Several Turkish companies are undertaking projects related to construction, infrastructure, energy, port management and similar projects in various foreign countries. Alongside the foreign citizens working on these projects in foreign countries, Turkish companies mostly wish to take their existing Turkish employees to their overseas companies, or recruit new Turkish employees specifically for their projects abroad. In this article, the procedure for recruiting Turkish employees in overseas companies and the applicable law to govern these overseas employment contracts will be reviewed.
Bilateral Labor Force Treaties
Bilateral labor force treaties are international treaties enabling labor transfer between two countries, which regulates the terms and conditions for the employee's employment and living standards, security, return to home country, and etc.
As of the date of this article, the Republic of Turkey is a party to bilateral labor force treaties executed with Germany, Austria, Belgium, Netherlands, France, Australia, Libya, Jordan, Qatar, Northern Turkish Republic of Cyprus, Azerbaijan and Kuwait. If employers wish to recruit Turkish employees in any of these countries, firstly, the terms of the related bilateral labor force treaty should be observed. If any special procedure is designated for recruitment, the bilateral labor force treaty shall be applied.
Procedure for Overseas Recruitment
In addition to the procedure regulated under the related bilateral labor force treaty, as per Article 4 of the Overseas Recruitment Regulation1, the Turkish Employment Agency and private employment agencies, which are permitted by the Turkish Employment Agency to provide intermediary services for finding employees, are authorized to intermediate for employers who wish to recruit Turkish employees for their overseas companies. Companies may take employees to work at overseas companies after preparing and obtaining approval of the documents listed under Article 5 of the Overseas Recruitment Regulation and the overseas employment contract by the Turkish Employment Agency. In practice, standard form contracts related to overseas recruitment prepared by the Turkish Employment Agency are executed between the employer and the employee.
Applicable Law to Overseas Employment Contracts
In the case of overseas recruitment, applicable law provision in overseas employment contracts is usually designated as the foreign law in which the employment will take place. Although the parties determine foreign law as the applicable law, if a dispute arising out of an overseas employment contract is taken to the Turkish courts and the Turkish courts are competent to hear the case, the Act on International Private and Procedural Law ("AIPPL") shall be applied due to the element of foreignness established by overseas recruitment.
As per Article 27 of the AIPPL, employment contracts are subject to the applicable law designated by the parties, provided that the minimum protection arising out of the mandatory rules of the employee's habitual work place are reserved. In cases where the parties did not designate an applicable law, the law of the habitual work place of the employee shall govern the employment contract. If the employee is temporarily working abroad, such work place will not be deemed as the habitual work place. In cases where the employee is consistently working in several countries without working habitually in one state, the employment contract is subject to the law of the state where the main work place of the employer is located. What is meant by the main work place in this clause is the place of the headquarters of the employer.2 However, pursuant to paragraph four of the same article, in consideration of all of the circumstances, if there is a law more tightly related to the contract, that particular law shall govern.
It is understood from the above stated Article 27 of the AIPPL that the parties are free to choose the applicable law, but if the applicable law chosen by the parties offers less protection to the employee in comparison to the law of the employee's habitual work place, then the law of the habitual work place that grants more protection to employee shall be applied. Due to the lack of equal negotiation power between employers and employees, and since the applicable law chosen by employers may be imposed on employees, the legislator has chosen to regulate this article. If the chosen law grants more protection to the employee than the habitual work place law, the chosen law shall be applied with all of its provisions without any legal limitations.3 In determining which law is more beneficial to the employee, specific provisions of each law applicable to the dispute are compared, rather than comparing the provisions of both laws, in general.4
When determining the habitual work place, employment contract shall be observed in general, and the state, where the employee dominantly conducts his/her job by considering the quantity, quality and duration of the work, matters most and, thus, the habitual work place is accepted as "the work place where the material and dominant part of the work takes place."5 Turkish employees who are employed for overseas projects are generally employees recruited specifically for such projects and for the duration of such projects. For the employees recruited for a specific project abroad, an inference can be made that the habitual work place of such employees is the foreign state, hence the provisions of Turkish law shall not be applied to them. However, as explained below, the Turkish Supreme Court treats this matter differently due to the provisions of directly applicable rules and public order regulated under Articles 5 and 6 of the AIPPL.
Directly Applied Rules and Public Order
Most of the regulations in the labor law regarding the protection of business life, social security, strikes and lockouts, maximum working hours, which are entered into force due to the state's economic and social policies, are identified as directly applied rules.6 As per Article 6 of the AIPPL, "In situations where the competent foreign law is applied and in cases that fall under the scope of directly applied rules of Turkish law with respect to the purpose of regulation and field of application, such directly applied rule of Turkish law is applied." It is aimed to protect the public interest with directly applied rules. Due to the nature of these rules, even if the employment contract is governed by foreign law, the provision designated under the foreign law shall not be applied, but the directly applied rule of the Turkish law shall be applied, instead.
Additionally, Article 5 of the AIPPL sets forth that "In case the provision of a competent foreign law to be applied for a specific event is evidently contrary to the public order of Turkey, that provision is not applied; Turkish law is applied in cases where deemed necessary." For public order intervention, the decision to be made after applying the foreign law to the case shall explicitly contradict the principles of Turkish law.7
Because employees are the weaker parties against employers, employment contracts differentiate from other types of contracts under Turkish law. Pursuant to Supreme Court precedents, the choice of law in employment contracts is narrowly recognized and, thus, employees are prevented from being faced with lower standards than the ones in Turkish law. Briefly, in cases where foreign law grants less protection to the employee, the corresponding provision under Turkish law is applied.
For instance, the 22nd Civil Chamber of the Supreme Court resolved that "Proceedings regarding employee receivables arising from overseas employment between employer and employee are related to public order. Therefore, according to the material facts and mandatory provisions, the case should be resolved pursuant to Turkish law." (Decision numbered 2015/16473E., 2015/25517K. and dated 28.09.2015).
Similarly, the 9th Civil Chamber of the Supreme Court, which is the other civil chamber hearing labor law disputes, stated in a case in which the employee was requesting employee receivables by asserting that the employment contract was terminated without any valid reason during the employment in Libya, "The provisions regarding the jurisdiction of the labor courts and job security under Turkish labor law are mandatory provisions that are related to the public order. Existence of job security provisions under Libyan labor laws are not asserted in the case, and even if they exist, any contradictory provision with Turkish law shall explicitly be contrary to Turkish public order and, thus, the court shall apply Turkish law because of Article 5 of the AIPLL." (Decision numbered 2009/31301E., 2010/30289K. and dated 25.10.2010).
In the same direction, the 22nd Civil Chamber of the Supreme Court set forth that "Other benefits that are being provided to the employee or which can be measured with money (such as continuous bonus payments, fuel allowance, clothing allowance, rent, shelter allowance, etc.) in addition to the main salary shall be considered in calculating the amount of severance and notice payments." (Decision numbered 2016/15857E., 2016/18919K. and dated 23.06.2019).
On the other hand, there are resolutions of the Supreme Court in which it did not hold the employer responsible for the outcomes of re-instatement cases, which were resolved in favor of the employees, because it was actually not possible for the employees to start working in the foreign state.8
As understood from the Supreme Court precedents, even if a foreign law is designated as the applicable law under the employment contract, if a dispute between the parties is taken to competent Turkish courts, and foreign law grants less protection to the employee for such matter in comparison to Turkish law, Turkish law shall be applied to the case either due to directly applied rules or public order intervention. On the other hand, if a foreign law grants more protection with regard to other employment law matters, then the foreign law shall be applied.
Turkish companies undertaking projects in foreign countries generally recruit Turkish employees to work in those projects. Employers wishing to recruit Turkish employees for overseas companies shall firstly check whether a bilateral labor force treaty is executed between the Republic of Turkey and such state. If a bilateral labor force treaty is executed, the recruitment procedure set forth under the treaty shall be observed. Additionally, each overseas employment contract shall be approved by the Turkish Employment Agency. As to the merits of overseas employment contacts, foreign law is mostly determined as the applicable law that governs the contract. As per Article 27 of the AIPPL, employment contracts are subject to the applicable law designated by the parties, provided that the minimum protection arising out of the mandatory rules of the employee's habitual work place are reserved. The work place where the material and dominant part of the work takes place is accepted as the habitual work place. In this regard, the habitual work place of the employees who are recruited specifically for the project abroad is the foreign state. Having said that, the Supreme Court prevents employees being faced with rules granting less protection in comparison to Turkish law, and applies Articles 5 and 6 of the AIPPL regulating public order and directly applied rules and, thus, applies Turkish law to each case, where the applicable foreign law grants less protection to the employee.
1. Published in the Official Gazette dated 16.02.2008 numbered 26789.
2. Tarman, Zeynep Derya: Yabancılık Unsuru Taşıyan İş Sözleşmelerine Uygulanacak Hukuk, AUHFD, 59 (3) 2010: 521-550, p.537.
3. Nomer, Ergin: Devletler Hususi Hukuku, 22. Bası, Beta, 2017, p. 345.
4. Nomer, p. 345.
5. Sarıöz Büyükalp, A. İpek: Mutad İşyeri Kavramı ve MÖHUK m.27/3'ün Uygulanması Sorunu, Hacettepe HFD, 8(2) 2018, 195 – 248, p.206. https://dergipark.org.tr/tr/download/article-file/659223 (Last Access Date: 23.08.2020)
6. Şanlı, Cemal; Esen, Emre; Ataman Figanmeşe, İnci: Milletlerarası Özel Hukuk, Vedat, İstanbul, 2013, p. 275.
7. Tarman, p. 544.
8. Kar, Bektaş: Yurtdışı Hizmet Sözleşmelerinde Milletlerarası Özel Hukuk Uygulaması İş Hukuku Sorunları, Ankara 2017, p. 44.
Originally published August 2020
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