Article 18 of the Turkish Labor Code numbered 4857, namely the "Employment Protection Act" has changed the employment environment in Turkey significantly ever since its promulgation in 2003.

Although nearly a decade has passed, the Court of Appeals decisions have only provided the guidelines for termination based on the performance of the employee.

The referenced act is applicable to the employment contract of the relevant employee if; the contract is for an indefinite period, the relevant employee has a minimum seniority of 6 (six) months, the relevant employee is not a representative of the employer, and the employer employs 30 (thirty) or more employees.

Undoubtedly, termination of an employment contract should be the last resort. In view of this understanding the Act requires the employer to provide the notice of termination stating precisely one of the termination reasons provided in the referenced act. Accordingly, the employer terminating the employment contract must base its grounds on a valid reason arising from the (i) efficiency (performance) or (ii) manners of the employee or the (iii) requirements of business, business enterprise or workplace, and a defense needs to be obtained. In the event the employer does not abide by these rules, the courts decide for the reinstatement of the employee.

As the burden of proof lies with the employer, the Turkish Labor courts have a general tendency to favor the employee, the termination process is detailed and complex, and most reinstatement lawsuits are successful.

In this legal environment, in order to terminate the employment contract of a poor performer, the employer needs to prove to the court that the termination based on the performance of the employee was a valid termination reason.

The condition precedent of proving that the relevant employee's performance was a valid ground for termination is to implement a performance evaluation system which is in line with the guidelines provided by the courts. In other words, the existence of a performance evaluations system is not sufficient, as it needs to be a system which is in line with the below principles:

(i) The evaluation system should be based on objective criteria. Employees who do the same job should be subject to the same rules.

(ii) The criteria and the targets, goals and objectives should be written and served to the employee by the employer in advance. These criteria should be discussed and taken into consideration during a performance evaluation.

(iii) The targets, goals and objective of the employees should be realistic and reasonable. Failing to reach the goals and targets may not be a valid reason by itself if the qualifications of the employee and the determined goals and targets are not compatible.

(iv) The lack of performance or performance deficiency should only be considered upon the continuously realized evaluations.

(v) A performance evaluation system should be created according to the requirements of the job and qualifications of the employees.

(vi) Performance evaluations should be realized periodically. The results should be shared with the employee.

(vii) It is the employer's responsibility to take necessary steps in order to improve the performance of the employee or to eliminate the poor performance. The employer should also investigate the reasons behind the performance deficiency and assist the employee to eliminate the possible factors which causes the poor performance.

Undoubtedly, the system also needs to be implemented correctly, fairly and objectively in each and every case.

It should be noted that the above mentioned rules are not limited and can be extended. Furthermore, the above rules cited from the precedent court decisions are only general guidelines for the employers to design and implement performance evaluation systems. Termination of an employment contract based on poor performance will continue to be a lingering problem until the conditions for a valid performance evaluation system are detailed and clarified.

In the absence of precise rules, employers need to act in good faith, be objective and transparent, realize the necessary steps and exert best efforts in order to improve the efficiency of the employee, duly document every step of the procedure and always consider termination as the last resort.

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.