefits).
- Select the Termination Type: Indicate whether the notice period was observed.
- Get the Net Report: View net severance and notice pay separately after the current severance ceiling, stamp tax, and income tax deductions.
Frequently Asked Questions
Can an employee who resigns voluntarily receive severance pay?
As a rule, an employee who resigns cannot receive compensation. However, severance is paid even upon resignation for military service, a female employee leaving within 1 year of marriage, retirement, leaving after completing SGK contribution days while waiting for retirement age, or termination for a justified reason.
Can severance pay be paid in installments?
No. Under Yargıtay (Court of Cassation) case law, severance must be paid upfront in cash upon termination. Late interest may be claimed on installments arranged without the employee's written consent.
What happens to unused annual leave?
When employment ends, all unused annual leave days are converted to cash at the final gross pay rate and must be paid with compensation.
Legal Basis and Sources
- İş Kanunu, Law No. 1475 (Article 14): Severance entitlement and calculation principles.
- İş Kanunu, Law No. 4857 (Articles 17, 24, 25): Notice periods and justified termination grounds for employees and employers.
- Damga Vergisi Kanunu (Stamp Tax Law), Law No. 488: Stamp tax deduction of 7.59 per thousand on compensation payments.
Information: This content and calculator are intended for general information; they do not replace official payroll or definitive legal advice. In a dispute, the employment contract, collective agreement, and specific circumstances should be assessed with an employment lawyer or mediator.