We set forth below, the termination of employment agreement procedure and rights of the employee due to termination of the employment agreement with an indefinite term by the employer.
1. Termination Notice:
An employment agreement must be terminated with a written notice which must be served on the employee.
2. Notice Periods:
The agreements with indefinite terms may be terminated by way of giving notice period or immediately based on a fair cause.
The minimum mandatory statutory notice periods under Turkish Law are as follows:
- employees having a seniority of less than 6 months: 2 weeks,
- employees having a seniority of between 6 months to 1,5 years: 4 weeks,
- employees having a seniority of between 1,5 years to 3 years: 6 weeks,
- employees having a seniority of more than 3 years: 8 weeks.
The above periods may be increased in the contract. The employer may waive its right to require the employee to work during the notice period, in which case in lieu of notice period, the employer must pay notice pay, which shall be the gross salary to be accrued for the applicable notice period, including regular benefits received if any for such period.
3. Severance Pay:
In the event that the agreements with indefinite terms are terminated without a fair cause, the employee shall be entitled to severance pay. The reasons that will give the employer the right to terminate employment agreements on fair grounds and immediately without paying severance pay are enumerated in the Labor Law. It is, however, very difficult for the employer to prove "fair termination" in a court case as the Turkish courts are exceedingly pro-employee.
The severance pay shall be calculated as one month-salary (Salary to be taken into calculation shall be gross monthly salary plus other regular benefits, which can be measured monetarily) of the employee multiplied by the number of years employed. Please note that there is a mandatory statutory ceiling to be applied to the one-month salary to be taken into consideration when calculating the severance pay amount. The applicable ceiling is TL3438 (which is around 1500$) at the moment.
4. Should the employment agreement be terminated with notice by the employer and such termination constitutes an act of bad faith on the part of the employer, the employee shall be entitled to bad faith compensation, which is in the amount of three times the notice period pay, even if all of the notice period requirements are fulfilled.
5. In workplaces with more than 30 employees, the employees -other than "employer representatives", who may be top level managers who represent the employer and manage the company as a whole- with a seniority of more than 6 months benefit from "job security" provisions. Accordingly, the termination must be based on a "valid reason". There is a new tendency in the labor courts whereby they start to consider that in cases where the subsidiary of a foreign company in Turkey cannot adopt its decisions alone and the mother company deals with every aspect of the management and administration of the subsidiary, even if the number of employees of the subsidiary may be less than 30, the number of employees employed by the entire organization around the world are taken into account and "job security" provisions are applied to such subsidiaries. Job security provisions are applicable to liaison offices of a foreign corporation even if the number of employees employed in the liaison office is less than 30 if the foreign corporations number of employees exceed 30.
Please note that "valid reason" does not have to be as important as a "fair causes" referred to in the Section 1 hereabove. In other words, certain factors may not be considered as a fair cause to terminate the agreement immediately without severance pay and notice pay, but may be considered as a valid cause, in which case the employer would be entitled to terminate the agreement based on a valid reason by paying notice pay and severance pay and the termination shall be valid. Economic crisis, underperformance of the employee (provided that that can be demonstrated by solid evidence) or liquidation of the company may be valid reasons for terminating an agreement.
If the termination is not based on a valid cause, the employee shall have the right to file a lawsuit and demand that the termination should be cancelled and the job must be offered to him again. If the court decides that the termination is not based on a valid reason, the court cancels the termination. If the employer does not accept to employ the employee again within month, then the employer has to pay the following:
- The rights (salary and other rights) of the employee for the period up to maximum of four months, and
- Compensation in the amount of minimum four-month and maximum eight-month salary
(If the above compensations are paid, bad faith compensation referred to in Section 3 does not have to be paid in addition)
6. In any termination by either of the parties and based on any grounds, the accrued salary until the date of termination shall be paid.
7. In any termination by either of the parties and based on any grounds accrued annual leave pay for any unused paid annual leave periods shall be paid.
The above would be rights of the employees due to termination of the employment agreement by the employer.
This Memorandum provides an overview of termination of employment agreement under Turkish law. The information provided is not intended to serve as a legal advice. Before taking any action or relying on the information given, addressees of this Memorandum should seek specific advice on the matters which concern them.
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.