Contributed by Nazali Tax & Legal.
1.1.1. Background Checks
Background checks are not explicitly stipulated under Turkish legislation. However, legislation such as the Turkish Criminal Code numbered 5237, the Law on Protection of Personal Data numbered 6698, the Labor Law numbered 4857 (Labor Law) and the Law on Occupational Health and Safety numbered 6331 (OHS Law) must be considered while conducting background checks.
Under the OHS Law, medical checks are mandatory before employment, during a change of position, in cases where the employee returns to work after an absence from work due to an occupational accident, occupational disease, or health problems, and at regular intervals recommended by the Ministry of Family, Labor, and Social Services in accordance with the employee’s status, nature of work, and the hazard class of the workplace. Those who will work in workplaces classified as dangerous or very dangerous cannot start work without a health report stating that they are suitable for the work.
It is important to note that expenses incurred by the employee from medical checks must be covered by the employer, in accordance with the OHS Law.
Finally, background checks should be conducted in proportion to the employee’s position and work, in order to avoid any infringement of the employee’s right to privacy and/or personal data protection laws.
1.1.2. Hiring of Employees within Turkey by Foreign Companies
The establishment of a legal entity within Turkey is required in order to hire employees in Turkey. This is due to the fact that if a legal entity is not established within Turkey, it would not be possible to ensure the employee within the Social Security Institution.
In practice, it is commonly seen that foreign employers who are not established in Turkey register the employee on a Turkish company’s payroll and pay the employment expenses monthly via service procurement. However, please note that such relations must be designed meticulously, in order to avoid any negative legal consequences.
1.1.3. Types of Employment Contracts
Employment contracts can be divided into the following main categories: contracts made for an indefinite period, fixed-term employment contracts, full-time employment contracts, part-time employment contracts, on-call employment contracts, remote-work employment contracts, and employment contracts with a probation clause.
As can be seen from the types of employment contracts given above, employment contracts are generally categorized according to their duration, or hours of work decided under the contract. Furthermore, it should be noted that it is possible and common for an employment contract to have the features of more than one type. For example, an employee may work remotely under a part-time contract made for an indefinite period.
The typical employment contract found in practice in Turkey is an employment contract for an indefinite period, as the Labor Law sets out strict conditions for the validity of fixed-term employment contracts. This is due to the fact that employees employed under fixed-term employment contracts cannot benefit from certain rights the legislation offers, such as the right to file a reinstatement lawsuit, severance pay, and notice pay. Therefore, the existence of objective conditions such as the completion of a certain work or the materialization of a certain event is required in order for the fixed-term employment contract to be valid.
1.1.4. Elements of an Employment Contract
An employment contract is a type of contract where the employee agrees and undertakes to perform work in subordination to the employer in exchange for the payment of a wage. Therefore, the mandatory elements for employment contracts can be listed as the performance of work, wage, and dependency.
The distinguishing element that separates employment contracts from similar types of contracts (service agreements, consultancy agreements, etc.) is the dependency element. For a contract to be characterized as an employment contract under Turkish labor legislation, the employee must strictly adhere to the employer’s instructions during the performance of the work and is constantly supervised by the employer, therefore is “dependent” on the employer.
1.1.5. Form Requirements of Employment-Related Statements and Actions
It should be noted that it is not required by law for an employment contract to be in written form. It is also possible for the employee and employer to agree on the performance of work and wage verbally. However, a written form is required for employment contracts with a fixed duration of one year or more. In cases where no written contract has been made between the parties, the employer must provide the employee with a written document, within two months at the latest, showing the general and special conditions of work, the daily or weekly working time, the basic wage and any wage supplements, the time intervals for remuneration, the duration if it is a fixed term contract, and conditions concerning the termination of the contract.
Furthermore, any fundamental changes made by the employer in working conditions based on the employment contract, on the rules of work which are annexed to the contract, and on similar sources or workplace practices, must be made only after a written notice is served to the employee. Changes that are not in conformity with this procedure and not accepted by the employee in written form within six working days shall not bind the employee. Changes made by the employer to working conditions include but are not limited to: changing working hours, changing the location of work, the addition of extra duties to the employee’s assigned position, and changing certain benefits such as food/travel allowance. Each situation should be assessed based on the details of the concrete case in order to determine whether or not the changes made by the employer constitute a fundamental change in the working conditions of the employee.
Considering the fact that Turkish labor courts have a tendency to rule in favor of the employee, it should be noted that in practice employers prefer to keep documents such as payrolls and company policies in written form with the employee’s wet signature even though the legislation does not oblige so.
1.1.6. Written Form Requirements
All kinds of contracts that have a written form requirement, must be in paper form and include the wet signatures of the parties.
According to the Turkish Code of Obligations numbered 6098 (TCO) and the Electronic Signature Law numbered 5070, a secure electronic signature has the same legal effect as a handwritten wet signature. A secure electronic signature is a type of electronic signature that is exclusively dependent on the signatory, created with the secure electronic signature creation tool at the disposal of only the signature holder, that enables the identification of the signature holder based on the qualified electronic certificate, and determines whether any changes have been made to the signed electronic data afterward. Although it is technically possible to meet the written form requirement if the parties sign the digital document with a secure e-signature, in practice the usage of secure e-signatures is not common within employee-employer relationships in Turkey, except for executive-level employees. This is due to the fact that the secure e-signature can be obtained from a limited number of electronic certificate service providers, and is not as accessible to be implemented in daily human resources processes and employer/employee relations.
1.1.7. Language of Employment Contracts and Employment Documents
In accordance with the Law on the Mandatory Use of Turkish in Commercial Establishments, all kinds of companies and institutions of Turkish nationality are obliged to keep all kinds of transactions, contracts, communications, accounts, and books in Turkish. For foreign companies and institutions, this obligation is limited to their correspondence, transactions, and contacts with Turkish establishments and persons who are citizens of Turkey, and to the documents and books that they are obliged to present to the state. Although foreign companies and institutions may use a language other than Turkish in their transactions, the company officials must sign under the Turkish text.
In addition to the information above, it is highly recommended to keep all employment contracts and employment documents in Turkish or in dual-column format. Otherwise, in situations where the document signed by a Turkish employee is in a foreign language, courts may rule in favor of the employee stating that the documents have not been understood clearly by the employee. Furthermore, extra translation costs may arise during the submission of the documents to the court in case of a dispute.
1.1.8. Probation Periods
It is possible for the parties to agree upon including a probation period in the employment contract, for a maximum duration of two months. However, the probation period may be extended up to four months with collective labor agreements.
Within the duration of the probation period, the parties may terminate the employment contract without having to observe the notice term and without having to pay compensation. It should be noted that the employee is entitled to wages and other rights earned in exchange for the days worked.
1.1.9. Executive Employees
The required qualifications of an executive employee are not set out explicitly under the labor legislation. Therefore, the employer may decide freely with the employment contract the person it would like to appoint as an executive.
There are two main differences between executive employees and employees under Turkish Labor Law. Firstly, a non-executive employee whose employment contract has been unlawfully terminated has the right to file a reinstatement lawsuit, where the employer must reinstate the employee or pay a certain amount of compensation stipulated under the Labor Law. However, the provisions of job security do not apply to the employer’s representatives and assistants who manage the whole of the enterprise and the representatives of the employer who manage the whole workplace and have the authority to hire and dismiss the employee. Therefore, executive employees who manage the entirety of the enterprise and the representatives of the employer who manage the entire workplace and have the authority to hire and dismiss the employee cannot file a reinstatement lawsuit.
Secondly, employees working in the position of an executive as the employer’s representative are not entitled to overtime wages, if they are duly compensated in line with their duties and responsibilities since executives have the ability to determine their working hours if certain conditions are met and decided by the employment contract.
1.2. Employees Versus Independent Contractors
1.2.1. Employees and Independent Contractors
There is no statutory checklist regarding the differentiating factors between employees and independent contractors, which leads to courts deciding on the type of contract between the parties on a case-by-case basis.
The aspect of dependency is perhaps the most significant and distinctive feature of the employment contract. Dependency means that the employee must work under the employer’s direction, supervision and control, depending on the employer’s orders and instructions. With contracts where the subject is the execution of a work, the instructions of the contractor are directed towards the result of the work, whereas with employment contracts, the employer coordinates the entire process of performing the work by giving instructions. This dependency factor disrupts the equality between the parties in the employment contract, leading to a tendency in Turkish labor law to protect the employee. This dependency is determined by the nature of the employee’s work, the employee’s position, as well as other factors, and creates a hierarchy between the employee and the employer. Considering the existence of flexible working models such as remote working, especially in today’s market conditions, the existence of the dependency factor should be determined by evaluating whether the employee works within the scope of an organization drawn by the employer (within the framework drawn by the employer, based on the employer’s orders) rather than the fact of physically working within the employer’s workplace.
An independent contractor agreement, according to the Turkish Code of Obligations numbered 6098, is a contract in which the contractor agrees to perform work and the party ordering work agrees to pay a fee in return. In this context, the contractor is responsible for the work’s outcome, establishes its own independent organization to carry out the work, and sets its own working hours and methods. The contractor may also work for other companies and hire its own employees. As a consequence, unlike in an employment relationship, the contractor does not have a personal and legal dependency within the scope of performing the work. While the contractor bears the economic risk in case the work is incomplete under an independent contractor agreement, the employer bears the economic risk of the work under an employment contract.
The Labor Law provides protection and benefits to employees employed with employment contracts. Therefore, when an employment contract is terminated by the employer without a just or valid reason, the employee has the right to file a reinstatement lawsuit if they are benefitting from job security. Again, the employee may file a claim against the employer if their receivables are not paid. The important factor here is that Turkish Labor Law is based on the principle of interpretation in favor of the employee. Due to the mandatory provisions of the Labor Law which protect the employee, in cases where the employer is under the burden of proof and the case must be interpreted and concluded by the court, the courts will interpret in favor of the employee and consequences may arise against the employer.
In cases where the relationship between the parties is in fact an employment relationship, however, the contract between the parties is not designed as an employment contract, and the employer is not directly fined by the authorities. However, as each case is evaluated on a case-by-case basis, the courts may determine that the contract actually is an employment contract. If it is determined that the relationship between the employer and the employee is actually an employment relationship and therefore falls within the scope of the Labor Law and related legislation, even though the contract is named differently, administrative fines may be applied in terms of obligations that have not been fulfilled within the scope of the Labor Law, the Social Security Law and the Law on Occupational Health and Safety. Such obligations include but are not limited to the payment of social security premiums, payment of overtime wages, and fulfillment of occupational health and safety requirements.
1.3. Foreign Employees
1.3.1. Employment of Foreign Employees
It is mandatory for a foreigner to obtain a work permit to be able to work in Turkey, with a few exceptions (foreigners, specified in the legislation or in bilateral or multilateral agreements or international agreements to which Turkey is a party, that they can work without a work permit).
The types of work permits and the application procedures are mainly regulated under the Law on International Labor Force numbered 6735 (ILF) and the Regulation on the Implementation of the Law on International Labor Force. According to the ILF, there are five types of work permits: periodic work permits, indefinite work permits, independent work permits, exceptional work permits, and turquoise cards.
As per Article 10 of the ILF, “In case the application is evaluated positively, the foreigner is granted a work permit valid for a maximum of one year in the first application provided that it does not exceed the duration of the employment or service contract, on the condition that he/she works in a specific workplace belonging to a real or legal person or public institution or organization, or in a specific job in their workplaces in the same business line.” Therefore, foreign employees who will be applying for a work permit in Turkey for the first time can obtain a work permit valid for a maximum of one year.
On the other hand, it is possible to extend the duration of the work permit by making an extension application sixty days before the expiry of the work permit and in any case before the expiry of the work permit. According to Article 10/2 of the ILF, if the extension application is evaluated positively, the foreign employee is granted a work permit for a maximum of two years with the first extension application and up to three years with subsequent extension applications, to work under the same employer. However, it should be noted that applications made to work for a different employer are evaluated as a first application, therefore can only be for a maximum of one year.
As per Article 7 of the ILF, if the foreigner is residing in Turkey, work permit applications are made directly to the Ministry (through the e-permit automation system). However, work permit applications to be made from abroad are made to the embassies or consulates of the Republic of Turkey in the country where the foreigner is a citizen of or is legally residing at.
As per the Article 21 of the Regulation on the Implementation of the ILF, work permit applications are evaluated according to the General Directorate’s evaluation criteria that applicant workplaces and foreigners must meet regarding the work permit requests of foreigners. For example, the employment of at least five Turkish citizens is mandatory in the workplace where a work permit is requested and, the paid-in capital of the workplace must be at least TRY 100,000 or its gross sales must be at least TRY 800,000 or the last year’s export amount must be at least USD 250,000.
The evaluation of the applications is completed within 30 days, provided that the uploaded information and documents are complete.
Work permits also stand for residence permits during their validity. However, if the work permit becomes invalid due to any reason, the right of residence connected to this permit also ends. It should be noted that the work permit is only valid at the workplace and address where it is issued.
Finally, regarding applications made within Turkey, it is obligatory for the foreigner to start working within one month from the start date of the work permit. Regarding applications made from abroad, it is obligatory for the foreigner to start working within one month from the date of entry to Turkey, and in any case within six months from the start date of the work permit.
1.4. Home Office
During and following the COVID-19 pandemic, remote work has remained on the agenda of both employees and employers. As a result, new legislation was enacted defining the rules of remote work and the responsibilities of the parties.
Home office or remote work is regulated under Article 14/4 of the Labor Law and the Regulation on Remote Work. According to the aforementioned legislation, remote work is a business relationship established in writing, where the employee performs work within the scope of the organization created by the employer, at home, or outside the workplace making use of communication tools.
In accordance with Article 5 of the Regulation on Remote Work, employment contracts regarding remote work must be made in writing. In this respect, the employer must make a written employment contract with the employee to be employed within the framework of remote working, or, in the case of the transition to the remote working model at the workplace, the parties must draft and sign an additional protocol which includes the essential points of the remote work system.
Furthermore, the parties must agree on the following issues in the employment contract: the working environment and costs that will incur, mandatory expenses, supply and use of materials and work equipment, duration of work, and means of communication.
If necessary, the arrangements regarding the place where the remote work will be carried out must be completed before the performance of the work begins and the method of covering the costs arising from these arrangements should be determined together by the employee and the employer.
According to the Turkish Code of Obligations and the Regulation on Remote Work, unless the parties agree otherwise in the employment contract, the employer must provide the necessary tools for the employee. If the employee will use their own tools and equipment, an appropriate price must be paid by the employer. This fee to be paid must be in an appropriate amount (proportionate to the cost of the tools and equipment assigned to the job by the employee) as a matter of equity. Computer, telephone, fax, printer, modem, and similar technical equipment, such as the subscription and software for the program to be used, as well as a desk, and a work chair can be given as examples of necessary tools. Furthermore, the employer is obliged to deliver the list of work tools indicating their prices on the date of delivery to the employee, in writing.
It should be noted that even in situations where the employee supplies their own tools, it is not possible for the employer to impose occupational health and safety obligations on the employee. The employer has an obligation to ensure that the equipment provided by the employee is also safe. According to the provisions of Article 12 of the Regulation on Remote Work: “The employer is obliged to inform the employee about the occupational health and safety measures, to provide the necessary training, to provide health surveillance and to take the necessary occupational safety measures regarding the equipment provided, taking into account the nature of the work performed.” It is necessary to make a double distinction regarding the occupational health and safety incident that the employee is exposed to at home. If the incident occurred during the performance of the work (for example, the electrical line caught fire while working on the computer, the employee fell while sitting on the chair while working, etc.), the incident will be classified as a work accident. However, if the employee cuts their hand while preparing food in the kitchen at home, the incident will not be classified as a work accident. In other words, the event must have a causal link with the work.
2. Contract Modification
2.1. Requirements of employment contract modifications
As mentioned in Section 1.1.5., any fundamental changes made by the employer in working conditions based on the employment contract, on the rules of work which are annexed to the contract, and on similar sources or workplace practices, must be made only after a written notice is served to the employee. Changes that are not in conformity with this procedure and not accepted by the employee in written form within six working days shall not bind the employee. Changes made by the employer to working conditions include but are not limited to: changing working hours, changing the location of work, addition of extra duties to the employee’s assigned position, and changing certain benefits such as food/travel allowance. Each situation should be assessed based on the details of the concrete case in order to determine whether or not the changes made by the employer constitute a fundamental change in the working conditions of the employee.
If the employee does not accept the written offer of the employer within six working days, they will not be bound by the modification. Furthermore, the employer may terminate the employment contract by respecting the term of notice, provided that they indicate in written form that the proposed change is based on a valid reason or there is another valid reason for termination. However, the employee has the right to file for a reinstatement lawsuit and claim that the termination was unlawful.
As a result of the above-mentioned legislation, fundamental changes in the employment contract must be implemented only after they are notified to the employee in written form and are accepted by the employee within six working days. The written form requirement is met with the wet signatures of the parties and a declaration of acceptance by the employee. Furthermore, in general, the courts in Turkey do not accept implicit acceptance by conduct regarding fundamental changes made to working conditions that are not in favor of the employee.
2.2. Unilateral Contract Modification by Employers
It is possible to draft articles in the employment contract stating that the employer has the right to modify certain working conditions, which will provide some room for a unilateral contract modification. However, this is only true if the modification at hand does not constitute fundamental changes in working conditions, as explained above.
Whether or not the modification can be made unilaterally or not must be determined in accordance with the facts of the concrete case. For example, a modification in the working place may be considered a fundamental change if it increases the amount of time the employee must travel. However, if the employee’s travel time is shortened, then the modification may be made unilaterally.
2.3. Minor Changes in the Employees’ Tasks
Minor changes in the employees’ tasks do not require contract modification by rule. However, it should be noted that these changes must not be classified as fundamental changes in working conditions, as these must be notified to the employee in writing, as specified above. Whether or not a change is considered minor or fundamental, must be decided according to the facts of the concrete case.
2.4. Modification of Employer Policies/Internal Regulations
The same rules apply to modifying employer policies and internal regulations as employment contracts if the modifications fundamentally change the working conditions of the employees. For example, if the modifications to the employer policies/internal regulations change the working hours of the employees, the consent of the employee is required in order to implement such a change. However, it should also be noted that the employer has managerial authority over the workplace. Therefore, changes made to policies/internal regulations which do not constitute fundamental changes in working conditions shall be considered within the scope of the employer’s managerial authority and can be implemented without the consent of the employees.
3.1. Termination Types
3.1.1. Termination of Employment
In terms of reasons for the cessation of employment, different categorizations can be made. However, it is better to have two main categories: cessation apart from termination and termination.
The first category – cessation apart from termination – is related to the situations which end employment with a reason outside of termination, such as the death of one of the parties of the employment contract (employer and/or employee) and the end of the duration of the fixed-term employment contract. In these cases, even though there is no will toward terminating the employment with the occurrence of specific circumstances, the employment relationship ends.
On the other hand, termination, which is a will toward ending the employment relationship, can be categorized into three sub-categories: the first being termination with a notice, the second being termination with a just cause, and lastly, termination by mutual agreement.
Termination with a notice is comprised of circumstances outside of just cause, in just cause a necessity to end employment is required since it is not objectively expectable from the affected party to continue the employment relationship in these circumstances. Both parties can resort to termination with notice, by respecting the notice periods to be followed according to the legislation and/or the employment contract.
Termination with a just cause, due to its nature, does not include a necessity to abide by the legal notice periods and both parties may terminate employment immediately. Lastly, agreement by mutual agreement is an accord of wills of both parties in terms of ending the employment.
By taking the Turkish legal system into consideration in terms of termination of the employment, it can be asserted that an employer may take an action in the direction of termination by undertaking the risk of paying compensations arising from unlawful termination. Even in the case of reinstatement, they may choose to pay compensation as an alternative to reinstatement and not to re-employ the employee.
But one must be aware that, in some cases (such as a termination in order to obstruct unionization), the financial risk to be undertaken by the employer may be considerably higher due to the compensations to be decided by the court in favor of the employee.
3.1.2. Consequences of Termination of Employment
The consequences of termination can be divided into the following categories: termination by the employer, termination by the employee, termination with a notice, and termination with a just cause.
In the scenario, in which the employee terminates with a notice, the employee is under the obligation to respect the notice period. However, it should be noted that in some specific cases, the employee is not subject to a notice period, such as the marriage of the female employee, retirement, etc.
In situations where there is a just cause, the employee can terminate the employment immediately. These situations have been listed in the legislation, and include situations where it is not expectable from the parties to continue the employment relationship, such as failure to pay the employees’ wages, harassment, and health issues.
On the employer side, whether or not the employee is protected by job security arising from legislation is important. In case of termination with notice, if the employee is not within the scope of job security, the employer should abide by the notice period, pay severance pay if the employee has one year or more seniority, and pay remuneration for unused annual leaves in addition to other accrued wages. The employer has the opportunity to pay notice pay in advance instead of abiding by the notice period.
If the employee is within the scope of job security, apart from mentioned obligations, the employer should check whether its right to terminate has originated. In other words, there should be a reason for termination which is legally valid. Otherwise, the employer may face reinstatement claims.
In the case of termination with a just cause, there is no necessity to abide by the notice period and it is enough for an employer to pay remuneration for unused annual leaves in addition to other accrued wages. However, in some cases (such as termination because of health problems of the employee, imprisonment of the employee, etc.), a necessity to pay severance pay to the employee with a one year or more seniority may arise. The situations where the employer may terminate the agreement with just cause include but are not limited to discontinuity, use of alcohol and/or drugs in the workplace, and theft.
3.1.3. Termination by Mutual Agreement
The most fundamental requisite of mutual termination is an agreement based on the mutual and free will of both parties. It is especially important for the employee to not be under pressure while signing the mutual termination agreement.
However, the free will of both parties is not enough to have a legally valid mutual termination. According to precedents of the Turkish Supreme Court, some receivables & compensations should be paid to the employee, depending on which party makes the offer to mutually terminate the employment contract. Within this scope, if the offer comes from the employee, it is enough to pay severance pay (in case of one year or more seniority), notice pay, and remuneration for unused annual leaves in addition to other accrued wages. On the other hand, if the offer is made by the employer, together with the aforementioned payments, additional payment should be ensured, not less than four months’ wage of the employee. As it is a minimum, in cases where the seniority of the employee is high, a payment exceeding four months’ wage may be required.
3.1.4. Lawful Restriction Clauses
One of the liabilities of the employee arising from employment is the duty of loyalty. This duty, stemming from very much the nature of the employment, leads to restricted employee activities in terms of the employee’s relations with other employers. Within this scope, the employee should not work for another employer, who is competing with the current employer. Accordingly, even though it is not a necessity (since it arises from the nature of the employment), a clause regarding this obligation may be added to the employment contracts.
A violation of the mentioned obligation may lead to termination by the employer. However, since this type of prohibition inhibits freedom of labor enshrined in the constitution, whether there is a violation or not should be carefully evaluated. Within this sense, if the employee is working for a competing employer or if the performance of the employee diminishes because of the secondary occupation, the employer may resort to termination. Other than these types of concrete reasons, the termination may be deemed unlawful.
On the other hand, since the duty of loyalty regarding secondary occupations covers the duration of the employment, in order to restrict employees’ activities after termination, parties to the employment should agree on a prohibition of competition, also referred to as a non-compete clause. It should be noted that because of its intervenient nature, a prohibition of competition is subject to strict terms. In this respect, firstly, the parties must agree upon a non-compete clause in writing. Moreover, not every employee is subject to this prohibition. In other words, the clauses regarding the prohibition of competition can only be foreseen if the employee has the opportunity to obtain information about the customer environment, production secrets or the work carried out by the employer, and if the use of this information poses a threat of harm.
Additionally, the prohibition of competition needs to be limited in terms of duration, geographical area, and type of work. It is possible to determine the geographical area where the prohibition of competition will be valid as a certain region or province/provinces, as long as it does not exceed the area in which the employer operates, as the determining factor in terms of location is the employer’s field of activity. The subject of the prohibition of competition is limited to both the employer’s field of activity and the actual job/duty that the employee is obliged to fulfill. Again, the prohibition of competition may be valid for a maximum of two years from the date of termination of the employment contract. Moreover, if the employment contract is terminated with a just cause by the employee or without a legally valid cause by the employer, the employee will not be bound by the prohibition of competition.
It is common for the parties to agree on a certain amount of penalty in case of violation of the non-competition clause. Determining a penal clause is not a requirement for the prohibition of competition, but in the case of a breach, it makes it much easier to recover damages.
It should be noted that when no restrictions are imposed on the prohibition of competition in terms of geographical area, subject or duration, the courts may consider the prohibition invalid. On the other hand, in case the boundaries of the prohibition are drawn in terms of geographical area, subject and time, but the judge considers that these boundaries are unfair or the penal clause is exorbitant, the judge may impose a limitation on the prohibition.
3.2. Collective Dismissal
Not every termination falls within the scope of collective dismissal, and not every dismissal in large quantities is legally deemed as collective dismissal. Collective dismissal in a legal sense occurs when the employer contemplates dismissing a number of employees envisaged in the legislation for reasons of an economic, technological, structural, or similar nature necessitated by the requirements of the enterprise, the workplace, or activity on the same date or at different dates within one month. The numbers of employees, which should be dismissed, are stipulated as:
- in workplaces employing between 20 and 100 employees, a minimum of 10 employees
- in workplaces employing between 101 and 300 employees, a minimum of 10 percent of employees and
- in workplaces employing 301 and more employees, a minimum of 30 employees.
Moreover, as reasons for termination are restricted, termination reasons such as termination by the employee, termination by the employer with a just cause, and termination with a mutual agreement are not included and there is no need to implement the procedure of collective dismissal.
Within the procedure of collective dismissal, some obligations are imposed on the employer. Firstly, the employer should provide the union shop stewards (if any) and the Turkish Employment Agency with written notice at least 30 days prior to the intended dismissal. Terminations will have effect 30 days after the written notice to the Turkish Employment Agency, thus notice period starts after 30 days within the written notice.
Secondly, as another obligation imposed on the employer, consultations/meetings with union shop stewards should take place after the written notice.
Please note that, if the employer wants to employ employees again for the same job within six months from the finalization of the collective dismissal, it should preferably invite those, dismissed within collective dismissal, with suitable qualifications.
In practice, in order to avoid the application of the procedure of collective dismissal, dismissal waves are implemented and there is no legal obstacle in terms of dismissal waves. However, collective dismissals are inspected by Turkish Employment Agency and a substantial amount of administrative fine, multiplied by the number of terminations, is imposed in case of violation of the procedure of collective dismissal. Since the stipulated procedure is multi-layered and has technicalities, which are not apparent to a non-legist person, employers should act meticulously while implementing dismissal waves.
3.3. Unlawful Termination
3.3.1. Consequences of Unlawful Termination
Job security, which is granted to employees who meet conditions set forth in the legislation, gives the employee the right to initiate a reinstatement lawsuit and if its claim is evaluated as justified by the court, the right to reinstatement. Additionally, in the case the employer does not reinstate the employee, additional compensations have been stipulated in favor of employees within the scope of job security. These conditions, which must be fulfilled by the employee in order to benefit from job security, are as follows:
- The employee must be considered an “employee” under the Turkish Labor Law numbered 4857. Thus, for example, a domestic worker who undertakes household chores cannot benefit from job security.
- The employee must be employed via an employment contract for an indefinite period.
- The employment contract must be terminated by the employer without a valid or just cause.
- There must be at least 30 employees working within the workplace. Having said that, while determining whether 30 employees are met, all the workplaces within the same line of business belonging to the same employer should be taken into consideration.
- The employee must have at least six months of seniority. Seniority should be calculated by taking into consideration the total time spent in the same or different workplaces of the same employer, even in the case of discontinuous working.
- The employer must not be a representative of the employer (in a legal sense).
- As can be seen, the consequences of unlawful termination differ between an employee with job security and without job security.
Within this scope, in a scenario where there is an employee benefitting from job security, they can initiate a reinstatement lawsuit and if the termination is unlawful, the court will decide in favor of reinstatement. After the decision, the employee should apply to the employer with the intent to be re-employed. With the application, the employer will be under the obligation to reinstate and pay a remuneration up to the four months’ wage of the employee, which covers a part of idle time. In case the employer does not reinstate, in addition to the remuneration up to the four months’ wage, compensation of non-reinstatement from four months to eight months’ wage of the employee must be paid. Additionally, severance pay, notice pay, and remuneration for unused annual leaves should be paid, providing that the employee is entitled to these payments.
On the other hand, if the employee is not within the scope of job security, they cannot claim reinstatement. However, they can claim notice pay, if the notice period is not abided by, and severance pay, if the seniority of the employee is one year or more. Additionally, if the right to terminate is utilized abusively by the employer, the employee can claim bad-faith compensation. In addition to the aforementioned payments, the court may decide on compensation up to the six months’ wage of the employee, which is labeled as compensation for unjust termination.
Moreover, regardless of job security, additional compensations may arise depending on specific features of the concrete case, such as union compensation in case of a termination with an intent to obstruct unionization. Furthermore, it is always possible for the employee to claim material and immaterial damages.
Lastly, termination of the fixed-term employment contract before the expiration date should be mentioned. In this case, since it is a fixed-term contract, reinstatement cannot be possible. However, the employee can claim their wages corresponding to the remaining duration of the contract. Additionally, severance pay and compensation for unjust termination may be brought to the agenda.
3.3.2. Calculation of Loss of Income
In reinstatement lawsuits filed as of January 1, 2018, the court will calculate remuneration up to the four months’ wage of the employee, which covers a part of idle time, on the income on the date of the lawsuit.
In terms of reinstatement lawsuits filed before January 1, 2018, remuneration up to four months’ wage is calculated over the wages and other rights (such as fringe benefits) granted to the employee following the termination. While calculating this payment, the wages and other rights of the employee are determined as if the employment continues for a maximum of four months after the termination date.
Please be aware that even though other rights (bonuses, fuel allowance, etc.), apart from wages, are considered while calculating remuneration up to four months’ wage, payments based on actual work (such as performance-based payments) are not considered.
3.3.3. Revocation of Dismissal
Dismissal, as a will, is a unilateral resolutive formative right. As a consequence, with the arrival of the will to terminate to another side, the employment contract is terminated. Thus, even though the will can be withdrawn before arrival, the only possibility to revoke the dismissal after the arrival is through a mutual agreement between employer and employee in terms of revocation of the dismissal. Of course, in a scenario, in which the will to terminate has reached the other party but the parties continue to employ and work, then the existence of a tacit agreement may be asserted.
3.3.4. Additional Protections Against Termination
Under the Labor Law, there is no specific category for protected employees. However, in some cases, additional protection has been granted. For example, if an employer resorts to termination with a discriminatory motive (such as race, sex, political opinion, philosophical belief, etc.), compensation for discrimination may arise. Along the same line, union compensation may be awarded, in case of a termination with an intent to obstruct unionization.
Additionally, Turkish labor law explicitly stipulates some grounds for termination as unlawful, such as union membership or participation in union activities, being a union representative, being absent from work during maternity leave when female workers must not be engaged in work, etc.
3.3.5. Disciplinary Processes
The employer can carry out disciplinary processes and impose disciplinary penalties such as warnings, reprimands, etc. Parallel to this, an employee who continues to violate workplace regulations and who is punished with multiple disciplinary penalties may be subject to termination based on their conduct.
At this point, since there are disciplinary regulations in many workplaces, it is important that these regulations are legally and functionally regulated and that all disciplinary processes are carried out in accordance with the regulation and legislation.
4. Wage And Hour
4.1.1. National Minimum Wage in Turkey
In Turkey, a national minimum wage is applied and its amount and other related details are determined by the minimum wage determination commission. The commission determines the minimum wage by including all lines of business/industries. The wage is determined at the latest every two years. However, in practice, while it is generally determined once a year, it has also been determined twice a year in previous years.
Based on the decision of the minimum wage determination commission, the minimum wage for one day of normal work between January 1, 2023, and December 31, 2023, was determined as TRY 333.60 per day.
4.1.2. Payment in Foreign Currency
According to the legislation regarding the protection of the value of the Turkish currency, persons residing in Turkey shall not determine the contract price and other payment obligations arising from employment contracts in foreign currency or index these payments to foreign currency.
However, the following employment contracts, which are within the scope of exceptions in accordance with the legislation, are not subject to the prohibition of payment in foreign currency:
- Employment contracts executed abroad by persons residing in Turkey and employment contracts to which seamen are parties,
- Employment contracts, to which employees who do not have citizenship ties with Turkey are a party,
- Employment contracts, to which branches, representative offices, and liaison offices located in Turkey and belonging to non-residents are a party,
- Employment contracts concluded by companies located in Turkey, in which non-residents hold 50% or more shares, directly or indirectly,
- Employment contracts, to which companies in free zones are parties as employers within the scope of their activities in the free zone.
Thus, if an employment contract is within the scope of these exceptions, it is possible to pay wages in foreign currency. Other than that, in case an employee is paid in foreign currency although there is no exception, an administrative fine may be accrued to the employer.
4.1.3. Allowances to be Included in the Salary
Parties to the employment contract may decide on different wage systems in accordance with their mutual agreement. They can execute their employment contract with an hourly/daily calculated wage, which corresponds to the actual work of the employee and does not include allowances. On the other hand, they may prefer a fixed wage, which is paid monthly and in full even in cases where the employee is excused from work for reasons such as sickness or being off work. Remunerations for national and public holidays and weekly rest days, which should be paid to the employee even though the employee does not work on these days, are deemed as included within the fixed wage.
Another subject, which should be mentioned, is including overtime in the wage. According to Turkish law, clauses, which include work at extra hours and overtime to the monthly wage, are legally valid. However, since with these clauses the employee is deprived of overtime pay and there are abusive implementations in practice, these clauses are subject to the strict supervision of both inspectors and courts. As a part of this supervision, conditions to be fulfilled in order to include work at extra hours and overtime to the monthly wage are as follows:
- The existence of a clause in the contract, stating that the work at extra hours and overtime wages are included in the monthly wage, is required.
- There must be a reasonable ratio between the performance of the work and wage payment. At this point, it will be important that the wage of the employee is at a reasonable level above the national minimum wage.
- The monthly wage of the employee should be definite and determined.
- Working hours and work at extra hours/overtime hours of the employee should be documented.
- Overtime work should not exceed 270 hours per year.
4.2. Working Time
4.2.1. Working Hours
According to Turkish legislation, the maximum working hours are 11 hours per day, 7.5 hours per night, and 45 hours per week. Employees shall be allowed a rest break approximately in the middle of the working day, by arranging with due regard to the customs of the area and requirements of the work. Rest breaks shall not be considered as a part of the working hours.
In addition to working hours limits, there is an overtime limit of up to 270 hours per year, along with the requirement to obtain employees’ consent for overtime work.
The employees shall be allowed to take a rest for a minimum of 24 hours (weekly rest day) without interruption within seven days, provided that they have worked on the days preceding the weekly rest day. As long as this seven-day period is preserved, weekly rest days can be determined inside the weekend or weekdays, in other words, there is no necessity to determine this day as Sunday.
Unless otherwise agreed upon, working hours shall be divided equally by the days of the week worked at the workplace. In practice, generally, a weekly working pattern of six working days and one weekly rest or five working days and two days off (one of them is a weekly rest) are implemented. While six working days are preferred in workplaces employing blue-collars, white-collar-based workplaces opt for five working days.
4.2.2. Holidays Entitlement
Holidays, in general, can be categorized into four sub-topics: weekly rest days, national and public holidays, annual leaves, and other paid leaves.
The employees shall be allowed to take a rest for a minimum of 24 hours (weekly rest day) without interruption within a seven-day time, provided that they have worked on the days preceding the weekly rest day. For the weekly rest day, the employer shall pay the employee’s daily wage, without any work obligation in return. It is important to state that it is forbidden to make the employee work on the weekly rest day. However, if the employer does not obey this rule, the employee’s work should be paid in addition to the employee’s daily wage.
National and public holidays arising from the legislation are limited to the ones stated explicitly in the legislation and 14,5 days in total per year in Turkey. Written consent from the employee is required in order to make the employee work on these days. Employees shall be entitled to the full day’s wage of the holiday day, without any work obligation in return. If they work instead of observing the holiday, regardless of how many hours they worked, they shall be paid an additional full day’s wage for each day worked.
Employees who have completed a minimum of one year of seniority in the establishment since their employment, shall be allowed to take annual paid leave and the right to annual paid leave shall not be waived. Annual paid leave should not be divided by the employer. In other words, this leave must be granted without interruption. However, leave periods may be divided by mutual consent provided that one of the parts is not less than 10 days.
Other kinds of leave, with or without pay, granted by the employer during the year or taken by the employee as convalescent or sick leave should not be deducted from annual paid leave. National holidays, weekly rest days, and public holidays which coincide with the duration of annual paid leave should not be counted in the annual leave.
Moreover, the employer must pay the employee the remuneration corresponding to their leave period either in a lump sum or as an advance payment prior to the beginning of the leave. If an employee does not or cannot use his annual leave in the current year, they can use them in the next years. In other words, these leaves will be carried over.
Lastly, there are paid casual leaves arising from the legislation for reasons such as marriage, bereavement, etc. Of course, in addition to the legislation, the employer may grant more days and more reasons in terms of casual leaves.
4.2.3. Sick Leave
The employee is entitled to sick leave if they have a valid medical report. Turkish Social Security Institution pays a benefit for temporary incapacity to employees during sick leave. In this context, the benefit for temporary incapacity is paid to the employee from the day of the accident in case of an occupational accident, from the third day of determination of temporary incapacity for work in case of illness, and from the beginning of the eighth week before birth in case of maternity (the tenth week in case of multiple pregnancies).
Whether the employer is obliged to pay during sick leave (based on illness) depends on the payment system of the employee. In this context, if the employee is paid hourly/daily (hourly/daily rate), the employer is not obliged to pay for the days the employee has a medical report including the first two days. However, if the employee gets a monthly fixed payment, the employer is obliged to pay during sick leave. Thus, the employer should pay not only the first two days but also the whole period of sick leave. On the other hand, after paying the whole sum of the salary, the employer has the opportunity to deduct benefits paid by the institution from the salary of the employee, who works with a fixed wage.
5. Collective Labor Law
5.1. Trade Unions
5.1.1. Forming a Trade Union in Turkey
According to the Trade Unions and Collective Labor Law no. 6356, trade unions are organizations with legal personality formed by at least seven employees or employers to come together and operate in a business line in order to protect and develop the common economic and social rights and interests of employees or employers in their labor relations. The law states that trade unions can be established and operate on the basis of a line of business, and there are currently 20 business lines of operation listed.
On the other hand, a confederation can be established by at least five unions in different lines of business, pursuant to Article 2/1-f of the same law. Turk-Is, Hak-Is, and Disk are the most populated employee confederations in Turkey.
5.1.2. Qualifying as a Party to a Collective Labor Agreement (CLA)
In accordance with Law No. 6356, collective labor agreements in Turkey can be concluded for a minimum of one year and a maximum of three years, covering the workplace or business. In order to be an employer in a collective bargaining agreement pursuant to Law No. 6356, it is sufficient to be the employer of the workplace/enterprise where the collective bargaining agreement is to be concluded or to be a union member of the employer.
On the other hand, in order to be at the table on the employee’s side in the collective bargaining agreement, two conditions must be met. The first of these conditions is to ensure that the line of business threshold is met by registering at least 1% of the employees working in the line of business where the union is established. The second condition is that more than half of the number of employees in the workplace in terms of workplace collective bargaining agreements and at least 40% of the total number of employees working in the enterprise in terms of enterprise collective bargaining agreements must be members of the labor union that wants to be at the table. The labor union, which is authorized by providing these conditions together, can be a party to the collective bargaining agreement. These authorization conditions must be re-established in each new collective bargaining period. Under most of the confederations in Turkey, there are only a few trade unions that have met the line of business threshold in almost every business line. However, it can only be possible for the relevant trade union to be the party to a collective labor agreement, after the numerical majority requirement to be met in the enterprise or workplace is determined by the Ministry of Labor and Social Security individually for each employer in addition to the line of business threshold.
5.1.3. Main Rights of Trade Unions
Unionization is a right protected by a constitutional guarantee, and members of a union established in accordance with the law have union activity and membership guarantees. Sanctions of actions and transactions aimed at preventing the exercise of union rights have been enacted as union compensation, which can amount to up to a 12-month salary of the employee. Also, employees whose employment contracts are terminated due to their union activities being prevented can request reemployment by taking advantage of job security. In addition, in case of violation of trade union freedom, penal sanctions are envisaged in accordance with Article 118 of the Turkish Penal Code. Similarly, administrative fines are also counted as sanctions in accordance with Law no. 6356. Trade union freedom in Turkey is strictly protected at the legal level and the rights-seeking activities of employees whose union activities are illegally prevented constitute the biggest workload of the judiciary in terms of union law.
5.1.4. The Effect of CLA on an Individual Employment Agreement
Pursuant to Article 36 of Law No. 6356, individual employment contracts cannot be contrary to the collective labor agreement, unless otherwise stated in the CLA. The provisions in the collective labor agreement replace and prevail over the provisions of individual employment agreements that are contrary to the collective labor agreement. If there are provisions contrary to individual employment agreements in the collective labor agreement, the provisions of the individual employment agreement for the benefit of the employee are valid and these provisions are applied. The provisions of the terminated CLA about and replacing the individual employment agreement continue as the provisions of the individual employment agreement until the new collective labor agreement enters into force.
5.2. Works Councils
Pursuant to Article 27 of Law No. 6356, the trade union, whose authority to conclude a collective bargaining agreement has been finalized, appoints one workplace union representative if the number of employees in the workplace is up to 50, if the number of employees in the workplace is between 51 and 100, at most two, between 1001 and 500 at the most three, between 501 and 1,000 at the most four, if between 1,000 and 2,000 appoints a maximum of six, and more than 2,000, a maximum of eight workplace union representatives from among its members working in the workplace.
Where there is more than one representative, the chief workplace representative is also appointed, and all representatives are notified to the employer. Provided that it is limited to the workplace, the duties of the workplace union representatives and the chief representative are to listen to the wishes of the employees and resolve their complaints, to ensure cooperation, labor peace, and harmony between the employee and the employer, to protect the rights and interests of the employees and to assist in the implementation of the working conditions stipulated in the labor laws and collective labor agreements.
The employment contracts of the representatives cannot be terminated unless there is a just cause and the reason is clearly and precisely stated in the notification. Unlike other workers, the employer cannot terminate the employment contracts of union representatives based on valid reasons. Otherwise, the representative whose employment contract is terminated for valid reasons or the union of which he is a member can file a reemployment lawsuit within one month from the notification of the termination notice.
6. Transfer Of Undertakings
The basic principle in labor law in Turkey is to protect and maintain the employee-employer relationship and thus employment as much as possible. In accordance with Article 6 of the Labor Law, when the workplace or a part of the workplace is transferred to another employer based on a legal transaction, the employment contracts existing in the workplace or in a part of it on the date of transfer, together with all its rights and debts, pass to the transferee. The transferee employer is obliged to take action according to the date when the employee started to work with the transferring employer in the rights based on the employee’s service period. In this context, in the case of transfer, the transferring and the transferee employer are jointly responsible for the debts that arose before the transfer and must be paid on the date of the transfer.
The obligations of informing the employee’s representatives of both the transferor and the transferee employer, and the employees in absence of representatives, about the transfer day, reasons for the transfer, legal, economic and social consequences, and consulting the representatives on this issue, as stipulated in the EU directive no 2001/23, are not regulated in Turkish labor law. However, although the obligation to inform the employees is not expressly stipulated in the law, since the option of not working with the transferee employer is brought with the right of objection, which is granted only in the transfers realized through merger, division, and type change, pursuant to Article 178 of the Turkish Commercial Code, in order employees to use this right of objection, it is considered and advised that it would be appropriate to notify the employees by the transferring employer a reasonable time before the transaction. Since the law stipulates that the employment contract will expire at the end of the notice period if the employee objects to transfer, it would be appropriate for the reasonable period to be as long as the notice period.
As mentioned above, in Article 6 of the Labor Law, it is regulated that together with the transfer of the workplace, the employment contract of the employee, together with all their rights and obligations, will be transferred to the transferee employer. However, the later-dated Turkish Commercial Code (TCC) Article 178 set forth a special provision against the Labor Law Article 6 and must be applied. Accordingly, the employee has the right to object to the transfer of the employment contract with all its rights and obligations to the transferee employees due to the transfer, in such transfers realized only through merger, division, or change of type. If the employees object to the transfer, the transfer process of the company does not stop, only the transfer of the employment contract of the said employees is prevented. In case the employee objects to the transfer, the employment contract expires at the end of the legal notification period in accordance with Article 178/2 of the TCC, however, the transferee and the employee are obliged to fulfill the contract until that expiration. The most debated issue regarding this objection period is whether the employee will be entitled to severance pay after the objection. Although there is no legal regulation in this regard, the opinion that the employee cannot be entitled to severance pay because they want to terminate the employment contract by objecting to the transfer without the will of the employer is dominant.
7. Labor Investigation
As mentioned earlier, it would not be wrong to say that the main purpose of the Turkish Labor Law legislation is to protect the employee-employer relationship and employment and to make the employer and employee as equal as possible by principle of interpretation in favor of the employee which is relatively considered as the weaker party. Considering this situation, it can be said that serious legal sanctions have been regulated for employers who employ uninsured employees in the workplace. These sanctions include, in addition to the employee’s right to file a lawsuit against the employer, payment of compensation and administrative fines, the cancellation and repayment of state supports given to the employer by the Social Security Institution, due to the fact that the state cannot fulfill its debts to the employee by violation of social security provisions.
On the other hand, legal sanctions are imposed on employers especially as job security is granted to employees, in cases where the employer terminates the employee’s employment contract without valid reason or the exercise of the right of unionization is prevented. Also, in the event that the employer does not fully and duly fulfill the wage debt, which is the most fundamental debt of the employment relationship, the interest foreseen above the legal interest is also envisaged as legal sanctions for employers. Similarly, crimes such as violation of freedom of work and labor, prevention of the use of union rights, and discrimination in employment are also regulated and sanctioned in the Turkish Penal Code. In addition to these, administrative fines are regulated in the legislation as a sanction in most cases of violation of the Turkish Labor Law legislation such as the provisions of the Labor Law Art.98-108, the Maritime Labor Law Art.50-53, the Press Labor Law Art.26-30, the Trade Unions and Collective Labor Agreement Law Art.78, the Occupational Health and Safety Law Art.26.
NAZALI Attorney Partnership