Calculation of Severance And Notice Pay And The Mediation Process For Workers

The fundamental conditions for entitlement to severance pay are as follows:

• The employee must have worked for the same employer for at least one year
• The employment contract must have ended for a reason that entitles the employee to severance pay

Principal circumstances giving rise to severance pay entitlement include: termination by the employer without just cause, termination by the employee for just cause, retirement, military service for male employees, termination by a female employee within one year of marriage, and the employee's death. Voluntary resignation by the employee (without just cause) does not, as a rule, give rise to a severance pay entitlement.

Calculation basis: Severance pay is calculated on the basis of 30 days' gross wages (inclusive of regular supplements) for each full year of service; proportional additions are made for periods exceeding full years. "Wages inclusive of supplements" means the basic wage plus regularly provided benefits such as transportation, meal allowances, bonuses, and premiums.

Two important points: A statutory ceiling applies to severance pay, and this ceiling is updated periodically; the calculated amount cannot exceed it. Additionally, severance pay is exempt from income tax and is subject only to stamp duty. Since the ceiling amounts change regularly, the current figure must be verified at the time of calculation.

Notice pay arises when an indefinite-term employment contract is terminated without observing the notice periods prescribed by law. The notice periods vary according to the employee's length of service:

• Less than 6 months of employment: 2 weeks
• Between 6 months and 1.5 years: 4 weeks
• Between 1.5 years and 3 years: 6 weeks
• More than 3 years: 8 weeks

The party that fails to comply with the notice period must pay the other party notice pay in the amount of wages corresponding to that period. In other words, not only the employee but also the employer may claim notice pay where the employee leaves without observing the notice period. Unlike severance pay, notice pay is subject to income tax.

In brief: severance pay is an entitlement corresponding to the employee's length of service upon termination of the employment relationship under specified conditions; notice pay is compensation for non-compliance with notice periods upon termination. The two rest on different legal grounds and may be claimed together when their respective conditions are met.

Since 2018, in claims for employment-related receivables, compensation, and reinstatement between employees and employers, applying to a mediator before filing suit is mandatory. This constitutes a "precondition for litigation"; a lawsuit filed directly without first resorting to mediation will be dismissed on procedural grounds by the court.

There is an important exception: lawsuits for material and moral damages arising from workplace accidents or occupational diseases, as well as related actions for determination, objection, and recourse, fall outside the scope of mandatory mediation and may be filed directly.

The general flow in mandatory mediation is as follows:

1. Application: An application is filed with the Mediation Bureau at the relevant courthouse.
2. Assignment: The Bureau assigns a mediator from the registered list.
3. Negotiations: The parties (and their attorneys, if any) meet under the mediator's supervision.
4. Final minutes: The process concludes with the preparation of final minutes upon the parties reaching an agreement or failing to agree.

As to timing: The mediator generally concludes the process within three weeks from the date of assignment; in exceptional circumstances, this period may be extended by a maximum of one additional week. If an agreement is reached, the minutes drawn up carry enforceable force equivalent to a court judgment.

In İzmir, mandatory mediation applications are processed through the Mediation Bureau located at the Bayraklı campus of the İzmir Courthouse; the assigned mediator conducts negotiations at their own office or in a suitable venue. The presence of numerous mediation offices operating in and around Konak facilitates access to negotiations for the parties. For the process to proceed correctly, it is important to have the receivable items and claims properly determined with the assistance of a lawyer before filing the application.

Deadlines are the area where loss of rights most frequently occurs in labor law:

• For reinstatement claims: An application to a mediator must be made within one month of the termination notice; if no agreement is reached, a reinstatement lawsuit must be filed before the labor court within two weeks of the date the final minutes are drawn up. Missing these deadlines results in forfeiture of the reinstatement right.
• For receivables such as severance and notice pay: These claims are subject to a five-year limitation period. However, mandatory mediation remains a prerequisite before filing suit.
• Tolling of limitation: Filing a mediation application tolls the limitation period; the period begins to run again upon the preparation of the final minutes. For this reason, timely filing of the mediation application is important.

• Filing a lawsuit directly without applying for mandatory mediation (risk of procedural dismissal)
• Missing the one-month application or two-week lawsuit deadline in reinstatement cases
• Attending mediation negotiations unprepared and specifying receivable items incompletely
• Requesting an insufficient amount of compensation due to incorrect calculation of wages inclusive of supplements
• Signing the settlement minutes without evaluating their scope and consequences

How is severance pay calculated? The calculation is based on 30 days' gross wages inclusive of regular supplements for each full year of service; periods exceeding full years are added proportionally. The calculated amount cannot exceed the statutory ceiling, which is updated periodically.

Can the employer also claim notice pay? Yes. The party that fails to observe the notice periods must pay the other party notice pay; in the case of an employee who departs without observing the notice period, the employer may claim it.

Is mediation mandatory for employment-related receivables? Yes. In claims for employment receivables, compensation, and reinstatement, applying to a mediator before filing suit is a precondition for litigation. Lawsuits arising from workplace accidents and occupational diseases fall outside this scope.

How long does the mediation process take? The mediator generally concludes the process within three weeks from the date of assignment; in exceptional circumstances, it may be extended by a maximum of one week.

Within what period must a reinstatement lawsuit be filed? An application to a mediator must be made within one month of termination; if no agreement is reached, a lawsuit must be filed within two weeks of the final minutes.

What is the limitation period for severance and notice pay? These compensation claims are subject to a five-year limitation period; filing a mediation application tolls the limitation period.

The two fundamental factors that determine the outcome in severance and notice pay proceedings are the accurate calculation of the amounts and the timely completion of each procedural step. Mediation, mandatory for employment-related receivables since 2018, is a stage that must be completed before litigation can commence. Particularly given the short deadlines in reinstatement cases and the limitation periods applicable to receivables, planning the process correctly from the outset helps prevent loss of rights.

For legal assistance regarding employment receivables, compensation calculations, and mediation processes, please contact Yücesoy Attorney Partnership & Law Office.

Av. Mehmet Yücesoy

İzmir Attorney & Legal Consultancy