Turkey: New Turkish Code Of Obligations Implications Of General Service Contract Provisions On Turkish Labour Law (Duty Of Diligence And Loyalty)

I. Introduction

The Turkish Commercial Code and the Turkish Code of Obligations have simultaneously gone through a major change, which will affect many areas of Turkish laws including Turkish Labour Law. This will take effect from July 1^st, 2012 and is expected to be a new era in Turkish commerce and private practice as a result of the inventiveness of the lawmakers assuming an improved manner.

II. General Service Contract

The relevance between the Turkish Code of Obligations and Turkish Labour Law will expose itself mostly on the terms and conditions of a "General Service Contract" stipulated under the Turkish Code of Obligations starting with Article 393.

General Service Contracts will apply only to "employees" not subject to the Turkish Labour Code numbered 4857 ("Turkish Labour Code") and where there are no explicit provisions stipulated under the Turkish Labour Code including other labour codes such as Maritime or Press.

The application of the General Service Contract's terms and conditions only to employees not covered under the Turkish Labour Code would not prevent one from its application to issues emerging from an employment relationship not stipulated under the Turkish Labour Code, as the General Service Contract constitutes also a part of Turkish Labour Law.

Since the inception of the Turkish Labour Code in May 22^nd of 2003, the Turkish High Court of Appeals took many decisions regarding the most debated problems and issues under Turkish Labour Law. Fortunately, many of them have been incorporated as a new rule to the Turkish Code of Obligations.

III. Duty of Diligence & Loyalty

One of the most important rules adjusted and expanded by the new Turkish Code of Obligations under Article 396 is the "Diligence Duty" that requires compliance from the employee, which is obviously considered under the same umbrella with "Duty of Loyalty". As a result, the Turkish Code of Obligations gained a new provision with the heading "Duty of Diligence and Loyalty".

In view of the fact that in relation with the duty of loyalty, there has been a gap in the regulations of the Turkish Labour Law, the Turkish High Court of Appeals used to apply the same rules determined for the "attorney-client relationship", under its verdicts. In the "attorney-client relationship", the attorney is supposed to perform its obligations towards its client in a "good way", which covered its "diligence duty" and s/he is obliged to act "for the benefit of its client and according to the wishes of the latter" which covered "duty of loyalty." Thus, a further Turkish High Court of Appeal jurisprudence has been gained as an enacted rule.

IV. Due Care & Use of Material

As a statute incorporated from Turkish Labour Code, the employee is obliged duly to use the machines, tools and equipment, technical systems, facilities, and vehicles owned by the employer. At the same time, the employee is under the duty to take care of the material that is entrusted to him.

According to current discussions, the interpretation of this new rule may cause conflict when the limits of the employee's "due use" or "care" have to be set. Moreover, how damages as a result of such duty's omission will be determined is another problem. Certainly, one can claim that the general rules of the Turkish Code of Obligations will apply in order to determine the degree of the fault when causing such damages.

However, a more detailed investigation is suggested considering the philosophy of modern labour laws and the balance between the employee and the employer's properties in eliminating such damages. In a potential conflict, the court should at least fairly scrutinize whether the employer has enabled the employee to rest during the working hours or provided the employee with all the working conditions required by applicable law and rules.

V. Non-Compete

As a further part of "duty of diligence and loyalty", the employee is obliged to refrain from competitive acts against the employer. The employee is prohibited to breach its "duty of diligence and loyalty" by entering into contracts with third parties in consideration of a payment.

At the same time, the employee is banned to perform acts and make transactions which may result in competition with the employer. Such obligation will last for the term of the employee's employment contract.

The employer and employee are still enabled to agree in writing the term of the non-competition obligation after the expiration of the employment contract as it used to be during the period of the old Turkish Code of Obligations.

One of the most important changes brought by the new Turkish Code of Obligations is the limitation of the employee's non-competition obligation in terms of its period, i.e. which will not exceed two (2) years provided that special circumstances and conditions do not require otherwise.

Moreover, the new Turkish Code of Obligations leaves the discretion in determining the scope and period of the "exaggerated" non-competition obligation to the judge. In other words, the judge is enabled to limit such scope and period by taking all the circumstances and conditions into consideration and evaluating fairly the counter undertaking of the employer. As it was in the old Turkish Code of Obligations the non-competition obligation should be determined considering the place, period, and type of the work, which is equalled in the employment contract usually to the territory, term, and sector. The consequences of the employee's breach of its non-competition obligation and the expiration of such obligation remained the same as in the old Turkish Code of Obligations.

Under the same provision stipulating the employee's "duty of diligence and loyalty", the employee is prohibited either to use the information s/he was acquired during her/his work, particularly production or commercial information for her/his own benefit ,or to disclose them.

Such prohibition is limited with the term of the employee's employment contract. If for the protection of the employer's just benefit it is required, the employee will also comply with the non-disclosure obligation after termination of the employment relationship. However, it is understood that the term for the continuance of such obligation will be evaluated in each circumstances by the judge since no limit is envisaged.

VI. Non-Disclosure & Just Cause

The term "non-disclosure obligation" is certainly not new to Turkish labour law. Under Article 25 of the Turkish Labour Law, the law entitles "the employer to terminate the employment contract on just cause with immediate effect, if the employee would act untruthfully or disloyally such as disclosing the employer's professional secrets".

Also under the Turkish Penal Code, it is stipulated that any person delivering or disclosing commercial secrets, banking secrets or customers' secrets that are acknowledged by such person because of its title or duty, proficiency or occupation to unauthorized persons are underlying an imprisonment of one to three years or a judicial fine of a considerable amount. If such information were unlawfully received and thereupon delivered or disclosed in breach of such prohibition, the same penalty will apply. Whether the consequences of the non-compliance with the "non-disclosure obligation" of the Turkish Labour Law would result in breaching the Turkish Penal Code's above mentioned provision, should certainly be evaluated in each case.

However, by the clear provision of the new Turkish Code of Obligations such non-compliance would lead to the breach of the employment contract on the side of the employee, which may lead to the employer's just termination of the employment contract with immediate effect. Moreover, according to the Turkish Labour Law, the employer would be entitled to claim damages from the employee if they have occurred as a result of the employee's untruthful and disloyal behaviour.

On the other hand, in a jurisprudence of the Turkish High Court of Appeals, the court decided that the employer should prove whether it faced damages because of the employee's alleged breach of the non-disclosure obligation and denied the allegations of the employer in relation thereto that no sufficient evidence has been provided¹.

VII. Conclusion

In order to determine the degree of the employee's mistakes, general rules for the employee's liability against the employer will apply. The new Turkish Code of Obligations has specified certain benchmarks in determining the degree of the fault which are whether the work is dangerous, whether the work requires proficiency and education, and the employee's talent and qualifications that are known or should be known by the employer.

Consequently, there are several aspects that need to be evaluated in order to determine the "Duty of Diligence and Loyalty" of the employee. However, at least in the new Turkish Commercial Code, such duty is comprised of "diligence", "loyalty", "carefulness", "non-competition", and "non-disclosure".

Everyone may not be good, but there's always something good in everyone. However, we hope that these changesmay be good and beneficial for everyone since it is predicted that these changes will be beneficial to all, and protect the innocent from exploitation.

Footnotes

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.