The severance pay ceiling is one of the most critical elements of employment cost planning in Turkey, particularly for employers managing long-term staff, senior executives, or workforce restructuring. For the first half of 2026, the severance framework has been updated following an official circular issued by the Ministry of Treasury and Finance, introducing revised coefficients and a newly calculated income tax–exempt severance amount.
This amendment is not merely a technical adjustment. It directly impacts termination liabilities, payroll compliance, accounting provisions, and employee entitlements. Employers who fail to apply the updated figures correctly may face compliance risks, disputes, or financial misstatements.
This article explains the 2026 I. Period severance ceiling, the income tax–exempt severance amount, the legal basis of the amendment, and the practical implications for employers and employees for the period between January 1 and June 30, 2026.
Understanding Severance Pay in Turkey
Under Turkish Labor Law, employees working under an indefinite-term employment contract may be entitled to severance pay if certain statutory conditions are met, such as:
- Termination by the employer without just cause
- Resignation for legally justified reasons
- Retirement or eligibility for retirement
- Completion of military service
- Death of the employee
Severance pay is calculated as 30 days of gross wage for each completed year of service, including regular benefits that qualify as wage components.
However, this calculation is subject to a statutory upper limit, known as the severance pay ceiling.
What Is the Severance Pay Ceiling?
The severance pay ceiling sets the maximum gross monthly amount that can be used as the basis for calculating severance pay per year of service, regardless of how high the employee’s actual salary may be.
In practice:
- If an employee’s gross monthly wage is below the ceiling, severance is calculated on the actual wage.
- If the wage is above the ceiling, severance is calculated only up to the ceiling amount.
This ceiling is binding for all employers in Turkey and applies equally in the private sector, even though it is derived from public sector wage parameters.
Legal Basis: Public Officer Wage Coefficients
The severance ceiling is closely linked to the wage structure of senior public officers. Accordingly, it is revised in line with changes to public sector salary coefficients.
Official Circular Dated January 6, 2026
According to the Circular dated January 6, 2026 and numbered 27998389-010.06.02-4481518, published by the Ministry of Treasury and Finance under the subject “Financial and Social Rights”, the coefficients used in the calculation of public officers’ wages have been revised effective January 1, 2026.
These revised coefficients form the legal and mathematical basis for recalculating the severance pay ceiling applicable in the first period of 2026.
2026 I. Period Income Tax–Exempt Severance Pay Amount
Taking into account the revised coefficients announced in the January 6, 2026 Circular, the authorities have recalculated the maximum severance pay amount that is exempt from income tax.
Applicable Period
- January 1, 2026 – June 30, 2026
Income Tax–Exempt Severance Pay Ceiling
- 64,948.77 TRY
This amount represents the maximum severance pay per year of service that can be paid without being subject to income tax during the first half of 2026.
It is important to note that:
- Severance pay in Turkey is already exempt from income tax up to the legal ceiling
- Only stamp tax applies to severance payments
- Any contractual severance exceeding the statutory ceiling may lose its preferential tax treatment
Practical Severance Calculation Using the 2026 Ceiling
To correctly apply the 2026 I. Period severance ceiling, employers should follow these steps:
- Identify the employee’s gross monthly wage
- Compare it with the 64,948.77 TRY ceiling
- Use the lower of the two figures
- Multiply by the number of completed service years
- Apply stamp tax only
Example
- Employee gross monthly wage: above 64,948.77 TRY
- Length of service: 8 years
Severance pay calculation:
64,948.77 TRY × 8 years
The employee’s actual salary is irrelevant once it exceeds the ceiling.
Financial Impact on Employers
Increased Termination Costs
The amendment of the severance ceiling for the first period of 2026 results in higher severance liabilities, particularly for:
- Senior management
- Long-tenured employees
- High-income professionals
Companies planning workforce reductions, restructuring, or executive exits in 2026 must factor in the updated ceiling when estimating termination costs.
Accounting and Provisioning Implications
Severance pay constitutes a long-term employee benefit liability under accounting standards. The revised ceiling affects:
- Severance provisions on balance sheets
- Actuarial calculations
- Budget forecasts and cash-flow planning
Failure to update assumptions may lead to under-provisioning and audit findings.
Impact on Employees
For employees, the amended severance ceiling means:
- Higher potential severance payouts
- Better inflation-adjusted compensation protection
- Increased financial security upon termination
This is especially relevant for employees whose wages significantly exceed the statutory ceiling and who have accumulated many years of service.
Private Sector Application Despite Public Sector Origin
Although the severance ceiling is calculated based on public officer salary coefficients, it is mandatory for private sector employers.
Private companies:
- Cannot apply a lower ceiling
- Must respect the statutory threshold
- May voluntarily offer additional severance, but outside the legal framework
Only the portion up to 64,948.77 TRY per year of service benefits from statutory treatment for the 2026 I. Period.
Importance for Foreign Companies and EOR Structures
Foreign companies employing staff in Turkey—whether through local entities or Employer of Record (EOR) models—must apply the updated ceiling correctly.
Common risks include:
- Using outdated severance figures
- Applying foreign severance policies inconsistent with Turkish law
- Underestimating exit costs during workforce planning
EOR providers are expected to reflect the updated ceiling in payroll, termination calculations, and client reporting.
Strategic Considerations for HR and Legal Teams
The severance ceiling often influences termination timing and negotiation strategy. Employers may:
- Accelerate or delay terminations based on ceiling updates
- Adjust settlement negotiations
- Review employment contracts and severance clauses
For 2026, awareness of the January–June ceiling is particularly important, as a new revision may occur in July.
Monitoring the Second Period of 2026
Turkey traditionally updates public wage coefficients—and therefore the severance ceiling—twice per year.
Employers should:
- Monitor announcements for July–December 2026
- Prepare payroll and HR systems for mid-year changes
- Communicate clearly with employees when thresholds change
Access to the Official Circular
To access the full official circular in which these announcements were made, please click here.
(Document available in Turkish)
Need Assistance?
Should you have any questions regarding:
- Severance calculations
- Payroll compliance
- Employment termination planning
- Employer of Record services in Turkey
Please contact your customer representative for tailored guidance.
The 2026 First Period severance pay ceiling amendment, based on the January 6, 2026 Circular of the Ministry of Treasury and Finance, introduces an income tax–exempt severance threshold of 64,948.77 TRY, applicable from January 1 to June 30, 2026.
For employers, HR professionals, payroll managers, and foreign companies operating in Turkey, this update is not optional—it is a core compliance requirement. Correct implementation ensures legal certainty, financial accuracy, and smoother employee exits in an increasingly regulated employment landscape.