Method Of Calculating The Salary To Be Used As The Basis For Severance Pay
Summary:
It is accepted that the amount per day will be determined by dividing the total payments made in the last year by 365 when reflecting monetary benefits other than wages or benefits that can be measured in monetary terms in compensation (9th Civil Chamber, September 29, 2005, Case No. 2005/342 E, 2005/31714 K., Supreme Court 9th Civil Chamber, April 12, 1999, Case No. 1999/5910 E, 1999/7119 K.). For monetary rights that do not have a periodic nature, it is appropriate to determine the amount per day by dividing the payments made during the year by 365 days. For example, the trip (road) bonus received by a truck driver during the year may vary continuously, and it may be difficult to use a specific period as the basis for calculation. On the other hand, it is unlikely that the allowance paid to the worker twice a year during religious holidays is made for a specific period. In this case, dividing the annual payment amount by 365 is appropriate. Finally, it should be noted that monetary assistance paid once a year (such as fuel assistance) will be reflected in the base salary for compensation and will be calculated by dividing the annual amount by 365.
T.C.
Supreme Court
9th Civil Chamber
Case No: 2014/22935
Decision No.: 2015/33774
Date: 30.11.2015
SUPREME COURT DECISION
A) Summary of the Plaintiff’s Claim:
The plaintiff, who worked as a rodding machine operator at the defendant’s workplace, claimed that the employment contract was unjustly terminated by the employer, that although some payments were made, they were insufficient, and sought notice compensation. In the consolidated case, the plaintiff sought the collection of the seniority compensation owed.
B) Summary of the Defendant’s Response:
The defendant argued that the severance and notice pay owed to the plaintiff were paid upon the termination of the employment contract and requested the dismissal of the case.
C) Summary of the Local Court’s Decision:
Based on the evidence gathered and the expert report, the court ruled in favor of the plaintiff, stating that the payment made by the defendant employer after the termination was insufficient and that the plaintiff was entitled to the difference in seniority and notice compensation.
D) Appeal:
The defendant appealed the decision.
E) Grounds:
1- Based on the documents in the file, the evidence gathered, and the legal grounds on which the decision is based, the defendant’s appeals outside the scope of the following clause are unfounded.
2- There is a dispute between the parties regarding the salary to be taken into account in the calculation of seniority compensation.
The wage to be used as the basis for calculating severance pay is the employee’s last wage. In other words, it is the wage in effect at the time the employment contract was terminated. In the case of termination with notice, since the termination occurs on the date the notice period ends, the wage on the date the notice period ends should be used as the basis. In cases where the employer terminates the employment contract without providing notice and without paying severance pay (or without paying it in full), the employee whose employment contract is terminated must also benefit from any wage increases implemented at the workplace up to the end of the notice period, and the severance pay must be calculated based on this increased wage.
The wage to be considered in calculating severance pay is the employee’s gross wage. Therefore, severance pay is calculated based on the gross wage determined without deductions such as social security contributions, taxes, and union dues, rather than the actual wage received by the employee.
The monthly wage used as the basis for severance pay should be determined by multiplying the hourly wage by seven and a half, and then by thirty. On the contrary, it is not correct to calculate the monthly wage based on the number of days the employee actually worked.
The concept of the last wage refers to the last wage earned by the employee within the scope of the employment relationship. In the event of the suspension of the employment relationship and the termination of the employment contract during the suspension period, the wage to be considered in the calculation of severance pay should be the last wage earned before the suspension of the employment contract.
Our Chamber has consistently ruled that the period of up to four months during the trial of a reinstatement case shall be added to the length of service (Supreme Court 9th Civil Chamber, October 3, 2005, Case No. 2005/16932, Decision No. 2005/31926). Similarly, our Chamber has ruled that the date on which the employee is informed that they will not be hired or the end of the one-month probationary period is considered the date of termination. Therefore, the seniority compensation ceiling applicable on the date of termination must be taken into account. Similarly, the wage to be used as the basis for compensation must be the wage applicable on the date of termination, in accordance with the provisions of Article 14 of Law No. 1475.
In determining the wage to be used as the basis for severance pay, in addition to the basic wage referred to in Article 32 of the Labor Law No. 4857, any monetary or monetarily measurable benefits provided to the employee are also taken into account. Accordingly, bonuses, regular commissions, fuel allowances, clothing allowances, rent, lighting, transportation allowances, meal allowances, and similar payments are taken into account in the calculation of severance pay. Special health insurance benefits or life insurance premium payments provided to the employee are also included in the concept of benefits that can be measured in monetary terms and should be added to the base wage for severance pay. Although bonuses calculated based on sales figures or other data may vary, they should be evaluated within the concept of expanded wages in the calculation of severance pay.
Benefits such as protective clothing provided to the employee, towels and soap provided for use at the workplace, occasional overtime, national holiday general leave, and weekly leave entitlements are not taken into account.
In practice, it is observed that payments are made under the name of travel allowance based on the distance traveled, especially for truck drivers. In most cases, a fixed wage at the minimum wage level is paid, and the main part of the wage is provided through the specified allowances. It is not possible to accept that a truck driver traveling abroad works only at the minimum wage level. Therefore, payments made under the name of travel allowance must also be taken into account when determining the base wage for compensation. Our Chamber’s decisions have been consistent in this regard. (Supreme Court 9th Civil Chamber, February 7, 2005, Case No. 2005/950, Decision No. 2005/3328.)
In our Chamber’s decisions, it is accepted that the amount per day shall be determined by dividing the total payments made in the last year by 365 when reflecting monetary or monetarily measurable benefits other than wages in the compensation (9th Civil Chamber, September 29, 2005, Case No. 2005/342 E, 2005/31714 K., Supreme Court 9th Civil Chamber, April 12, 1999, Case No. 1999/5910 E, 1999/7119 K.). For monetary rights that do not have a periodic nature, it is appropriate to determine the amount per day by dividing the payments made during the year by 365 days. For example, the trip (road) bonus received by a truck driver during the year may vary continuously, and it may be difficult to use a specific period as the basis for calculation. On the other hand, it is unlikely that the allowance paid to the worker twice a year during religious holidays is made for a specific period. In this case, dividing the annual payment amount by 365 is appropriate. Finally, it should be noted that monetary assistance paid once a year (such as fuel assistance) will be reflected in the base salary for severance pay and will be calculated by dividing the annual amount by 365.
Regarding monetary rights paid regularly and at specific intervals during the year, severance pay must be calculated based on the final wage. Since severance pay is calculated based on the employee’s final wage and the average of wages increased during the year is not taken into account, a similar solution should be sought regarding wage supplements. For example, if the three bonuses received by the employee during the year are based on the old wage and are therefore lower, but the final bonus is paid based on the employee’s final wage, the bonus to be considered in determining the wage basis for severance pay should be this final bonus. Calculating the bonus by dividing it by the number of days in the period to which the final bonus installment pertains is also fair. More specifically, if there are four bonus payments per year, each bonus is applied to a three-month period. Dividing the increased bonus by the 90 days it pertains to to determine the daily bonus amount would be more consistent with the legal rule that severance pay is calculated based on the final salary. The same application can also be made for payments such as travel and meal allowances. For such payments assumed to be made monthly, the amount per day should be determined by dividing the portion paid for the final month by the actual number of days worked. Accordingly, for periodic payments that have increased during the year, dividing the final period’s payment by the number of days in the relevant period would allow the amount to be reflected in the base salary for severance pay to be determined more accurately. Our Chamber’s decisions also align with this approach (Supreme Court of Appeals, October 10, 2008, Case No. 2007/27615 E, 2008/26209 K.).
In the present case, the expert report on which the judgment was based erred in calculating the plaintiff’s compensation-based salary by considering the amounts listed on the plaintiff’s last pay slip at the workplace, rather than the monthly average of the bonuses and fuel allowances paid to the plaintiff by the employer in the last year, which should have been taken into account. This error warrants the reversal of the judgment.
F) Conclusion:
The appealed decision was overturned for the reasons stated above, and it was decided by unanimous vote on November 30, 2015, that the advance appeal fee would be refunded to the relevant party upon request.