Severance and Notice Pay Calculation

How to Calculate Severance Pay

1. Severance pay is calculated based on the employee's last gross salary. The gross salary is the total amount found by adding insurance premiums, taxes, and all deductions made by the government to the employee's salary. For example, in 2022, a worker earning the minimum wage receives 4,253 TL, while the gross salary is 5,004 TL. Therefore, you should write the gross amount, including taxes and deductions, not the net amount deposited into your account each month. If you do not know your gross salary, you can find this information on your payslip.

2. After entering your gross salary, you should also write down the regular monthly benefits provided by your employer. Examples include regularly paid bonuses, transportation and meal allowances, food and clothing allowances, language compensation, etc. The monthly amounts of these regular payments should be written in the monthly benefits section.

3. The same explanations given for monthly benefits also apply to bonuses. Enter the total bonuses you receive annually in the specified area. You should enter the total amount of regular bonuses received in a year in this section.

4. To clarify the monthly benefits and bonuses, we can give an example: If a worker receives a monthly bonus of 600-900 TL, 300 TL for transportation, and 500 TL for meals, what should be written in the monthly benefits section? The monthly average of the bonuses, 750 TL, plus the total monthly transportation and meal allowance of 800 TL, should be written as 1,550 TL in the monthly benefits section.

For bonuses, if the worker receives a bonus of 3,000 TL every three months, they will receive a total of 12,000 TL in a year. This amount should be entered in the annual bonus section.

Severance and notice pay calculation websites usually do not include sections for monthly benefits and bonuses. This significantly reduces the calculated compensation and can lead to employee grievances. Therefore, do not forget to calculate and enter the monthly benefits and bonus amounts provided by the employer in the relevant sections.

5. The start date and end date of employment must be entered accurately. To be entitled to severance pay, an employee must have worked continuously for at least one year at the same employer's workplace(s).

6. Severance pay is calculated based on the last received salary. However, there is an upper limit. This upper limit changes every year. For 2022, the upper limit for severance pay is 15,371.40 TL. Therefore, if the person's salary exceeds this amount, this amount will be used for the severance pay calculation.

7. To calculate severance pay, the number of years worked by the employee is multiplied by the last received gross salary (gross + other payments). If there are additional periods beyond a year, the employee also receives severance pay for those periods. In this case, the severance pay corresponding to one year is divided by 365 to find the amount for one day. The number of additional days is then multiplied by this daily amount to find the severance pay for those days. Finally, the severance pay for the additional days is added to the amount for the years worked to find the total severance pay. A stamp tax deduction of 0.759% is made from the total amount. After this deduction, the remaining amount is paid to the employee as severance pay through the bank.

How to Calculate Notice Pay

1. Notice pay is calculated based on the employee's last gross salary and the total of additional benefits, just like severance pay. Therefore, the explanations given in the section on how to calculate severance pay also apply here. You do not need to enter separate data for notice pay. Our calculation tool calculates both your severance and notice pay using the same data you enter.

2. Notice periods increase according to the employee's tenure:

   • For employees who have worked less than 6 months: 2 weeks
   • For employees who have worked between 6 months and 1.5 years: 4 weeks
   • For employees who have worked between 1.5 years and 3 years: 6 weeks
   • For employees who have worked more than 3 years: 8 weeks

3. When an employer wishes to terminate an indefinite-term employment contract, they must notify the employee in advance by these periods. Additionally, the employee must be given at least two hours of job search leave each day during these periods. Otherwise, the employer must pay notice compensation equivalent to the salary for these periods.

4. Income tax and stamp tax (0.759%) are deducted from the calculated amount. After taxes are deducted, the remaining amount is paid to the employee as notice pay. The critical point here is that while only stamp tax is deducted from severance pay, both stamp tax and income tax are deducted from notice pay.