Turkey: Termination Of Employment Contracts Through Mutual Rescission

1 In General

The employment relations between the employers and employees may come to an end for certain reasons which may stem from either the termination of the agreements or reasons other than termination thereof.

Fixed term employment contracts come to an end on the expiration of the periods specified at the outset whereas the termination of the employment contract of an employee working at a workplace under the scope of job security with an employment contract for an indefinite duration is subject to certain criteria/reasons under the scope of the Labour Law.

The employers may rely on solely the grounds enumerated in the legislation for terminating the employment contracts of the employees working at a workplace under the scope of job security with an employment contract for an indefinite duration.

The parties may end the employment relations between the same upon reaching an agreement to that effect. The discharge of the employment contract without termination upon the agreement is called "mutual rescission".

Mutual rescission agreements are not explicitly regulated under the Labour Law numbered 4857. The reason for this is that the discharge of the employment contracts through mutual rescission is subject to the general principles of the Code of Obligations due to their contractual nature.

The employment contracts of definite or indefinite duration may anytime be discharged by mutual agreement.

Mutual rescission is usually a method generally referred as an alternative to the benefiting of the employees at the workplaces under the scope of job security from the job security provisions. Mutual rescission is of a nature which prevents the filing of a re-employment lawsuit by the employees. At this point, the issue which is required to be evaluated in particular is whether the mutual rescission is based on the actual intent of the employees or not. The mutual rescission agreements based on the actual intent of the employees are necessitated to be accepted whereas the mutual rescission agreements which enable the employers to carry out concealed terminations in order to hinder the utilization of the legal benefits of the employees should be accepted as invalid.

The employers should inform the employees as to the fundamental aspects of the validity of the mutual rescission agreement to be executed as stipulated by doctrine and judiciary and the employee should have "reasonable benefits" for mutual rescission.

2 In Terms Of Form

There are no requirements as to form given that mutual rescission agreements are not explicitly regulated under the Labour Law. Mutual rescission agreements may be executed orally or in writing. In addition, mutual rescission agreements may also be executed expressly or implicitly. Nevertheless, in terms of conclusive force thereof, mutual rescission agreements should be executed in explicitly and in writing. The drawing up of the mutual consent of the parties in writing and in an explicit manner is of crucial importance in terms of proof in the problems which may arise in the future.

3 Reconciliation Of The Intentions Of The Parties

The most significant characteristic of mutual rescission agreements is the reconciliation of the intentions of the contracting parties for the termination of the employment contract. What is necessitated whilst the mutual rescission agreements are drawn up is the expression of the consent of the contracting parties to terminate the agreement explicitly and in a comprehensible manner to eradicate all doubts. Yet, sometimes in practice, the reconciliation of the intentions of the parties for the termination of the employment contracts may also be implicit. For instance, the prioritising of an employer at a workplace to make collective redundancies of the intentions of the employees to volunteer shall give rise to an implicit mutual rescission agreement between the employer and the employee.

4 Invalidity Of The Mutual Rescission

The most significant condition for the validity of a mutual rescission agreement is that the intentions of the parties are mutual and are in the same direction. The fact that one of the parties is not in the same opinion/intention with the other party for the termination of the employment contract shall render the mutual rescission agreement invalid.

In terms of the validity of the mutual rescission agreement which is executed, the fundamental aspects stipulated by doctrine and judiciary are that the employees have been informed by the employers as to the consequences of the mutual rescission and that the employees have "reasonable benefits" for mutual rescission.

From the standpoint of the judiciary, with respect to the existence of reasonable benefits, the payment to the employees of the severance and notice payments within the scope of the job security are not deemed sufficient and additional payments are required to be made to the employees.

Another issue that necessitates to be examined herein is the amount of the additional payment to be effected to the employee. The 9^th Circuit of the Supreme Court of Appeals stated in its decision with the File number of 2008/42179, Decision number of 2009/6949 and date of 16.3.2009 that "It is possible for the parties to ascertain severance and notice payments and job security compensation and even some or entirety of the wages pertaining to the lost period and other benefits in the revocation agreements".

Whilst the reasonable benefit standard is evaluated, whether the employees are deprived of payments arising from certain legal obligations as a result of the payment of the execution of mutual rescission agreements should be taken into consideration. Such payments should definitely be included in the mutual rescission agreements. Moreover, certain additional opportunities may also be provided to the employees other than such payments.

5 Conclusion

Mutual rescission agreements are agreements executed for the termination of the employment contracts upon the mutual agreement of the employees and employers. There are no regulations on this subject in the Labour Law. Despite the lack of any explicit provisions in this matter in the general provisions, mutual rescission agreements are subject to the general principles of the Code of Obligations due to their contractual nature. The decisions of the Supreme Court of Appeals provide guidance in the determination of the practice.

The Supreme Court of Appeals pays great attention to this matter and predicates the validity of the mutual rescission agreements on the "reasonable benefit" criterion and advocates that each concrete case is considered on a case-by-case basis.

In order for a mutual rescission agreement to be valid, easily understandable intentions of the parties, payment of the legal rights and even the payment of further (additional) monies in addition to the legal rights are significant criteria.

The matter to be focused on - when the validity of the mutual rescission agreement is considered - is whether the employees incurred damages or not. The mutual rescission agreement should be accepted to be valid if the employer treated the employee within the framework of good faith, no pressure is put on the employee, employee has been informed by the employer, and employee has not incurred any damages in signing the mutual rescission agreement and even have reasonable benefits.

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.