Turkish labor law termination and compensation regulations

Turkish labor law outlines specific regulations regarding termination, notice pay, and bad faith compensation. Employees terminated due to the misuse of termination rights—such as discrimination based on pregnancy, marriage, race, gender, or union membership—may be entitled to bad faith compensation. In workplaces with fewer than 30 employees, where reinstatement is not an option, this compensation is calculated as three times the notice period.

Notice pay serves as a reciprocal obligation when a contract is terminated without prior notice. The duration of the notice period is determined by seniority: two weeks for under six months of service, four weeks for six months to 1.5 years, six weeks for 1.5 to 3 years, and eight weeks for over three years. Legal limits established by the Court of Cassation (Yargıtay) dictate that the total compensation cannot be increased indefinitely; the upper limit is the sum of the notice period and the bad faith compensation. For employees with over three years of service, this maximum is 32 weeks. While notice pay is subject to income and stamp tax, bad faith compensation is subject only to a stamp tax of 0.759 percent. Additionally, employees facing termination are entitled to two hours of daily job-seeking leave.

A recent Yargıtay ruling has expanded the definition of wages by establishing that regular and continuous tips must be treated as part of an employee’s wages. This decision impacts service sector workers in restaurants, cafes, and hotels, as these earnings must now be included in calculations for severance pay and overtime. Social Security Expert İsa Karakaş warned that employers failing to report these tips to the Social Security Institution (SGK) face administrative fines exceeding 66,000 TL per unreported month and the potential loss of minimum wage support incentives. Correct reporting is also expected to increase future retirement pensions for employees.