Turkey: Termination Of The Employment Contract By Employer Under Turkish Law

General

The Law No: 4857 Labor Code ('TLC') regulates termination of the Employment Contracts. In general TLC requires some formalities and procedures (such as notice period) for the termination of the employment contracts in order to protect the rights of the employees.

Under TLC, termination made by the employer shall be in written form and the ground for termination shall be mentioned therein.

TLC defines the employment contracts in two main categories, which are employment contracts for indefinite period and employment contracts for definite period.

An employment contract for definite period can only be executed under special circumstances determined in the article 11 of TLC such as a specific work to be performed or a work to be completed within a certain period. The reason for TLC to enable to sign an employment contract for definite period under special circumstances is to protect the employees and to ensure they benefit from the employment security provisions provided to employees who work under employment contracts with indefinite term.

The termination of the definite term contracts is not been clearly determined by TLC. According to the precedents of Court of Appeals, definite term contract shall be terminated by the employers with valid grounds determined under article 18 or justifiable grounds determined undern the article 25 of TCC.

Termination of Employment Contract with (prior) notice

Pursuant to Article 17 of TLC, the employee is entitled to terminate employment contract for an indefinite period by observing the following minimum notification periods

  1. 2 weeks if length of service of the employee is less then 6 months,
  2. 4 weeks if length of service of the employee is between 6 – 18 months,
  3. 6 weeks if length of service of the employee is between 18 months – 3 years,
  4. 8 weeks if length of service of the employee is more than 3 years.

These periods are minimum and may be increased by mutual agreement. The employer may terminate the contract of the employee by paying in advance the salary of the employee corresponding to the period of notice.

During the period of notification, the employer shall allow the employee for a sufficient time to look for a new job during working hours, without making any reduction from his/her salary. The duration of this leave of absence may not be less than two hours a day, which may be also used as a whole. e.g. 1 day leave during a week rather than using 2 hours each day.

Termination of Employment Contract without notice with justifiable grounds

The employer has the right to terminate the contract for an indefinite or definite period, under specific conditions stipulated by the provisions of TLC. The conditions set in the article 25 of TLC can be classified under as reasons of health, actions of employee against moral values and goodwill and similar circumstances; and compelling circumstances. (e.g. the employee is sentenced to imprisonment)

Please note that the right of terminating the contract on the grounds of employee's actions against moral values or goodwill shall be exercised within six working days after learning of such action by the employer and in any case within 1 year since such action.

In case of termination by the employer based on actions of employee against moral values and goodwill, employer has right to terminate the employment contract (for both indefinite and definite contracts) without a notice period and compensation for notice and/or severance. In other cases, (health reasons and compelling circumstances) the employer shall pay the severance.

Collective Dismissal

When the employer intends to dismiss employees collectively due to economic, technological, structural and similar enterprise, business or work requirements, employer notifies this to the business trade union representative (if there is any union in the workplace), respective regional directorate of the Social Security Authority and the Turkish Employment Agency in writing at least thirty days in advance.

Dismissal of;

  • at least 10 employees in a working place operating with 20 to 100 employees,
  • at least 10% of the employees in a working place operating with 101 to 300 employees,
  • at least 30 employees in a working place operating with 301 or more than 301 employees

on the same date or different dates within one month is regarded as "collective dismissal of employees".

The notification to be made under the above paragraph should include information on the reasons for the employee's dismissal, the number and group of employees who will be affected and the period of time that the dismissal procedures will take place.

Notices of termination become effective thirty days after the notification of regional directorate of the Social Security Authority by the employer of his/her intention of collective dismissal. The notice period for employees shall only start 30 days after the notice to the regional directorate of the Social Security Authority. The annual leave rights of employees cannot be deducted from any notice period.

Consequences of the Termination

When a reason for the termination of a employee's contract cannot be shown, or when the given reason is considered invalid, then legal actions may be taken by the employees. Scope of the legal actions and the claims therein, can be different depending of the number of the employees in the workplace.

i. Reinstatement of the Worker

Termination of the employment contract (for indefinite period) of an employee having at least six months service period by the employer in a workplace operating with thirty or more employees should be based on a valid reason relating to efficiency or behavior of the employee, or the requirements of the enterprise, workplace or the work. Specific reasons that cannot be considered as valid reason for the termination of contracts are determined in TLC which are not exhaustive though. The employee whose contract is terminated has the right to file a lawsuit against the employer for reinstatement within one month as of the date of notification sent for termination of the contract if the employee is in the opinion that the considered reason is invalid.

Should the court decide that the termination is invalid or groundless, the employer is obliged to re-employ the employee within one month. The employer is obliged to pay compensation to the employee corresponding to at least four months salary, at most eight months salary, if he fails to re-employ the employee within one month after his/her application. The court shall determine the amount of such compensation. In addition to that compensation, the salary and all other rights of the employee covering at most four months is paid to the employee for the period discontinued to work until the final judgment of the court is received. This amount is paid to the employee no matter the employer re-employs the employee or not.

Both employer and the employee may appeal the decision of the first instance labor court before the Court of Appeal. The possibility of arbitration in the event of dismissal also exists. Since many cases are currently being processed through the labor courts, disputes may instead be taken to arbitration. There is no provision preventing disputes arising from employment agreements from being taken to private arbitration but there is no practical procedure for solving disputes through arbitration under TLC. A regulation on this subject is considered, but has not yet been completed. We shall briefly state that no dispute has been resolved through arbitration up to date.

Following a final decision for reinstatement the employee shall apply to the employer within 10 days. Then the employer is required to reinstate the worker within one month. If the employer accepts the reinstatement, the agreement continues as if no termination had happened. If, on the other hand, despite a reinstatement decision, the employer does not have the employee start working, the employment contract is not in effect and such situation gives rise to eligibility for compensation as mentioned above.

If the employee does not apply to the employer to start working or does not start working despite the fact employer accepts the employee to start working again, the employee would not be entitled to any compensation mentioned above. The will of the employer to have the employee to start working again should be sincere.

ii. Claim for Compensations and Payments

In case there is not a justifiable ground for employer to terminate the employment contract in accordance with the article 25 of TLC, then the employee can initiate a lawsuit and claim the following:

  1. Severance Payment to be calculated at the rate of thirty days' wages for each full year since the date the employment commenced. Payment shall be made pro rata for a portion of a year. Calculation of severance pay shall be made based on the latest wage drawn. However, the ceiling for severance pay as of 2015 is TRY 3.541,37 for each year.
  2. Notice payment to be calculated according to minimum notification periods stipulated in the article 17 of TLC (as mentioned above).

Please kindly note that the employee can have above claims regardless of the number of employees in the workplace. In other words, an employee who is working in a workplace operating with thirty or more employees can initiate lawsuits for both reinstatement and compensation claims.

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.

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