Turkey: The High Court Of Appeals Concludes That The Employees Of A Foreign Company Must Be Considered In Terms Of The Number Of Employees Of Its Turkish Affiliate Regarding The Applicability Of Job Security Provisions

Article 18 of the Turkish Labor Law No. 4857 ("Labor Law") provides that an employer who terminates the employment agreement of an employee who (i) is engaged for an indefinite term, (ii) is employed in a workplace with thirty (30) or more employees, and (iii) meets a minimum seniority requirement of six (6) months, must rely on a valid reason (i.e., provide "just cause") for such termination. A valid reason for termination can be based on the underperformance or inappropriate conduct of the employee in question, or it may relate to the operational requirements of the workplace or the work itself. This provision offers a certain amount of job security to designated employees by requiring a valid reason for the termination of an employment agreement, as long as the other conditions specified by the relevant provision are satisfied.

One of the conditions enumerated under Article 18 of the Labor Law is that there must be at least thirty (30) employees in the workplace for the job security provision to be applicable to a particular company. Moreover, employees working in the same field of activity who are employed at other workplaces belonging to the same employer are also taken into account in terms of the number of employees of the relevant company within the scope of Article 18 of the Labor Law. In this context, the determination of whether the threshold of thirty (30) employees is exceeded may not be straightforward if the relevant employer is an affiliate company with few employees in Turkey whose main/parent company is established abroad and comprises more employees.

A strict interpretation of Article 18 of the Labor Law requires that only the employees who are working at the relevant workplace must be taken into consideration in terms of the applicability of the job security provisions. In this case, adopting a strict interpretation of Article 18, only the employees of the affiliate company established in Turkey would have to be counted to determine whether the thirty (30) employee threshold has been met. That being said, the High Court of Appeals has concluded that, in this scenario, the employees of the foreign main company must also be included in terms of the number of employees of the affiliate company established in Turkey, with respect to the application of the job security provisions.

In the dispute subject to the decision of the 9th Civil Chamber of the High Court of Appeals (dated March 14, 2018, and numbered 2018/1959 E., 2018/5292 K.), the employee claimed that the employees of the main company established in Germany should have been taken into account for the calculation of the number of employees of the employer, regarding the applicability of the job security provisions with respect to the Turkish affiliate company. The local court had denied the employee's claims, as there were fewer than thirty (30) employees working at the affiliate employer company at the time of the employee's termination. The local court had justified its dismissal of the plaintiff's claim that the employees of the main company (established in Germany) must also be taken into account by stating that the employer {i.e., affiliate) company was an independent company established in Turkey, and that it was separate from the main company established abroad. In this regard, it is evident that the reasoning of the local court was based on the legal principle of "corporate separateness".

However, the 9th Civil Chamber of the High Court of Appeals quashed the local court's decision, by declaring that the "organic link" between the main company and its affiliate company necessitated the consideration of the employees of the main company in terms of calculating the number of employees of the affiliate company for the application of the job security provisions. Having said that, the Court did not elaborate or provide any further explanations as to what exactly constitutes an "organic link" between the affiliate company and the main company.

The decision of the 9th Civil Chamber of the High Court of Appeals can be said to represent a departure from the "corporate separateness" principle, as the Court concluded that the employees of the foreign (main) company must also be counted in terms of the application of the job security provisions to the affiliate company, despite the fact that the main and affiliate companies had independent and separate corporate identities. This result cannot be considered as a surprise; however, as the High Court of Appeals had already adopted a similar approach with respect to company groups (holdings) in its previous decisions. Indeed, the 9th Civil Chamber of the High Court of Appeals had concluded (in its decision dated January 23, 2007, and numbered 2007/29128 E. 2007/441 K.) that, even though only the employees of an employer company are taken into account for the application of the job security provisions (despite the fact that the employer company belongs to a company group), as all companies are independent and separate from each other in terms of their corporate identity, if there is co-employment, (i.e., if the employee performs work for more than one company belonging to the same company group), all employees of the relevant companies in the company group/holding must be taken into account in terms of the application of the job security provisions. Therefore, it can be observed that the High Court of Appeals has now adopted a similar approach with respect to the Turkish affiliate companies of foreign main companies.

Nevertheless, the decision of the 9th Civil Chamber of the High Court of Appeals can be criticized for failing to provide any detailed explanation or guidance in terms of what constitutes an "organic link" between main companies and their affiliates. The Court's decision indicates that, in this particular case, the trade registry records were taken into consideration when assessing whether there was an organic link between the main company established in Germany and the affiliate company in Turkey. This implies that the High Court of Appeals has taken the partnership status of a company into account while assessing the "organic link" between the two companies. Therefore, it could be concluded that, if a sole shareholder of an affiliate company is a main company established abroad, or if all the shareholders of an affiliate company are companies established abroad belonging to the same company group (holding), then the High Court of Appeals may possibly conclude that an "organic link" exists between these companies in terms of the applicability of the job security provisions.

Consequently, further to the 9th Civil Chamber of the High Court of Appeals' recent decision, the employees of the main company established abroad can also be taken into account when calculating the number of employees of the affiliate company established in Turkey in terms of the applicability of the job security provisions, provided that there is an "organic link" between these companies, even if such companies have separate and independent corporate identities.



This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in March 2019. A link to the full Legal Insight Quarterly may be found here.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
 
Email Address
Company Name
Password
Confirm Password
Country
Position
Industry
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions