Severance Pay Fund

The severance pay fund has been frequently expressed by the executive body in recent years. However, it could not be put into practice due to the reactions coming from the workers' front. The interest of the sector subject to the Labor Law was gathered at this point when it came to the agenda that there was work to create the severance pay fund.

Who will affect the severance pay regulation? 

The employees subject to the Labor Law No. 4857, the employees who are subject to the Law No. 5953 on the Arrangement of Relations between Employees and Employees in the Press Profession, and those subject to the Maritime Labor Law No. 854 may be affected by this regulation.

Severance Pay in Current Practice

In the current practice, the employer is paid a gross 30-day severance pay for each full year during the continuation of the service contract from the date the employee starts work, provided that the employee's work has lasted for at least one year depending on the same employer and the employment contract expires for certain reasons. For periods of more than one year, payment is made at the same rate.

Reasons for entitlement to severance pay are listed in article 14 of the Labor Law No. 1475. According to this;

  • Unfair by the employer,
  • For good reasons by the worker,
  • Due to compulsory military service
  • Due to retirement (in order to receive old age, retirement or invalidity pension or to receive a total payment),
  • Due to the fulfillment of other pension conditions (except age) (other than the age specified in subparagraphs (a) and (b) of subparagraph (A) of the first paragraph of Article 60 of the Law no. 506), by completing the period of insurance and the number of days of premium payment due to their voluntary departure from work)
  • Marriage of a female worker (the termination of her employment of her own accord within one year of the date of marriage),
  • Termination due to the death of the worker,
  • In the case of the death of the worker or worker, the heirs are entitled to severance pay.

Why was there a need for a regulation? 

It should be noted that the temporary article 6 of the Labor Law No. 4857, which came into force in 2003, states that the fund will be introduced. According to this; “A severance pay fund is established for severance pay’’ is written. As can be seen, the idea of creating funds for severance pay actually goes back to much older.

The main reason for the creation of the fund is considered to be an important burden for the employer and it is considered that the severance pay is considered to have a negative effect on the competition among the employers and a lower amount is paid to the worker. In this way, both private sector employers and public institutions employing workers through subcontractors are required to relieve or reduce the burden as much as possible. In fact, this means a significant setback in terms of workers' existing rights.

Another reason lies in the idea of eliminating disputes regarding severance pay between the employer and the employee as they constitute an important part of the cases in the labor courts. In this respect, the regulation poses a positive situation for both the employer and the labor courts.

Again, some employers are exploited the 1-year working condition required to be entitled to severance pay and the workers are dismissed before the end of the 1-year working period.

What does the desired regulation contain? 

Although there is no clear case, there are some inferences in the direction of the explanations. However, it is also clear that this issue may undergo significant changes until it is enacted. First, as the name suggests, a fund will be created for severance pay. As with the unemployment insurance fund, the employer will invest a certain amount of the employee's salary in this fund. According to the current practice, the premium to be paid should be 8.33% in order to prevent any loss of rights of the worker. However, as it is seen from the explanations made and the idea of reducing the burden on the severance indemnity of employers, which is the main reason for the regulation, a figure below the government is considered.

The money accumulated in the account will be humidified in the money markets under the supervision and supervision of financial market regulators.

When the employee terminates his employment contract to receive severance pay accumulated in the fund (when he retires, etc.), he can withdraw the severance pay and salary accumulated in the fund.

What will be earned rights? 

At the beginning of the biggest uncertainties related to the issue, it is gathered to the extent of what will happen to the severance payments deserved until the date the fund is established. Due to the lack of a clear picture of the issue, it creates uncertainty as to what the retroactive rights of workers will be or the compensation or wages corresponding to these rights will be reduced.

It should be noted that the case of loss of past rights will not / should not be the case. With this arrangement, a triple solution can be considered.

The severance pay that is earned can be paid to the employee at an amount to be agreed by the employee and the employer.

Those who have ongoing work before the entry into force of the Fund may agree with their employers and never enter the new system and continue with the old system.

The employer may transfer the severance payments to the fund on behalf of the employee. In this case, however, it is a mystery how some employers, who are currently able to take various means to avoid severance pay, will act to pay such an aggregate additional cost.


It should be noted that the regulation to be introduced has not been fully clarified and has not been enacted.

From a worker's point of view, unless there is a reduction in the severance pay, it can be a positive regulation to create funds and guarantee the receivables. Because the employer's bankruptcy and so on. workers may lose their rights due to reasons.

It can be positive in reducing the workload of courts and eliminating the victim's grievance due to long court processes.

However, there may be a possibility of a decrease in the said amount, as this regulation is especially at the request of employers. Or, as the state supports 25% of individual pensions, it should also ensure that the reduction in employee compensation can be minimized or minimized.


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Severance Pay Fund