A divergence emerged among the decisions of the regional courts of appeal concerning whether the period an employee spent on unpaid leave during the COVID-19 pandemic should be included in the calculation of the service period that forms the basis for annual paid leave and severance pay. As a result of this disagreement, the matter was brought before the High Court (Supreme Court of Appeals).

In its ruling dated 29.05.2025, numbered 2025/3201 E. and 2024/1108 K., the 9th Civil Chamber of the Supreme Court held that, in determining the periods that serve as the basis for annual paid leave and severance pay, the time an employee spent on unpaid leave during the pandemic under the scope of provisional Article 10/2 added to Law No. 4857 should be taken into account, provided that it does not exceed the duration formed by adding six weeks to the statutory notice period. Any period exceeding this limit shall not be included in the calculation of the service period.

With Law No. 7553 which was published in the Official Gazette dated July 14, 2025 and entered into force on the same day, two important amendments were introduced to the Labour Law dated May 22, 2003 and numbered 4857, which are summarized below.

According to the Circular dated July 7, 2025 and numbered 27998389-010.06.02-4098345 published by the Ministry of Treasury and Finance with the subject ‘Financial and Social Rights’, the coefficients used to calculate the wage of a public officers have been revised effective July 1, 2025.

Income Tax Exempted Severance Pay

The decision of the Constitutional Court dated November 5, 2024 with file no 2023/158 and decision no 2024/187 ("Decision") was published in the Official Gazette numbered 32837 on March 10, 2025.

Article 27(1) of the Law on Private International Law and Procedural Law ("PIL") states "Employment contracts shall be subject to the law chosen by the parties, provided that the employee retains the minimum protection afforded by the mandatory provisions of the law of the habitual workplace.".