Avoiding Overpayment and Fraud Risk: Severance & Notice Pay Exceptions in Turkey

Compliance in HR is not only about knowing when to pay but also about knowing when not to pay. Payments made without a legal basis can undermine organizational justice, create perceptions of favoritism, and even raise fraud or misuse of assets concerns. For employers, avoiding unnecessary severance and notice payments is both a compliance requirement and a financial safeguard. 

When Severance Pay Is Not Due

1. Voluntary Resignation Without Just Cause

• Rule: Employees who resign on their own initiative, without a legally recognized reason under Labour Law Article 24, are not entitled to severance pay.
• Note for HR: Only resignations for “just causes” (e.g., health reasons, military service, marriage within one year for female employees, retirement) qualify.

2. Termination for Serious Misconduct (Article 25/II)

• Rule: If an employee is terminated for serious misconduct (e.g., theft, fraud, sexual harassment, disclosure of trade secrets), they lose both severance and notice pay.
• Tip: Always document termination grounds in writing to reduce dispute risk. 

3. Probationary Period Termination (Article 15)

• Rule: During the probationary period (up to 2 months, or 4 months via a Collective Bargaining Agreement), either party may terminate the contract without severance or notice pay.
• HR Practice: Only wages for actual days worked are owed.

4. Fixed-Term Contract Expiry

• Rule: If a fixed-term contract expires naturally, no severance or notice is payable.
• Caution: If fixed-term contracts are repeatedly renewed to disguise a permanent employment relationship, courts may treat it as an indefinite-term contract, triggering severance rights.

When Notice Pay Is Not Due

1. Employee Resigns Without Notice

• Rule: Employees who resign without serving the statutory notice period cannot claim notice pay.
• Risk for Employees: They may even be required to pay notice compensation to the employer.

2. Termination for Just Causes (Articles 25/I, III, IV)

• Health Reasons (25/I): If the employee’s absence exceeds the statutory notice period + 6 weeks due to their own negligence or contagious illness → no notice pay (but severance still applies).
• Force Majeure (25/III): If an external event prevents work for over a week → no notice pay, severance applies.
• Detention/Arrest (25/IV): If absence exceeds the statutory notice period → no notice pay, severance applies.

3. Notice Period Fully Worked

• Rule: If an employee works the full statutory notice period, they already receive wages during this time. No additional notice pay is due.
• Reminder: This does not affect severance rights if other conditions are met.

Special Scenarios

Mutual Termination

• Rule: In a mutual termination agreement, terms depend on what the parties sign.
• Court Practice: For validity, The Court of Cassation requires a “reasonable benefit” to the employee, beyond standard entitlements.

HR Compliance Checklist

✔️ The termination reason is legally valid and documented.
✔️ The resignation does not fall under severance-entitled “just causes.”
✔️ The notice period was worked or lawfully waived.
✔️ Job search leave (Article 27) was granted or compensated.
✔️ Probationary termination followed legal rules.
✔️ Fixed-term contracts are not disguised indefinite contracts.
✔️ Mutual termination agreements include clear terms and employee benefit.

Conclusion

Turkish Labour Law requires careful attention not only to employee rights but also to employer obligations. Understanding when severance and notice pay are not due prevents overpayments, protects organizational justice, and mitigates fraud risk. For HR professionals, the key is compliance + documentation: every decision should be legally grounded, clearly recorded, and fairly applied.