An ikale (termination agreement) is when employee and employer end the contract by agreement. It is a contract, not a termination, so consequences such as severance, notice, reinstatement and unemployment benefit do not arise automatically. As it is not regulated in the law, its validity conditions come from Court of Cassation case law.
Validity: the reasonable benefit test
- If the offer comes from the employer, paying only statutory entitlements (severance and notice) is not a reasonable benefit; for employees with job security an additional payment is generally expected.
- The amount is not set by law; seniority, pay, the employee's job security and the employer's circumstances are considered together.
- There must be no defect of consent (pressure, deception); giving the employee time to consider is advisable.
- Written form is not required but should always be used for proof.
An agreement without reasonable benefit may be treated by a court as an employer termination, leading to reinstatement and compensation claims.
How the payments are taxed
| Payment | SGK | Income tax | Stamp duty |
|---|---|---|---|
| Final month's wage, leave pay | Yes | Yes | Yes |
| Severance and additional payment under the agreement (up to the amount calculated with the severance ceiling) | No | Exempt | Yes |
| Additional payment above that | No | Taxed as wages | Yes |
What the payment is called ("incentive bonus", "goodwill compensation") does not change its tax nature. Calculate: Severance, notice, leave
Exit code and unemployment benefit
- Mutual agreement is generally reported with code 22 – Other reasons; İŞKUR then does not pay unemployment benefit.
- Reporting with code 04 – Termination by employer without just cause lets the employee claim benefit, but weakens a later employer defence that it was a mutual agreement and creates a risk of the benefit being reclaimed. Unemployment benefit
- The code must match the true nature of the transaction. Exit codes
Release (ibraname)
A release obtained by the employer after payment to document that "the employee has no further claims" is valid only if (Code of Obligations art. 420):
- It is in writing,
- It is made at least 1 month after the end of the contract,
- The type and amount of each released claim is stated clearly,
- Payment is made in full and through a bank.
A release signed on the day of termination is absolutely void; a document showing partial payment is a receipt, not a release.
Mutual termination or mediation?
Applying to a mediator before suing is mandatory in employment disputes. Mediation settlement minutes have the force of a judgment and no case can later be brought on the settled matters. A termination agreement, by contrast, can later be challenged for lack of reasonable benefit or defect of consent. For high-value or strained separations we recommend combining the agreement with mediation settlement minutes.
Process
- Calculation of entitlements (severance, notice, leave, overtime) and proposed additional payment
- Agreement text: end date, payments, payment day, confidentiality, exit code
- Final payroll and payments via bank
- Termination notification (within 10 days)
- Mediation settlement minutes if needed; release after 1 month
Common mistakes
- Paying only statutory entitlements and having the agreement signed.
- Having the release signed on the last day.
- Treating the whole additional payment as tax-exempt.
- Promising unemployment benefit and reporting code 04.
Sources
Turkish Code of Obligations No. 6098 art. 420; Labour Law No. 4857; Labour Courts Law No. 7036 art. 3; Income Tax Law No. 193 art. 25/7; Law No. 4447 art. 51; decisions of the Court of Cassation Assembly of Civil Chambers and 9th Civil Chamber.