Payment in Lieu of Notice

Payment in lieu of notice (ihbar tazminatı) is compensation under Article 17 of the Labour Law paid by the party terminating an indefinite-term contract without observing the notice period. It equals wages for the notice period and may arise for either employer or employee.

Who Can Claim?

• Employee: Receives notice pay where the employer terminates without observing the notice period and without just cause.
• Employer: May claim notice compensation from an employee who resigns without just cause and without observing the notice period.

No notice pay arises for terminations for just cause, terminations during the probation period or fixed-term contracts ending on expiry.

Calculation

Notice pay is calculated on the employee’s gross wage including regular benefits: regular monetary and money-measurable benefits such as meal and transport allowances and bonuses are added to the last gross wage. For example, an employee with more than three years’ service receives eight weeks’ wages. Notice pay is subject to income tax and stamp duty. Unlike severance pay, no cap applies.

Relationship with Bad Faith Compensation

Where the right to terminate is abused, an employee not covered by job security receives, in addition to notice pay, bad faith compensation equal to three times the wages for the notice period.

Limitation and Mediation

Notice pay claims are subject to a five-year limitation period from the end of the contract. Applying to a mediator is mandatory before filing a claim; see the Mandatory Mediation Guide.