What Is Notice Pay?
Notice pay is compensation, equal to the wage for the notice period, that must be paid when an indefinite-term employment contract is terminated without observing the notice periods. Its legal basis is Article 17 of the Turkish Labour Law No. 4857 (İş Kanunu). This article requires both the employer and the employee to give the other party a certain period of advance notice before terminating the contract. The aim is to grant a reasonable transition period — to the departing employee for finding a new job, and to the terminating employer for finding a replacement.
An important point is this: notice pay is a mutual obligation. In other words, whichever party fails to observe the notice periods — whether the employee or the employer — becomes liable to pay notice pay to the other party. In this respect, notice pay differs from severance pay, which arises only in favour of the employee.
Legal Basis and Notice Periods
Article 17 of the Labour Law provides for graduated notice periods based on the employee's length of service, running from the point the termination is notified to the other party. These periods are minimums and may be increased by the contract or by a collective bargaining agreement; however, they cannot be reduced to the employee's detriment. The tiers in force are as follows:
- For an employee working less than 6 months: 2 weeks
- For an employee working between 6 months and 1.5 years: 4 weeks
- For an employee working between 1.5 and 3 years: 6 weeks
- For an employee working more than 3 years: 8 weeks
The party wishing to observe the notice period grants this period to the other party in advance, and the contract ends when the period expires. The party that does not wish to observe the period may terminate the contract immediately by paying, in a lump sum, the wage corresponding to the notice period. This lump-sum payment is precisely what notice pay is.
How Is Notice Pay Calculated?
The essence of the calculation is simple: first the notice period corresponding to the employee's length of service is determined in weeks, and then this period is multiplied by the daily gross wage. The wage used in the calculation is not merely the bare (base) salary; it is the "dressed-up" gross wage that also includes continuing supplementary benefits such as regularly paid bonuses, premiums, transport and meal allowances.
The steps are as follows:
- 1. Determine the notice period: 2, 4, 6 or 8 weeks depending on length of service.
- 2. Convert the period to days: each week is taken as 7 days (for example, 6 weeks = 42 days).
- 3. Find the daily gross wage: divide the monthly dressed-up gross wage by 30.
- 4. Multiply: number of days × daily gross wage = gross notice pay.
The amount obtained is gross; income tax and stamp duty are deducted from it. Unlike severance pay, notice pay is not exempt from income tax; for this reason the net amount may come out significantly lower than the gross. Stamp duty, on the other hand, is applied to both types of compensation.
A Short Example Scenario
The contract of an employee who has worked for 2.5 years and whose monthly dressed-up gross wage is 30,000 TL is terminated by the employer without observing the notice period. Since the length of service falls within the 1.5–3 year range, the notice period is 6 weeks (42 days). The daily gross wage is 30,000 / 30 = 1,000 TL. The gross notice pay = 42 × 1,000 = 42,000 TL. The net payment is found by deducting income tax and stamp duty from this amount. These figures are example values given only to illustrate the method.
In Which Cases Is There Entitlement to Notice Pay?
The basic condition for entitlement to notice pay is that the contract has been terminated without observing the notice periods. Conversely, notice pay does not arise in certain situations:
- The contract must be of indefinite term. In fixed-term contracts, notice pay does not, as a rule, arise; such contracts end automatically at the expiry of the term.
- Notice pay does not arise in immediate termination for just cause. If the employer terminates for just cause under Article 25/II of the Labour Law (breach of morality and good faith rules), no notice pay is owed to the employee. Likewise, if the employee leaves for just cause under Article 24, they are not obliged to pay notice pay to the employer.
- An employee who resigns cannot, as a rule, receive notice pay; on the contrary, if they leave without observing the notice period, they may themselves be required to pay notice pay to the employer.
- If the employee is dismissed without being given a notice period or without a lump-sum payment in lieu of the period, they become entitled to notice pay.
Unlike severance pay, there is no minimum length-of-service requirement for notice pay; even an employee working less than 6 months may become entitled to notice pay where the notice period is not observed.
Points to Watch and Common Mistakes
The most frequently encountered mistakes in practice are as follows:
- Calculating on the bare wage: calculating the compensation only on the base salary is a common mistake. The dressed-up gross wage, to which regular premiums, bonuses, transport and meal benefits are added, must be used as the basis.
- Confusing severance with notice pay: severance pay is calculated at 30 days' wage for each full year and only in favour of the employee; notice pay is based on weekly notice periods and is two-directional. The conditions and calculation of the two types of compensation differ from one another.
- Ignoring tax: people forget that notice pay is not exempt from income tax and, mistaking the gross amount for the net, set up wrong expectations.
- Missing the limitation period: the notice pay receivable is subject to a 5-year limitation period running from the date of termination. Once this period is missed, the right to sue is weakened.
- Job-search leave during the notice period: an employee granted a notice period must be given at least 2 hours of paid job-search leave per day during that period; if it is not granted, a separate claim may arise.
The calculation made with this tool is approximate and for information purposes. The scope of the dressed-up wage, the reason for termination, the supplementary benefits paid and the current tax rates directly affect the outcome. For your specific situation, obtaining professional support from an employment lawyer is important to avoid a loss of rights.