Kıdem Tazminatı (Turkish Severance Pay) is the statutory lump-sum payment required by Turkish employment law (İş Kanunu, Law No. 4857) upon termination of employment in defined circumstances — a fundamental cost component of Turkish employment that differs structurally from U.S. at-will employment and most other jurisdictional severance frameworks. Kıdem tazminatı is one of the most consequential cost considerations for foreign companies operating in Türkiye and Turkish startups planning team expansion or restructuring.
Eligibility for kıdem tazminatı requires at least 1 year of continuous service with the same employer AND termination in a qualifying circumstance: (i) employer termination without cause — including all dismissals other than for serious cause as narrowly defined in Article 25 of İş Kanunu; (ii) employee termination for cause — including health reasons, employer misconduct, non-payment of wages, harassment, force majeure (employee-side termination triggers under Article 24); (iii) retirement — upon reaching statutory retirement age and meeting service requirements; (iv) death of employee — payment to legal heirs; (v) military service obligation; (vi) marriage of female employees within 1 year of marriage (a controversial but still-applicable provision); and (vii) certain other statutory circumstances.
The calculation formula: 30 days of gross monthly wages per year of service, with partial years pro-rated. “Gross monthly wages” includes base salary plus regular/recurring benefits (transportation, meal allowances, recurring bonuses pro-rated) but excludes one-time payments. The amount is subject to a statutory cap (kıdem tazminatı tavan tutarı) — updated semi-annually by the government to track inflation, currently approximately TRY 41,828.42 per year of service (as of H1 2025; updated regularly). Senior executives and highly-compensated employees often hit the cap, reducing severance below uncapped calculation.
Beyond kıdem tazminatı, additional Turkish-employment-termination obligations include: İhbar Tazminatı (Notice Payment) — typically 2–8 weeks of pay depending on service length, payable when notice period is not honored; Annual leave compensation — payment for accrued but unused annual leave; Severance for bad-faith dismissal (kötü niyet tazminatı) — additional damages for terminations motivated by improper purposes; Re-employment lawsuit (işe iade davası) exposure for employees with 6+ months service in workplaces with 30+ employees — successful suits result in mandatory reinstatement OR additional 4–8 months of wages as compensation; and Trade-union retaliation damages.
For Turkish startups planning team scaling, restructuring, or M&A transactions, kıdem tazminatı planning is operationally significant: (i) accrual provisioning — building balance-sheet provisions for accruing kıdem tazminatı exposure; (ii) M&A due diligence — quantifying buyer’s assumed kıdem tazminatı exposure across the target’s employee base; (iii) termination strategy — structuring “for cause” terminations under İş Kanunu Article 25 (very narrowly construed by Turkish courts) where applicable; (iv) settlement vs. litigation economics in employee-departure disputes; and (v) international-team coordination — Turkish kıdem tazminatı for Turkish employees vs. distinct frameworks for U.S./EU team members. Vircon Legal advises Turkish startups and international companies operating in Türkiye on kıdem tazminatı strategy, employment-termination architecture, M&A employment-cost analysis, dispute-prevention program design, and the integration of Turkish employment costs with broader international workforce planning.