Turkey: Business Transfers And Outsourcing In Turkey

Last Updated: 12 June 2017
Article by Noyan Goksu, Sumru Akter and Kemal Gurhan Aydin

Are employees statutorily protected in the event of a business transfer or service provision change?

Yes, all employees are statutorily protected in the event of a business transfer pursuant to the Turkish Labour Code No. 4857. Additionally both the Turkish Code of Obligations No. 6098 and the Turkish Commercial Code No. 6102 include protective provisions in favour of employees.

When will this statutory protection apply?

The statutory protection applies where a business or a part of a business is transferred through a legal transaction. The justification of the Labour Code covers both permanent and temporary legal transactions. This provision, however, shall not apply to transfer of a part of a business due to liquidation of assets in cases of bankruptcy.

Do employees transfer in the event of a business transfer?

Yes, employees shall be subject to transfer operation following a business transfer. Where a business or a part of a business is transferred, all rights and obligations arising out of the employment contracts that exist at the time of the transfer shall also be transferred to transferee.

The transferor and the transferee will be held jointly liable for any obligation that has arisen before the transfer and was due during the transfer. However, liability of the transferor is limited to two (2) years after the transfer.

Can employees refuse to transfer?

In fact, the Labour Code has no explicit provisions regarding employees' right of refusal. Accordingly the Commercial Code comes into play as it is considered to be lex generalis compared to the Labour Code. The Commercial Code sets forth that "In partial or full demergers, the rights and obligations arising out of the employment contract will transfer to the transferee where the employee does not object". In other words, if the employee raises an objection, then the employment contract will be considered terminated as of its expiration date, however, both the employee and the transferee will have to oblige to the contract throughout this time.

Are employees protected against dismissal?

Neither the transferor nor the transferee can terminate an employment contract due to the transfer; nor can this transfer be considered as a ground for rightful termination for the employee. However, the employer's right to termination due to economic, technological or organizational issues are reserved. Similarly, the right to justified termination due to force majeure, health and moral reasons is reserved for both sides of the contract.

What are the employer's obligations to inform and consult?

Although the Labour Code is silent in terms of the employer's obligation to inform and consult, the justification of the Labour Code refers to the European Union Directive No. 2001/23 governing the matter. The transferor and transferee are under the obligation to inform the employees about the date, reason of the transfer as well as the legal, economic and social effects which the transfer may have and the precautions which the employees may take.

What do outgoing employers have to tell incoming employers?

There are no statutory regulations that call upon the outgoing employer to inform the incoming employers. However, the information that is essential to the transfer is generally stipulated in the agreement between the transferor and the transferee.

Can employers harmonise existing and new employees' terms of employment post-transfer?

The Labour Code does not expressly stipulate the impact of business transfers on the terms of employment. According to the Court of Appeals, a business transfer might cause a material change to working conditions, which would require the employee's written consent to be submitted within six business days starting from the notification of the change to the employee. For instance, a qualified employee cannot be assigned for a position of lower qualification unless he/she provides a written consent within the statutory period. Hence employers must pay utmost attention to the essence of the change.

What other practical steps can employers take?

Depending on the circumstances and the nature of the transfer, the transfer agreement should stipulate the liability regime between the transferor and the transferee in order to avoid future disputes regarding the rights of recourse.

Are there any anticipated reforms to the legislation?

After the mining disaster in Soma, Turkey the Turkish Parliament has initiated discussions for a stricter legal scheme to ensure further workplace safety. Further amendments are under discussion at the Parliament regarding the rights of the employees who work under subcontract agreements.

What Government guidance is available?

As Turkish law respects the fundamental principle of party autonomy, no government guidance is available.

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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