Turkey: Termination of Employment Agreements Due To Insufficient Performance

Termination of employment must be considered as a last resort under any circumstance, employers are obliged to make a sincere effort not to terminate employment agreements. This rule is called "ultima ratio" principle and governs the entirety of Turkish labor law.

Pursuant to Article 18 of the Labor Law, insufficient performance is among valid reasons for termination. Although what constitutes insufficient performance is not defined within the Labor Law, it can be understood from Court of Appeals' decisions.^[1]

As per the High Court of Appeals' precedents, there is insufficient performance where, for instance, an employee's performance is lower than the performance of the employees who undertake the same or similar works, or where an employee's concentration is lower than expected, or the employee fails to improve his/her abilities or knowledge, suffers from a lack of adaptation or a specific kind of sickness of the employee's keeps him/her from working constantly and efficiently.

Insufficient performance has to be determined objectively, in other words, the employer has to exclude its prejudice and personal preferences when determining and deciding on the insufficient performance of an employee. The objectivity principle here can be described as implementation of the same rules for each employee undertaking the same or similar works. When an employee's performance is first determined to be insufficient, in consideration of the above mentioned principle, the foregoing steps should be taken:

1. The employer shall issue a warning letter, apprising the employee of his/her insufficient performance, elaborating the expected performance standards and stating that his/her improvement in his/her performance will be closely watched over.
2. The employer has to make sure that the employee undergoes a certain performance evaluation system by taking into consideration the employee's opinion as well.
3. In case the employee fails to achieve the performance targets detailed in performance evaluation system, the employer should obtain the employee's written defense as to his/her failure.
4. If the employer concludes that the employee's defense does not justify his/her insufficient performance, the employer shall issue another warning letter regarding his/her failure to reach the standards set out by the employer. Following the service of this warning letter, the employee should be observed closely for a reasonable amount of time to see whether there is any improvement in performance. Here "reasonable amount of time" shall be determined on a case-by-case basis yet the High Court of Appeals' approach in this regard often requires 6 months' observation period before taking an action.
5. If the employee does not show any progress in his/her performance despite two separate warnings, the employer can now consider moving the employee to another position that may be appropriate for the employee's seniority and qualifications, within the same or another workplace of the employer, both local and abroad. According to Article 22 of the Labor Law, since such offer for changing the employee's position is an essential change in working conditions, the employer must notify the employee in writing with respect to the relevant change together with the reasons and the purpose of such change. So in order for such position change to be executed, the employee should consent to this change in writing within 6 business days as of the date on which the offer for the position change is notified to the employee.
6. Provided that the employee does not accept the position change offer within 6 days or there is not even a position available to the employee in the first place, the employer may be entitled to terminate the employment agreement on valid reason based on the employee's insufficient performance.

However, above all, the aforementioned criterion shall be constructed on the most essential targets that the employee is responsible to reach, in other words his/her expected performance criteria shall be determined beforehand under any circumstance. This is because according to the High Court of Appeals, if there is no starting point, there is nothing to compare either.

Accordingly, if the employer does not follow the foregoing steps, a reemployment lawsuit to be initiated against the employer within 1 month as of the termination date would result in reinstitution of the employee.