Frequently Asked Questions About the Severance Pay Fund

Severance Pay Ceiling for 2026

Severance pay remains one of the most frequently discussed topics in employment law. This section explains what severance pay is, outlines the updated ceiling amounts for 2026, and summarizes the latest developments regarding the proposed severance pay fund.

What Is Severance Pay?

Severance pay is a legal compensation paid by an employer to an employee who has worked for the same employer for at least one year, provided that the employment contract ends for one of the reasons specified in Article 14 of the former Labor Law No. 1475. These reasons include unfair dismissal, retirement, compulsory military service, resignation due to marriage, or termination for a justified reason. Employees are entitled to compensation equal to 30 days of their gross salary for each completed year of service.

Severance Pay Ceiling as of July 2026

The maximum amount of severance pay is revised twice each year—in January and July—based on changes in the civil servant salary coefficient. During the first half of 2026, the ceiling was set at TRY 64,948.77, while for the period between July and December 2026 it increased to TRY 73,729.87.

What Is the Current Status of the Severance Pay Fund?

The severance pay fund proposal introduced in 2022 has not been enacted into law. Therefore, severance pay continues to be paid directly by employers under the existing legal framework.

Instead, current discussions focus on the Complementary Pension System (TES). Included in the Medium-Term Program (2026–2028) published by the Presidency of Strategy and Budget on September 7, 2025, TES aims to transform the current Automatic Enrollment System (OKS) into a second-tier pension scheme by introducing employer contributions.

The current legal situation can be summarized as follows:

The official Medium-Term Program does not contain any provision abolishing severance pay or transferring it entirely into a fund.
Although TES was planned to enter into force during the second quarter of 2026, the required legislation and implementation details had not yet been published in the Official Gazette as of July 2026.
Severance pay continues to be governed by Article 14 of Labor Law No. 1475 under the existing legal rules.

In short, the former severance pay fund proposal has not been implemented. While TES is expected to introduce a new pension model, it has not yet become law and does not currently affect employees' severance pay rights.

Note: This information is current as of July 9, 2026. Updates regarding TES should be monitored through official announcements issued by the Ministry of Labor and Social Security.

When Are Employees Entitled to Severance Pay?

Employees become eligible for severance pay when their employment relationship ends under the conditions established by law. However, employees dismissed due to misconduct or violations of workplace rules are generally not entitled to receive severance compensation.

According to Labor Law No. 4857, employees may qualify for severance pay under circumstances such as:

Resignation for justified health-related reasons;
Leaving employment to perform compulsory military service;
Female employees resigning within one year after marriage;
Retirement after fulfilling the statutory retirement requirements.

What Is the Severance Pay Fund?

The severance pay fund refers to a proposed system under which employers would deposit severance contributions into a centralized fund rather than paying compensation directly when employment ends.

Under the current system, employees must satisfy specific legal conditions to qualify for severance pay, including completing at least one year of service and leaving employment for legally recognized reasons. Retirement, military service, and marriage are among the circumstances that may create eligibility.

Under the proposed model, employers would begin contributing to the employee's severance account from the first day of insured employment. Consequently, employees would retain their accumulated severance rights even if they changed jobs. One of the main objectives of the proposal is to protect employees' severance entitlements regardless of changes in employment.

Can Employees Receive Severance Pay If They Resign?

Under the existing legal framework, employees who voluntarily resign are generally not entitled to severance pay. An exception exists if the resignation is based on a legally justified reason.

Male employees leaving employment for compulsory military service and female employees resigning within one year of marriage are also eligible to receive severance compensation.

Employer organizations argue that the current system should remain unchanged, believing that allowing all resigning employees to receive severance pay could encourage experienced workers to change jobs more frequently. Future legislative decisions on this issue will therefore be significant for both employers and employees.

2026 Severance Pay Ceiling

For the period between July 1 and December 31, 2026, the maximum severance pay payable for each completed year of service is TRY 73,729.87 (gross). This represents the highest amount that may legally be paid for one year of employment.

What Happens If an Employer Fails to Pay Contributions?

One of the major concerns regarding the proposed severance pay fund is the possibility that employers may fail to make the required contributions.

Labor unions argue that if employers do not deposit contributions regularly, employees' severance rights could be jeopardized. They point out that collection problems already exist in relation to taxes and social security premiums, raising concerns about the effectiveness of a contribution-based fund system.

Would Employees Receive Severance Pay Immediately After Dismissal?

Under the current system, severance pay is generally paid immediately after the employment contract ends.

Under the proposed fund model, however, a different approach was suggested. According to the proposal, employees would be able to withdraw half of the accumulated funds after at least 15 years of participation or upon purchasing their first home. The remaining balance would become available upon retirement or after reaching the age of 56.