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CONDITIONS FOR ENTITLEMENT TO SEVERANCE PAY

The Turkish Labor Code numbered 4857 (hereinafter referred to as the “Code”) has abrogated the previous Turkish Labor Code numbered 1475 (hereinafter referred to as the “Abrogated Code”) with the exception of the Article 14 thereof. The said Article 14 regulates the severance pay, which can be defined as the sum of money to be paid to the employee (or to their successors in the event of decease of the said employee) under certain conditions prescribed in the Code and the Abrogated Code in case of termination of an employment relationship.

In the event of termination of an employment contract based on one of the below reasons after the completion of an employment period of a minimum of one year, the employee (or, as per the Clause f below, their successors) becomes entitled to receive severance pay following the termination of the employment contract:

  1. by the employer except for immoral, dishonorable or malicious conduct or other similar behavior of the employee as stated in the sub-clause II of the Article 25 of the Code,
  2. by the employee for the reasons stated in the Article 24 of the Code,
  3. due to compulsory military service,
  4. by the employee to receive an old age pension, pension fund, invalidity pension or a lump sum payment from the institutions to which they are affiliated,
  5. by the female employee within the first year of her marriage,
  6. due to the decease of the employee,
  7. by the employee’s will who has fulfilled the conditions as stated in the Article 28 of the Social Insurance and General Health Insurance Law numbered 55101 (the “Law numbered 5510”) other than the condition to be of a certain age or completed the insurance period and the number of days to pay premium foreseen to receive old age pension as per the Provisional Article 81 of the Social Insurance Law numbered 506 (the “Law numbered 506”).

1 The original text of the Article 14 of the Abrogated Code refers to the sub-clauses (a) and (b) of the sub-paragraph

(A) of the Article 60 of the Law numbered 506, which have been abrogated by the Law numbered 5510. As per the Article 104 of the Law numbered 5510, the references made to the abrogated articles of the Law numbered 506 shall be deemed to be made to the relevant articles of the Law numbered 5510. The Provisional Article 81 of the Law not been abrogated and is still in force.

In order for the employee to be entitled to receive severance pay upon the fulfillment of one of the aforementioned conditions, it is compulsory that the said employee has worked at an establishment of the employer within the scope of the Code, in accordance with a valid employment contract.

Please note that the employment relationships indicated below have been exempted from the scope of the Code as per the Article 4 thereof. Therefore, the above rules regarding the severance pay shall not apply to;

  1. Sea and air freight activities,
  2. Establishments and enterprises performing agricultural and forestry work with employment of a maximum of 50 employees,
  3. Any agriculture-related construction work within the scope of family economy,
  4. Handicrafts and works performed at home by family members of a maximum of 3rd degree, without contribution from exterior,
  5. Household services,
  6. Apprentices,
  7. Sportsmen,
  8. Employees subject to rehabilitation,
  9. Establishments within the scope of the Article 2 of the Tradesmen and Craftsmen Code numbered 507, employing three employees.

Determination of the Severance Pay

The amount of severance pay to be received by an employee shall be calculated taking into account the total period of the employment relationship, including any durations that the employee had worked at a different work place owned by the same employer; regardless of whether the employment contract has been concluded for an indefinite period or definite periods.

In the case that the work place has been transferred to another place or taken over by another employer, the employee’s seniority shall be calculated based on the total period of employment in different work places.

The amount of the severance pay shall be based on the employee’s 30 days’ salary for each year completed during the employment period. The current (latest) amount of the employee’s salary (at the date of determination) shall be taken into account for the calculations.

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