Supreme Court precedent: Mandatory unpaid leave during the pandemic will be counted towards severance pay.

20.09.2025 17:03

The 9th Civil Chamber of the Court of Cassation has ruled that the periods spent on unpaid leave during the pandemic will be counted for the calculation of severance pay and annual leave for employees. Social Security Chief Expert İsa Karakaş commented on the decision, stating, "With this ruling, hundreds of thousands of employees will be able to receive their severance pay and annual leave that were underpaid."

The Supreme Court's 9th Civil Chamber made an important decision regarding the unpaid leave of employees by employers during the pandemic period. In its decision dated May 29, 2025, the Chamber ruled on the conditions under which the periods of unpaid leave would be taken into account in the calculation of severance pay and annual leave rights.

UNPAID LEAVES DURING THE PANDEMIC WILL COUNT TOWARDS SEVERANCE PAY

According to the decision, during the pandemic period, the periods spent on unpaid leave under the temporary Article 10/2 added to the Labor Law No. 4857 will be counted as service time for the employee in the calculation of severance pay and annual paid leave, provided that it does not exceed the 6 weeks added to the notification period. However, unpaid leaves exceeding this period will not be considered in the calculation of severance and annual leave. Thus, a new perspective will emerge in determining the severance pay and annual leave rights of employees who were put on unpaid leave for a long time during the pandemic period.

"THOUSANDS OF EMPLOYEES WILL BE ABLE TO RECEIVE THEIR UNDERPAID SEVERANCE PAY AND ANNUAL LEAVE"

Social Security Chief Expert İsa Karakaş, who evaluated the issue, stated that the unpaid leaves applied during the pandemic were taken to court to reflect on severance pay and annual leave calculations. Karakaş mentioned that different decisions were made by regional courts on this issue and that the matter was brought to the Supreme Court, stating, "Indeed, the Supreme Court has made its new decision, and with this decision, hundreds of thousands of employees will be able to receive their underpaid severance pay and annual leave. This precedent decision is a turning point and fills a very important gap," he said.

"A SITUATION HAD ARISEN AS IF EMPLOYEES HAD NOT WORKED AT ALL"

Karakaş stated that the unpaid leave application is not counted towards severance pay under normal circumstances, and since the service contract is considered suspended during the unpaid leave, it is not taken into account in the period for determining annual leave. He noted, "Therefore, during the pandemic period, many employers did not consider these periods in both the severance pay calculation period and the annual leave calculation period. For employees, it created a situation as if they had not worked at all, which led to a significant psychological distress for them."

"THE DISPUTE ARISING IN REGIONAL COURT DECISIONS HAS BEEN REFERRED TO THE SUPREME COURT"

Karakaş referred to the decisions made by regional courts on the issue, stating, "Some regional appellate courts ruled that since it was unpaid leave, it should not be considered in the periods for severance pay and annual leave. Some regional appellate courts, however, ruled that this would result in a significant loss of rights for employees and that it should be considered as 6 weeks plus notification periods due to the existing victimization. Indeed, the dispute arising from all these regional appellate court decisions and the different rulings on the issue has been referred to the Supreme Court."

"THE SUPREME COURT DECIDED THAT THE PERIODS OF UNPAID LEAVE SHOULD BE DETERMINED ACCORDING TO NOTIFICATION PERIODS"

Karakaş stated that the Supreme Court took into account that the mandatory unpaid leave application during the pandemic occurred outside the will of the employee and the employer. He expressed, "The Supreme Court ruled that it would not be fair for the employee to bear all the losses in terms of severance pay and annual leave. Furthermore, even though the mandatory unpaid leave was legally initiated by the employer, the employer was also compelled to resort to this path, and it would not be correct to place the entire burden on the employer; thus, a more equitable, fair, and balanced decision should be made. In the decision, it was ruled that the periods of mandatory unpaid leave determined by the government should be based on notification periods and that 6 weeks should be added to these periods, while the parts exceeding this should not be taken into account."

"IF EMPLOYEES GO TO COURT, THEY WILL WIN THEIR CASES WITH THE PRECEDENT DECISION"

Speaking about the effects of the decision, Karakaş said, "If employees are still working, our advice to employers is to consider the notification periods plus 6 weeks in the calculation of severance pay and annual leave. If employees go to court, they will win their cases with this precedent decision. Therefore, employers will unnecessarily incur court costs and paperwork fees. As for employees who have been terminated, there is a 5-year statute of limitations. Within this 5-year statute of limitations, they can go to court and claim their unpaid rights. The 5-year statute of limitations covers the 5 years following their termination."

"EMPLOYEES WHO HAVE NOT BEEN COUNTED IN SEVERANCE PAY AND ANNUAL LEAVE SHOULD REQUEST THEIR UNPAID LEAVE DAYS FROM THE EMPLOYER"

Karakaş also spoke about the steps employees should take regarding the process, stating, "Employees should first go to their employer and show the precedent decision, saying, 'My period of unpaid leave has not been taken into account in the calculation. I request the difference in my unpaid annual leave and severance pay for this period.' If the employer rejects this, we can say that it is possible for them to win through legal means."