In its recent decisions1, the Turkish Court of Cassation conducts a comprehensive evaluation of the organic connection when determining whether the legal entities named as defendants in the case are jointly and severally liable for the employment receivables.
In this context, taking into account the definition of organic connection provided in the case law of the Court of Cassation2 and that of the General Assembly of Civil Chambers of the Court of Cassation, actors such as the legal entities sharing the same address, having similar partnership structures or boards of directors, having the same representatives, operating in similar fields, share transfers, collusive transactions, and the specific circumstances of the case are taken into consideration in determining the existence of an organic connection between legal entities.
In employment practices within group companies, it is frequently observed that employees provide services not only to the employer listed in their social security records but also to other companies within the group. In such cases, the Court of Cassation holds that it would be inappropriate to impose joint liability for employment receivables solely on the basis of an organic connection between the legal entities, as well as to attribute liability exclusively to a single legal entity on the grounds that the employee was formally registered under only one employer. At this point, the aim of the Court of Cassation is to determine the form of liability in a fair and equitable manner through a more comprehensive and detailed examination. Therefore, in assessing the liability of legal entities for employment receivables, it is required to concretely identify whether any of the following conditions are present:
- transfer of workplace between companies/employers,
- transfer of the employment contract,
- principal employer–subcontractor relationship, and
- joint employment.
The Court of Cassation has also provided clarity on the concept of "joint employment." While the existence of a group of companies is not a prerequisite for joint employment, it is noted that such arrangements typically arise within group company structures. For joint employment to exist, "there must be a legal relationship between the employee and the employers that renders it impossible to assess each employer's relationship with the employee separately". In such cases, where the employee performs the same work for multiple employers, the existence of separate employment contracts with each employer is not required. In situations of joint employment, legal entities are considered jointly and severally liable for employment receivables, and the employee is entitled to direct claims against any or all of the legal entities involved.
The Court of Cassation also emphasizes that the mere existence of an organic connection is not sufficient to lift the corporate veil. The doctrine of lifting the corporate veil has been developed in practice, particularly in group company structures, to prevent employees from being presented as working for a different company in appearance only. The term 'lifting the veil' refers to revealing the actual (principal) employer behind the corporate structure, thereby allowing the employee to pursue their claims against that principal employer. As noted above, in defining organic connection, the Court of Cassation stresses that "the existence of an organic connection alone does not justify the lifting of the corporate veil; even if such a connection is established between companies, in order to lift the veil and hold the entity behind it liable for the debt, it must be proven with concrete evidence that fraudulent transactions were carried out in bad faith with the sole intention of evading creditors and causing harm to them."
In conclusion, in its recent decisions concerning the apportionment of liability arising from employment receivables, the 9th Civil Chamber of the Court of Cassation first conducts a detailed assessment of the issues of organic connection and the lifting of the corporate veil. Subsequently, the court applies these legal concepts to the specific facts of the case with precision, aiming to ensure a fair and equitable determination of the legal entities' liability.
Footnotes
1 The Court of Cassation, 9thCivil Chamber, Case No. 2024/5123, Decision No. 2024/7060, dated 17.04.2024, The Court of Cassation, 9th Civil Chamber, Case No. 2024/3199, Decision No. 2024/5047, dated 18.03.2024, The Court of Cassation, 9th Civil Chamber, Case No. 2023/14418, Decision No. 2023/11764, dated 12.09.2023, The Court of Cassation, 9th Civil Chamber, Case No. 2023/4588, Decision No. 2023/8981, dated 12.06.2023, The Court of Cassation, 9th Civil Chamber, Case No. 2023/6993, Decision No. 2023/7149, dated 15.05.2023.
2 The Court of Cassation, 9th Civil Chamber, Case No. 2021/13328, Decision No. 2022/1791, dated 15.02.2022.
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