With a view to mitigating negative impacts of Covid-19 pandemic on social and economic life, Turkish authorities have put into force series of measures on employment related matters. Pursuant to the amendments brought to the Turkish Labor Code Numbered 4857 on 17.04.2020, the concept of so called "Termination Prohibition" has been incorporated, according to which, it is forbidden to lay off the employee from work unless there exists a good cause to do so, within the meaning of law. Said amendment is effective and in force until 17.11.2020, however taking into the account the increased number of COVID-19 cases worldwide, it is likely that the expiry date will be extended.
- The Scope of "Termination Prohibition"
Except for any of the scenarios provided below; the Employer is prohibited from unilateral termination of the employment contract in accordance with the recent amendment in law. However, the Employee is always free to submit its resignation with immediate effect at its unfettered sole discretion.
- Occurrence of any event set forth in detail at Article 25/2 of the Turkish Labor Code Numbered 4857, basically regulating behaviors of Employees which are against moral values and good faith,
- Expiration of the term at employment and service contracts of definitive period,
- Closure of business place and suspension of activities.
Put it another way, in the absence of any of the foregoing exceptions, the Employer is not entitled to terminate the employment contract, otherwise shall be subject to administrative fine.
After termination of employment relationship without good cause, if the Employee files a law suit at Labor Court for reinstatement to the work and vindicates at the court proceeding, the Employer who wrongfully terminates despite the "Termination Prohibition" is also assuming the risk of compensation payment up to 12 months of employee's salary, along with court expenses to be incurred.
To avoid any legal hassle and mitigate the risk, if the Employer is not quite sure and suspicious of existence of good causes for termination, instead of straight termination and directly assuming the risk of being subject to penalty, fines and other associated expenses, the Employer might opt for conducting a voluntary and quick mediation process, if the Employee also agrees to.
The advantage of voluntary mediation process is that, i) it is a fast alternative dispute resolution conducted out of court mechanism, and ii) once the minutes of the mediation meeting is executed by both Parties, it is deemed as a court verdict.
However, if the Employer is pretty sure on the existing of good cause to lay the Employee off, none of the foregoing restrictions apply and Employer might terminate the employment contract any time at its own will.
- Mediation Process in Termination of Employment Contracts
Pursuant to Article 18 of Mediation in Civil Conflicts Law Numbered 6325, a settlement agreement executed by and between Parties, their respective lawyers and the Mediator is deemed as a Court rendered verdict, which means for the disputes resolved under the auspices of the Mediator, Parties waive their respective rights to bring the dispute before the Court.
In practice, it is quite common for the Parties to the employment contracts who manifest their intention to terminate the relationship, bring their matter before the Mediator, instead of long lasting and relatively unpredictable court proceeding. Accordingly, any termination made with the involvement of Mediator seems not to be subject to limitations and sanctions of the concept of "Termination Prohibition".
However, termination with the involvement of Mediator does not remove the risk entirely especially during Covid-19 Pandemic Era. Social Security Institution of Turkey has not assigned a specific "Termination Code" yet for the termination through exercising mediation process, and for such terminations, Code "22-Other Reasons" are ticked up. The matter is that "22-Other Reasons" is within the realm of "Termination Prohibition", and by ticking up that option, the Employer might be subject to administrative fine, cancellation of incentives and risk losing short time working allowance.
Despite all the said downsides, the voluntary mediation is widely used in cases where the Parties mutually agree not continue with the employment relationship and seek legal certainty for their settlement.
Termination of employment contract through mediation process does not seem in defiance of "Termination Prohibition" in the first glance, however the termination type to be marked at the system maintained by Social Security Institution falls somehow under "Termination Prohibition". We believe, as a solution going forward, a separate termination type/code might be assigned for this unique mediation involved termination to avoid any misinterpretation and hesitation in practice. Comparing to mutual termination agreement, termination with mediation mechanism is much more reliable option in the sense that it is specifically regulated under Mediation in Civil Conflicts Law and in binding nature for the Parties involved, like Court decisions. Basically, it settles the matter once and for all; whereas in mutual termination agreements, there is always a chance that Employee might bring the matter before the court for reinstatement to the work or seeking for additional compensation purposes, no matter how good the conditions of termination agreement is.
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.