Turkish Labor Act 1475-Article 14: Severance Pay

Turkish Labor Act 1475-Article 14: Severance Pay	After new Labor Act no. 4857 came into force, all the articles of the former Labor Act no. 1475 were abolished. However, article 14 of Labor Act no. 1475, which regulates severance pay, is still valid. Although the creation of a severance pay fund is foreseen through a transitional article 6, as of July 2010 no severance pay fund has been enacted.

Article 14 of the Former Labor Act no. 1475
Labor Act No. : 1475
Enactment Date : 25/8/1971
Published in the Official Gazette on : 01/09/1971   No: 13943
Code: Serial: 5 Volume: 10 Page : 3102

Severance Pay:

Article 14 – (Amended first clause: July 29, 1983 – Article 2869/3) In the case of annulment of the service contracts of the employees who are amenable to this Act:

1. Except for the reasons stated by the employer in sub-clause II of Article 17 of this Act;
2. Pursuant to Article 16 of this Act by the employee,
3. Due to compulsory military service,
4. In order to receive an old age pension, pension fund or invalidity pension or to receive a full payment from the statutory institutions or retirement funds to which they are affiliated;
5. Due to their voluntary severance upon completing the insurance period and the number of days to pay premium prescribed for putting an employee on an old age pension as per the conditions other than the prescribed ages in sub-clauses (a) and (b) of sub-paragraph (A) of the first clause of Article 60 of Law no. 506 (Annex: August 25, 1999 – Article 4447/45) or as per Provisional Article 81 of the same Law;

Or in the case that the woman dissolves the contracts voluntarily within a year beginning from the date of marriage or the termination of contract upon the employee’s death, a severance pay equal to 30-day salary shall be paid to the employee by the employer for each full year which has passed during the period of the service contract beginning from the starting date of employment. For periods exceeding one year, the payment shall be made on the basis of the same proportion.

(Amended clauses: October 17, 1980 – Article 2320/1):

The amount of severance pay to be made to the employees shall be calculated in consideration of the employees’ working periods at one or more working places owned by the same employer; regardless of whether the service contract is continuous or drawn up at intervals. In the case that the working places are assigned, transferred or passed to another employer other than the previous one for any reason or the working places are moved to another place, the amount of severance pay to be made to the employee shall be calculated based on the employee’s seniority and the total period of the service contract at a working place or places.
In the case of transfer or hand-over of the working place for any reason dating from July 12, 1975 (1), both employers shall be responsible for the accrued indemnity. However, the responsibility of the employers who have transferred the working place is limited to the periods of employment and level of salary paid to the employee at the time of transfer. If the working place was transferred or passed into other hands for some reason before July 12, 1975 (2) and unless otherwise provided, the current employer shall be responsible for the accrued severance payments.

For the employee to be able to benefit from the provision given in clause 4 of the first sub-clause, s/he is required to certify that s/he is entitled to receive monthly or full payment or that s/he has applied to the institution or retirement fund to which s/he is affiliated in order to receive a monthly or full payment. In case of the employee’s death, there is no such requirement.

The employer of the last public institution shall pay severance to the employee who is entitled to an old age pension, invalidity pension or full payment pursuant to the Law of Social Insurance. This payment shall be made subject to the Law on the Retirement Pension Fund of the Turkish Republic and Law of Social Insurance and only subject to Law of Social Insurance, or the payment shall be made by means of aggregating the terms of office at various public institutions.
If the service contract at the above mentioned public institution has terminated in a way which will not require a severance pay to be made as per this article, the terms of office at this institution shall not be taken into account while the amount of severance pay is calculated.

However, the amount to be paid for the part which belongs to the term of office spent as affiliated to Turkish Pension Fund shall not exceed the amount prescribed for the retirement bonus pursuant to the provisions of Turkish Pension Fund in force at the starting date of the old age pension or invalidity pension.

The expression ‘public institutions’ aforementioned in this article shall include the general, supplementary, and special budgeted administrations and the institutions included in the 4th Article of Law no. 468.

More than one severance pay or bonus shall not be paid for the same length of service.

The severance pay shall be calculated on the basis of the last wage. The average wage which is calculated by dividing the wage paid in the last one-year period by the number of working days within that period shall be taken as a basis for the calculation of this indemnity. However, if the labour wage has been raised within the last year, the wage subject to indemnity shall be calculated by dividing the wage paid between the date of release and the date of the raise by the number of working days within the same period.
(Amended: July 29, 1983 – Article 2869/) During the calculation of the wage which will form a basis for the indemnity mentioned in Article 13 and the severance pay included in this article, the money and contractual and statutory benefits measurable in form of money provided to the employee in addition to the wage specified in the first clause of Article 26 shall be taken into consideration. At the end of the suit to be filed by reason of the fact that the severance pay has not been made on time, the judge shall rule that the highest interest charged on the deposit money in respect of the delay time will be paid. The employee reserves his/her other rights arising from the regulation. (1)
(Amended: November 17, 1980 – Article 2320/1)
The 30-day period related with the severance pay indicated in this article may be amended in the employee’s favour with the service contracts or collective labour agreements.

(Amended: December 10, 1982 – Article 2762/1)
However, the annual amount of the severance pay designated by the service contracts or collective labour agreements shall not exceed the maximum retirement bonus to be paid for one-year service to the senior civil servant who is subject to the Civil Servants Law, pursuant to the provisions of the Turkish Pension Fund Act no. 5434.

(Amended clauses: October 17, 1980 – Article 2320/1):

In case of the employee’s death, the severance arising from the above given provisions shall be paid to his/her legal heirs.

The employer cannot have other individuals or insurance companies insure the responsibility arising from the severance pay.

Under the employer’s responsibility, and provided that it is for old age, retirement, invalidity, death and full payment only, a fund related to the severance pay shall be granted by the employer at governmental or statutory institutions or at a bank or institution withmore than 50% of its interests are state-owned.

The issues relevant to the allocation of funds are regulated by law.

Article 15-110-(Abolished on May 22, 2003/Article 4857/120)

Additional Article 1-4-(Abolished on May 22, 2003/Article 4857/120)

Provisional Article 1-13-(Abolished on May 22, 2003/Article 4857/120)

Additional Provisional Article 1-(Abolished on May 22, 2003/Article 4857/120)

Article 111-112-(Abolished on May 22, 2003/Article 4857/120)

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