Discussions have revived on the severance payment system in Turkey, which has been one of the topics on the government agenda to make changes for a more comprehensive system that will include different arrangements to guarantee that all workers will be paid as required. Very few workers are able to receive severance pay in the current system, with or without membership in labor unions, as shown by several surveys.
The labor unions, meanwhile, have been protesting the move by the government on integrating the severance payment into the pension insurance system (TES). Seventy-six percent of the labor force, including members of the labor unions, emphasized that they want the current system to be changed as they do not get paid under it for several reasons.
Most recently, following a meeting on June 16 with President Recep Tayyip Erdoğan, Minister of Family, Labor and Social Services Zehra Zümrüt Selçuk, Union of Chambers and Commodity Exchanges of Turkey (TOBB) Chair Rifat Hisarcıklıoğlu, Confederation of Employers' Unions of Turkey (TISK) Chair Özgür Burak Akyol, Confederation of Turkish Trade Unions (TÜRK-IŞ) Chair Ergün Atalay and HAK-IŞ Trade Union Confederation Chair Mahmut Arslan in the capital Ankara, the details of the TES came to fore again.
Erdoğan, stressing that not all workers get paid in the current system, said at the time that the aim is "to create a permanent and a guaranteed system without leaving the severance payment right of the workers to someone’s mercy."
In the current system, the rate of workers receiving severance pay remains at 14% and not all employees can benefit from this right for various reasons.
The TES was aimed at both protecting existing rights acquired in current severance pay, the legal nature of which is frequently discussed, and providing additional pension support, according to a previous report by Anadolu Agency (AA) that examined the details of the system.
In the new model, the 5.33% severance pay right is preserved under the old severance pay provisions, while the 3% employer contribution will be deposited monthly into the employee's account. Thus, if the employee terminates his or her contract and qualifies for severance pay, he or she will be paid a 5.33% severance payment (19 days of wages per year worked) and a 3% premium will be kept in the fund account.
If an employee's employment or service contract expires due to situations that do not comply with the rules of ethics and goodwill, 50% of the total contribution of the employer and the state contribution will be transferred to the TES insurance account and 50% will be kept as a vested right in the employee's account.
When the employee resigns, the amount in the individual account will remain as a vested right, as well, without requiring a statement of a justified reason for the resignation.
Those who resign after Jan. 1, 2022, when the new legislation is expected to come into force, will also be able to receive past severance pay, and no transfer will be made to the new system.
The complementary retirement age was set at 60 as part of the newly announced system, however, there is no time limit for retirement. Since the contributions paid on behalf of the employee are included in the individual's account, each employee will be entitled to receive funds in his or her account when he or she reaches the retirement age, which means that it will make no difference whether an employee works for five years or 30 years. He or she will be paid within the scope of the savings in the individual account when turning 60 years old.
President Erdoğan, following the two-hour meeting in Ankara, asked labor unions to convey their objections to the economic management before the deadline and to come up with an agreed-upon model. However, no step toward a consensus was made by the unions.
TÜRK-IŞ announced last week that the arrangement for severance pay is "the reason for the general strike," organizing protests nationwide and labeling the severance pay system "a red line for the union."
Workers, united under the umbrella of TÜRK-IŞ and Confederation of Progressive Trade Unions of Turkey (DİSK) organized protests in several provinces across Turkey, including capital Ankara on Monday, demanding the government to give up plans to transfer severance pay to a new fund.
1 out of 2 workers do not get severance
According to research by the General Directorate of Labor, 49% of employees included in the survey stated that employers make their employees quit and reemploy them at other times in order not to pay severance.
The biggest problem occurs in the industry sector. Additionally, over 96% of those who do not receive severance pay do not want to sue. Around 42% of employees state that they did not accept new job offers despite good conditions in order not to lose their right to severance pay. While 77.6% of the employers complain about the current system, 75% say that one-off payments and wholesale payments cause financial difficulties.
In another survey conducted by the Turkish Employment Organization (IŞKUR), around 78% stated that they were laid off by their employer, 21.5% said they resigned and 57% said they failed to receive severance pay.
Most of the young people looking for a job stated that they are not satisfied with the existing seniority system and a new arrangement is needed.
Unionization ineffective
The IŞKUR research showed that being unionized does not help in getting severance pay. Accordingly, 51.9% of employees who are members of the union did not receive severance pay and 12% received only a part of the total amount. Only 35.8% received the entire severance pay.