Turkish Labor Law
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Severance payment will be made through a Fund that will be established for each individual employee, and all employees who even left the work by their own wish (resignation) or are dismissed for just cause, and whatever their length of service, will be able to receive their severance pay from their individual severance pay account.
According to the report of newspaper Dünya, the main point of Government’s long-awaited severance pay reform became clearer, and a draft law intended to reconstruct the current system substantiallywill be submitted to Parliament.
CURRENT SEVERANCE SYSTEM
In the current system severance payments of the entitled employees are paid by employer. In Turkish Labor Law there are many types of entitlement conditions, such as retirement, military service for men, marriage for women, being dismissed for unjust causes and so on. Also employee should work at least one year in the same workplace to entitle severance payment. In case the employee resigns, changes his workplace, or is dismissed by employer for valid reason, he/she cannot receive any severance pay, and his length of service that taken as a base in calculation of severance is set to zero.
Qualified employee is paid a severance pay equal to last 30 days’ gross wages for each full year of employment, and pro rata payment for a portion of a year.
SCOPE OF NEW SYSTEM
The newly-hired persons will be compulsorily included in, but the current employees will have the right to choose continuing with the older system, orchanging to the new one with the mutual consent of employer. The acquired rights will be reserved and existing funds will be transferred to new employee’s individual account.
CONTRIBUTION TO THE FUND
Only the employer will contribute to employee’s severance account, i.e. they will pay premiums, the government will grant some tax or premium support for the employers to lighten their burden.
Government doesn’tguarantee the premium payment of employer, but legal action may be launchedagainst employers who do not pay.
MANAGEMENTS OF THE FUNDS
Private Pension Companies will be authorized in the management of the severance payment funds. New legal arrangement on how to manage the funds is on the way.
Employees may choose how their savings is invested on financial instruments such as bonds, equity shares, currencies, gold and so on.
WITHDRAWAL OF SAVINGS
Employee who has the right to retirement in line with the labor legislation may be able to withdraw his acquired saving from the fund and 30 days gross wage per year ratio will be preserved. However in the event of terminating employment contract for reason of marriage or military service employees may be required to be employed at least 10 years forentitlement to receive severance pay, but in this cases severance pay amount may be less than 30 days gross wage per year.
