How to Calculate Severance Pay: 2026 Cap Amount and Calculation Examples

Leaving a job can sometimes be a new beginning, and other times a necessary change. However, no matter how the process unfolds, one of the first questions on employees' minds is usually the same: "How much severance pay will I receive?"

Right at this point, the calculation process can start to look a bit complex. What with the final gross salary, period of employment, additional payments, and the severance pay cap, the figures can get confusing. Moreover, the cap amounts, which are updated every year, directly affect the result of the calculation.

So, how is severance pay calculated? Who is eligible to receive severance pay? What is the severance pay cap for 2026? In this guide, we explain the logic of severance pay calculation step-by-step and make the subject easy to understand with up-to-date information and example calculations.

📌 Quick Glance: Severance Pay Calculation

• Severance pay is compensation paid to employees who have worked for at least 1 year under the same employer and meet the legal requirements.

• During the calculation, the employee's final gross salary and regular fringe benefits that can be measured in monetary terms are taken into account.

• For each full year worked, severance pay equal to 30 days of gross salary is calculated.

• Periods of less than a year are also included in the calculation proportionally.

• The severance pay cap determined by the government is applied in the calculation.

• Only stamp duty is deducted from the severance pay.

• In cases such as retirement, military service, or termination of employment by the employer without just cause, the employee may be entitled to severance pay.

• To calculate severance pay accurately, the period of employment, gross salary, and current cap amount must be evaluated together.

What is Severance Pay?

Severance pay is a lump-sum payment that employees subject to the Labor Law are entitled to receive if their employment contracts are terminated under the conditions stipulated by the law after completing a minimum of 1 year of service. This compensation, which is one of the most fundamental pillars of labor law, is calculated based on 30 days of grossed-up salary for each full year worked and represents the employee's wear and tear and financial security for the future. Although it is not paid as a rule in case of resignation; it must be paid by the employer to the employee as a legal obligation in cases such as retirement, military service, marriage of female employees, or unfair termination by the employer.

What are the Conditions for Receiving Severance Pay?

For an employee to be entitled to severance pay, they must meet certain conditions in terms of both the period of employment and the reason for leaving the job.

1. Having Worked for At Least 1 Year (Time Condition)

The first and most strict condition for severance pay is that the employee must have worked continuously for at least 1 full year (365 days) in the workplace or workplaces belonging to the same employer.

• Even if only 1 day is missing to complete one year (e.g., 364 days), severance pay cannot be legally claimed.

• Even if spent in different companies, if those companies belong to the same holding/employer or if the workplace has been transferred, these periods are combined and calculated.

2. Being an Employee Subject to the Labor Law

To receive compensation, the person must be working in the status of "employee" under the Labor Law No. 4857 (or Press/Maritime Labor Law). For example; apprentices, interns, or professional athletes cannot claim severance pay because they are outside the scope of the Labor Law.

3. Termination of the Employment Contract in accordance with Severance Pay Rules

Whether an employee receives compensation when they leave or are dismissed depends entirely on the reason for leaving (reason for termination). Under the law, the situations requiring the payment of severance pay are as follows:

• Dismissal of the Employee by the Employer Without Just Cause: If the employer terminates the contract citing the employee's performance or economic reasons, they must pay compensation.

• Resignation of the Employee for "Just Cause": Under normal conditions, an employee who resigns voluntarily cannot receive compensation. However, if the employee resigns for just causes (Labor Law Art. 24) such as non-payment of salary/overtime, mobbing, underpayment of social security premiums, or health problems, they can receive their severance pay.

• Leaving Due to Retirement: If the employee leaves the job because they are entitled to receive retirement, old-age, or disability pension, they receive their compensation.

• Completing Retirement Conditions Except Age (Leaving with Premium Days): Those who have completed the legal number of premium days and insurance period according to their insurance start date (for example, 15 years and 3600 days for those insured before 08.09.1999; gradually 4500 to 7000 premium days for later dates) can resign and receive their compensation without waiting for the retirement age by obtaining a "Letter of Eligibility for Severance Pay" from the SGK (Social Security Institution).

• Military Service Duty: Male employees are entitled to severance pay if they have to leave their jobs due to active military service.

• Leaving Due to Marriage (For Female Employees): Female employees can receive compensation if they apply to the employer with their official marriage certificate and resign within 1 year from the date of marriage.

• Death of the Employee: In the event of the employee's death, the employment contract automatically terminates, and the severance pay they are entitled to is paid to their legal heirs.

Who is Eligible for Severance Pay?

Severance pay is not an automatic process for every employee. To benefit from this right, one must first legally have "employee" status and meet the conditions required by the law.

Here are the people who are eligible and not eligible to receive severance pay according to the laws:

1. Those Eligible for Severance Pay (In-Scope)

The following groups of employees can receive severance pay, provided they have worked in the same workplace for at least 1 year and their contracts are terminated in accordance with the compensation rules:

• Private Sector Employees: All employees working in factories, offices, shops in 4A (SSK) status.

• Employees Working in the Public Sector: Those who are not in the status of "civil servant" or "contracted personnel" in government institutions and who work in the permanent worker staff (including those transferred from subcontractor to permanent staff).

• Press Employees (Journalists): Journalists who are subject to the Press Labor Law No. 5953. (In fact, their right begins earlier; the minimum working requirement for those subject to this law is 1 year, but the cap fee, which is the standard upper limit, is not applied in severance pay calculations).

• Seamen (Sailors): Captains, sailors, and all crew members working on ships within the scope of the Maritime Labor Law No. 854.

• Apartment Attendants (Janitors): Residential janitors also have this right. since they are considered full-fledged employees under the Labor Law.

2. Those Not Eligible for Severance Pay (Out-of-Scope)

Some professional groups or working models cannot receive severance pay, no matter how long they work, either because they have their own special laws or because they are excluded from the scope of the Labor Law:

• Civil Servants (4A / 4B): When civil servants leave their jobs, they do not receive severance pay, but rather a retirement bonus. When they resign, they have no right to a bonus or compensation.

• Bağ-Kur Members (Tradesmen and Self-Employed): Since individuals who work on their own behalf, are company partners, or run shops do not have employee status, they do not have the right to compensation.

• Interns and Apprentices: Apprentices and interns who work as part of their training are not accepted as "employees" according to the Labor Law.

• Domestic Workers: Those who do jobs such as cleaning, childcare/elderly care at home (even if they work more than 10 days a month and are insured) are outside the scope of the Labor Law. However, if they meet the conditions according to the law of obligations, they can request a "service award".

• Professional Athletes: Football players, basketball players, etc. who sign contracts with their clubs are not subject to the Labor Law.

• Those Engaged in Home Arts: Those who perform handwork, knitting, sewing, and similar tasks in homes among family members by purchasing materials from outside.

How is Severance Pay Calculated?

When calculating severance pay, the employee's total period of employment at the workplace and their final gross salary are primarily taken into account. The logic of calculation is quite simple: severance pay equal to 30 days of gross salary is paid for each full year worked. Periods of less than a year are included in the calculation proportionally based on days.

However, there is an important point to note here. In the calculation, not only the base salary, but also some fringe benefits that can be measured in monetary terms and show continuity can be added to the gross salary. In addition, if the employee's gross salary exceeds the severance pay cap, the calculation is not made directly over the salary, but over the legal cap amount.

For this reason, when calculating severance pay, the period of employment, gross salary, additional benefits, and the current severance pay cap should be evaluated together.

Severance Pay Calculation Formula

The basic formula used in severance pay calculation is as follows:

Severance Pay = Grossed-up Salary X Number of Years Worked

If the period of employment is not a full year, the remaining months and days are also included in the calculation.

For example, the severance pay of an employee whose final grossed-up salary is 45,000 TL and who has worked in the same workplace for 4 years is calculated as:

• 45,000 TL X 4 = 180,000 TL. However, if the employee's salary exceeds the severance pay cap, the calculation is made over the cap determined for the relevant period.

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Factors Taken into Account in Severance Pay Calculation

When calculating severance pay, salary is not the only thing evaluated. For the calculation to be performed accurately, the following factors must be evaluated together:

• Period of Employment: The total period of time the employee worked under the same employer forms the basis of the calculation. While 30 days of salary is taken as a basis for each full year, remaining months and days are also taken into account proportionally.

• Grossed-up Salary: The salary taken as a basis in severance pay calculation does not consist of base salary alone. Some additional payments provided regularly are also included in the salary to form the "grossed-up salary".

• Regular Fringe Benefits: Meal allowance, travel allowance, regular bonuses, fuel allowance, or similar payments of continuous nature can be included in the calculation under certain conditions.

• Severance Pay Cap: The severance pay cap determined by the government every year represents the highest amount that can be applied in the calculation. Even if the employee's gross salary is above this limit, severance pay is calculated based on the cap amount.

• Legal Deductions: Generally, only stamp duty (0.759%) is deducted from severance pay. Therefore, a small difference may occur between the calculated gross amount and the net amount the employee will receive.

To calculate severance pay accurately, all these factors must be evaluated together.

What is the 2026 Severance Pay Cap?

One of the issues that employees are most curious about in severance pay calculation is the severance pay cap. This is because no matter how high the employee's salary is, a certain upper limit is applied when calculating severance pay.

The severance pay cap valid for the January-June period of 2026 has been determined as 64,948.77 TL. This amount represents the maximum severance pay that can be paid in return for one year of work.

In other words, even if the employee's grossed-up salary is over 64,948.77 TL, the calculation is made over this amount. For example, for an employee whose final grossed-up salary is 80,000 TL, severance pay is not calculated over 80,000 TL, but over 64,948.77 TL.

📌 What is the Severance Pay Cap and How is It Applied?

The severance pay cap is the legal upper limit introduced by the government on the annual compensation amount that high-salaried employees can receive when they leave their jobs. This limit is indexed to the retirement bonus that the highest-ranking civil servant (Head of Presidential Administrative Affairs) will receive for one year of service, and is recalculated every year in January and July according to civil servant salary coefficients.

• Those Remaining Below the Cap: If an employee's grossed-up salary is below 64,948.77 TL (for example, if it is 35,000 TL), the severance pay calculation is made directly over their actual gross salary.

• Those Reaching Above the Cap: If the employee's grossed-up salary exceeds this cap (for example, if it is 80,000 TL or 100,000 TL), regardless of how high their salary is, the maximum gross compensation amount they can receive for each full year worked is limited to 64,948.77 TL.

Since the severance pay cap changes twice a year, the date on which the employee leaves the job (the date the contract is terminated) is of vital importance. An employee leaving in June receives payment based on the cap in the first half of 2026, while the new and probably higher cap fee to be announced in the second half of 2026 will be valid for an employee leaving in July.

Severance Pay Calculation of an Employee with 3 Years of Service

When calculating the severance pay of an employee who has worked continuously in the same workplace for 3 full years, the total period they are entitled to is calculated over 3 months (i.e., 3 full salaries). Logically, only a 0.759% stamp duty is deducted from this amount.

Here is the net calculation example with a salary scenario according to the current parameters of 2026:

Example: Employee with a Grossed-up Salary of 30,000 TL

Since this employee remains below the current severance pay cap for 2026 (64,948.77 TL), the calculation is made directly over their own salary.

• Period of Employment: 3 Years

• Monthly Grossed-up Salary: 30,000 TL

• Gross Severance Pay Amount: 3 X 30,000 = 90,000 TL

• Stamp Duty Deduction (0.759%): 90,000 X 0.00759 = 683.10 TL

• Net Severance Pay to be Paid to the Employee: 89,316.90 TL

When and How is Severance Pay Paid?

As much as being entitled to severance pay, when and in what way this money will be credited to the account is one of the most curious issues for both employees and employers.

When is Severance Pay Paid?

Legally, it is essential that severance pay is paid immediately and in a lump sum (cash) on the day the employment contract ends (i.e., as of the date the employee's termination is processed). There is no extra maturity or legal payment period defined for the employer in the law.

Can Severance Pay be Paid in Installments?

According to the Labor Law, the employer cannot divide severance pay into installments without the employee's consent. However, installment payment is one of the situations frequently encountered in practice. This is possible under the following condition:

• Written Approval of the Employee: If the employer requests installments due to economic difficulties and the employee approves this in writing, the compensation can be paid in installments.

• Right to Interest: While making the installment agreement, the employee may reserve the right to demand interest for delayed installments.

How is Severance Pay Paid?

If the number of employees in the workplace is above the legal limits (usually in places with 5 or more employees), it is mandatory to make all payments such as salary and compensation through bank channels. Compensation payments made in hand as cash may be considered legally invalid and may leave the employer in a difficult spot. The phrase "Severance Pay Payment" must be included in the payment receipt.

Frequently Asked Questions About Severance Pay

1. Can I receive severance pay if I resign voluntarily?

As a rule, no. In case the employee leaves the job by their own will without a just cause (resignation), the right to severance pay is forfeited. However; if there are legal "just causes" such as military service, marriage of a female employee, retirement, or immoral behaviors of the employer (non-payment of salary, mobbing, etc.), compensation is received even in case of resignation.

2. What should I do if my severance pay is not paid?

If your compensation is not paid despite leaving your job, you cannot file a lawsuit directly. First, you must apply to the "Mediation" institution, which is a legal requirement. If no agreement can be reached with the employer in the mediation meetings, you can file a severance pay lawsuit in the Labor Court.

3. What is the statute of limitations?

The statute of limitations for severance pay is 5 years. If you do not apply to a mediator and file a lawsuit within 5 years from the date your employment contract was terminated, this right is legally lost.

4. How much default interest is applied to severance pay?

In lawsuits to be filed in case the compensation is not paid on time, the court rules to apply the "highest interest rate applied to commercial loans on deposits" from the date of termination. This type of interest has a much higher yield rate compared to legal interest.

5. Can someone receiving notice pay also receive severance pay?

Yes, they can. Severance pay and notice pay are completely different legal rights. If the conditions are met (for example, if the employer terminated your employment suddenly and unfairly), you can receive both your severance pay and notice pay at the same time.