Performance Evaluations And Performance-Based Terminations In Labor Law

I. INTRODUCTION

Performance evaluations are an important tool for employers in determining whether an employee is fulfilling their duty to perform work at the expected level. This process, which allows for the evaluation of an employee’s knowledge, skills, competencies, and work results according to specific criteria, is also important for the continuation of the employment relationship. Indeed, a determination of poor performance resulting from a performance evaluation may lead to the termination of the employment contract under certain conditions.

II. CONCEPTS OF PERFORMANCE AND PERFORMANCE EVALUATION

Performance, in a general sense, refers to the quality and level of effort an employee demonstrates while carrying out the work assigned to them. The Court of Cassation also considers performance in terms of the quality and level of labor the employee expends during the work process and contributes to the production of the work. In this context, performance is a broader concept that encompasses not only the numerical results achieved by the employee but also the competencies required by the job—such as knowledge, skills, and experience—as well as the level of effort demonstrated while performing the duties.

Productivity, which is closely related to the concept of performance, refers to the output or work result produced as a result of the labor expended by a worker during a specific period of time. According to the ruling of the 22nd Civil Chamber of the Court of Cassation, Case No. E. 2018/14692, Decision No. K. 2018/24703, dated November 19, 2018: “…Performance, in its simplest definition, is the measurement of productivity. The quality and level of the labor expended by the employee during the work process and contributed to the production of the work constitute the employee’s performance. The level of production—which is the result of the labor expended by the worker per unit of time—indicates the worker’s productivity. In other words, performance is a dimension of the labor involved in the work process, while productivity is the result of the labor expended per unit of time. Accordingly, a worker with high performance is expected to have a high level of productivity as well…”

As is clearly evident in the relevant Court of Cassation decision, the distinction between performance and productivity is made along these lines; therefore, while the two concepts are closely related, they do not mean the same thing.

Performance evaluation, on the other hand, is the process of systematically assessing an employee’s performance according to predetermined criteria. In this evaluation, in addition to professional competencies such as the knowledge, skills, and experience required by the job, the employee’s job description, appropriate workplace behavior, productivity, and the work and personal development goals expected of them may be taken into account. Indeed, it is generally accepted in legal doctrine that performance evaluations must be conducted within a workplace-specific system based on objective and concrete criteria.

From the employer’s perspective, the purpose of a performance evaluation is not merely to provide a basis for terminating an employment contract. Performance evaluations serve purposes such as identifying employees’ strengths and areas for improvement, determining training and development needs, enhancing the effectiveness of the work organization, and monitoring the extent to which an employee has achieved the goals expected of them. From the perspective of labor law, performance evaluations are an important tool that, within the scope of the employer’s management rights, helps determine the extent to which an employee has fulfilled their duty to perform work.

Therefore, a finding—based on a performance evaluation—that an employee has fallen short of expected standards does not, in and of itself, constitute a valid reason for terminating the employment contract. Indeed, the Court of Cassation does not consider the mere failure to meet established performance or productivity targets to be sufficient; it requires that factors such as the persistence of poor performance, the objectivity and realism of the criteria used, and the manner in which the evaluation system is applied to the employee also be taken into account.

In this regard, performance evaluation is not a means of termination based on the employer’s unilateral and subjective opinion, but rather an evaluation mechanism that must be applied within certain legal limits. This point is addressed in the decision of the 9th Civil Chamber of the Court of Cassation, Case No. E. 2015/26004, K. 2016/3144, dated February 18, 2016: “…In order for an employee’s performance and productivity results to serve as a valid basis for termination, it is mandatory to establish objective criteria. Performance and productivity standards must be specific to the workplace. The criterion of objectivity must be applied such that employees performing the same job at that workplace are subject to the same rules. Performance and productivity standards must be realistic and reasonable. For a valid reason based on performance and productivity results to exist, there must be consistently low results or results showing a downward trend. Results that vary depending on circumstances or lack consistency may not be considered sufficient grounds for a valid reason. Furthermore, failure to meet targets aimed at improving performance and productivity should not, by itself, constitute a valid reason. A valid reason may exist only if the employee has the capacity to meet high targets but fails to exert the necessary effort to do so. (As stated in our ruling dated April 8, 2008, Case No. 2007/27829, Decision No. 2008/7831) …”

III. TERMINATION BASED ON POOR PERFORMANCE IN TURKISH LABOR LAW

A. Basic Legislation

In labor law, the fundamental provisions regarding performance evaluations and terminations based on poor performance are set forth in the Turkish Labor Law No. 4857 (the “Labor Law”). In this context, Article 18—which regulates valid reasons for termination arising from the employee’s capability or conduct—Article 19—which addresses the procedure for serving notice of termination and hearing the employee’s defense—Article 20—which governs objections to termination and the burden of proof—and Article 21—which sets forth the consequences of an invalid termination—are of particular importance. Additionally, Article 25 of the Labor Law must be considered regarding whether poor performance may constitute just cause for termination. However, for the regime of termination for valid reason and reinstatement to be applicable, the conditions for job security set forth in Article 18 of the Labor Law must be met. In this context, the employee must be working under an indefinite-term employment contract, have at least six months of seniority, be employed at a workplace with thirty or more employees, and not fall under the employer representative exception provided for in the Act. In cases where these conditions are not met, the consequences of termination based on poor performance must be evaluated separately under the general provisions governing termination.

B. The Legal Nature of Poor Performance as a Valid Reason for Termination

Poor performance may constitute a valid reason for termination arising from the employee’s capability where the employee fails to perform their duties at the expected level. Indeed, pursuant to Article 18 of the Labor Law, when terminating an employment contract, the employer must rely on “a valid reason arising from the employee’s capability or conduct, or from the requirements of the business, workplace, or job.” In this context, the employee’s failure to meet the expected level of work and performance may be evaluated as a reason for termination arising from the employee’s capability, depending on the specific circumstances of the case. However, not every instance of poor performance constitutes a valid reason for termination. The poor performance must reach a certain level of severity, be persistent, and tangibly and negatively affect the performance of the work or the continuation of the employment relationship. Given the specific circumstances of the case, the fact that the employer cannot reasonably be expected to continue the employment relationship must also be taken into account when assessing whether there is a valid reason. The conditions under which performance may serve as a basis for termination will be examined in more detail below.

C. Distinguishing Between Grounds for Termination Due to Poor Performance and Those Arising from the Employee’s Conduct

In determining whether poor performance stems from an employee’s capability or behavior, the focus should be not only on the resulting poor work performance but also on the source of that performance. If an employee fails to meet the expected level of performance due to a lack of knowledge, skills, professional competence, or capacity despite demonstrating the necessary effort, this is evaluated under the category of capability; however, if an employee, despite possessing the capability to perform the job properly, acts in a manner that constitutes a breach of the duty to perform work, this is evaluated under the category of termination grounds based on conduct.

However, the doctrine states that, in some cases, reasons stemming from the employee’s lack of capability and those arising from the employee’s conduct may overlap, and in such cases, these reasons must be evaluated separately. This distinction was also clearly set forth in the decision of the 9th Civil Chamber of the Court of Cassation dated April 22, 2019, Case No. 2018/10537, Decision No. 2019/9466. In the aforementioned decision, it is stated: “…For an employment contract to be terminated due to the employee’s conduct, there must be conduct by the employee that is contrary to the employment contract and constitutes a breach of the contract. If the employee has acted in breach of the contract through negligent conduct and, as a result, the employment relationship has been adversely affected, then a valid termination based on the employee’s conduct applies. Conversely, since the employee cannot be held liable for conduct that violates the contract but is not based on fault or negligence, there can be no valid reason for termination arising from the employee’s conduct…”

In this context, outcomes such as failing to meet specific targets, a decline in sales, a decrease in production volume, or falling below a certain performance score do not, on their own, constitute evidence of an employee’s lack of capability or a behavioral violation. If an employee, despite possessing the necessary knowledge and skills and being assigned an achievable goal, neglects their duties, fails to make the necessary effort, or culpably avoids fulfilling their obligation to perform work as required, such low performance may be evaluated as having a behavioral cause. Conversely, if an employee fails to meet a target despite demonstrating the necessary effort, due to their professional capacity, experience, or competence, the issue generally relates to the employee’s capability. In addition, consideration must be given to whether the poor performance stems from causes beyond the employee’s control, such as market conditions, work organization, workload, resources provided by the employer, or unrealistic targets.

Therefore, the employer must determine the grounds for termination not solely based on the outcome of the performance evaluation, but also based on the source of the poor performance. If the termination is based on conduct, it must be established which contractual obligation the employee breached, through which specific conduct, and whether such conduct constituted a fault.

Indeed, in the same decision, the Court of Cassation states that, in addition to determining the specific contractual obligation imposed on the employee and the conduct through which that obligation was breached, it is also necessary to assess whether the employee had the opportunity to avoid the breach in question. Failing to conduct this assessment and attributing poor performance to a behavioral cause may lead to an incorrect determination of the legal nature of the grounds for termination and, consequently, to the termination process being conducted in violation of the law.

D. The Distinction Between Poor Performance and Termination for Cause

As a general rule, poor performance is not grounds for immediate termination for just cause, but rather constitutes a valid reason for termination. In the case of termination for valid reason, while the employee’s lack of capability or conduct negatively affects the continuation of the employment relationship from the employer’s perspective, it does not reach a level of severity that would require termination of the contract without even waiting for the notice period. Immediate termination for just cause, on the other hand, is a more severe legal intervention and requires the existence of a situation where the continuation of the employment relationship cannot reasonably be expected of the employer under the principles of good faith. For this reason, the employee’s mere failure to meet targets, failure to achieve expected production or sales volumes, or receiving a low score in a performance evaluation does not, on its own, constitute just cause under Article 25 of the Labor Law.

However, if a situation appearing to be poor performance actually stems from a serious and culpable breach of duty by the employee, a different assessment may be required. For example, if a sales employee falls short of the established sales target despite the necessary working conditions being provided and the employee having made reasonable efforts, this is generally evaluated within the scope of performance and capability and does not, on its own, constitute just cause for termination. However, if the same employee—despite possessing the necessary professional qualifications—fails to conduct customer meetings on a regular basis or fails to carry out the tasks assigned to them, this may constitute a valid reason for termination based on conduct, depending on the nature and severity of the violation. Conversely, if it is determined that the situation appearing to be one of poor performance actually stems from conduct that separately constitutes just cause under Article 25(II) of the Labor Law—such as the employee’s abuse of the employer’s trust while performing their duties, theft, or disclosure of trade secrets— the issue is no longer one of mere poor performance but rather a breach of obligation that may permit immediate termination for just cause.

It is important to maintain this distinction in weight between a valid reason and a just cause. Indeed, in its decision dated April 22, 2019, Case No. 2018/10537, Judgment No. 2019/9466, the 9th Civil Chamber of the Court of Cassation stated: “… Reasons stemming from the employee’s conduct and capability, in addition to those specified in Article 25 of the same law, are reasons that—while not falling under that category—significantly and negatively affect the performance of work at the workplace. In cases where the reasons stem from the employee’s conduct or lack of capability, and where it cannot reasonably be expected from the employer to continue the employment relationship, it must be accepted that the termination is based on a valid reason…” This assessment highlights the difference in weight between the “valid reason” under Article 18 of the Labor Law and “just cause” under Article 25.

For this reason, the employer must determine the type of termination not only based on the resulting performance outcome but also on the cause of the poor performance and, if applicable, the nature and severity of the breach of duty. While poor performance or a behavioral violation may constitute a valid reason, immediate termination for just cause will only be considered if the violation reaches a level of severity that falls within the scope of Article 25 of the Labor Law. This distinction is also significant in terms of the financial consequences of the termination.

In cases where poor performance constitutes a valid reason under Article 18 of the Labor Law, as a general rule, the notice periods provided for in Article 17 of the Labor Law must be observed, or, if the conditions are met, payment in lieu of notice must be made; if the employee meets the conditions for entitlement to severance pay, that amount must also be paid separately. Conversely, if the conduct appearing to be poor performance constitutes a separate and serious breach of duty that serves as just cause under Article 25(II) of the Labor Law, the consequences of immediate termination must be evaluated separately based on the specific circumstances of the case.

IV. CRITERIA REQUIRED FOR A PERFORMANCE EVALUATION TO BE LEGALLY VALID

In order for a performance evaluation to serve as grounds for termination, the evaluation system must meet certain legal criteria. Indeed, as we have previously noted, for performance and productivity results to serve as a valid basis, objective criteria must be established, performance standards must be workplace-specific, realistic, and reasonable, and poor performance must be demonstrated to be ongoing. Within this framework, the primary criteria required for a performance evaluation to be legally valid will be examined below.

A. Performance Criteria Must Be Objective and Measurable

For poor performance to constitute a valid basis for termination, the employee’s performance must be evaluated based on objective and concrete criteria. A performance evaluation based solely on the subjective opinion of the employer or manager is not sufficient to demonstrate that the employee has genuinely fallen short of the expected performance level. Therefore, the criteria used in the evaluation must be, to the extent possible, measurable and verifiable, and must be related to the employee’s job description and the work they perform. Furthermore, objectivity requires that employees performing the same or similar work and who are in comparable working conditions be subject to the same evaluation criteria as a general rule. However, differences that may affect performance—such as region, customer portfolio, seniority, scope of duties, workload, and resources provided by the employer—must be taken into account in the comparison. Particularly in performance evaluations based on sales targets or KPIs (Key Performance Indicators—core performance metrics used to measure an employee’s or a business’s level of achievement against set goals), it is necessary to consider differences in working conditions that may affect these results, rather than merely comparing employees’ numerical outcomes.

B. Establishing Performance Criteria in Advance and Communicating Them to the Employee

For a performance evaluation to be conducted in a legally sound manner, the criteria to be used in the evaluation must be established prior to the evaluation period and made known to the employee. Indeed, in its decision No. E. 2015/5014, K. 2015/13582, dated April 8, 2015, the 9th Civil Chamber of the Court of Cassation stated: “… The defendant company failed to establish in advance the performance criteria to which the employee would be subject and to notify the employee of them upon hiring; the performance standards were not specific to the workplace, and the goals and standards were not set in a manner that employees could achieve within the scope of their job descriptions and authorities; the plaintiff was not assigned to work in another region; the plaintiff was not provided with on-the-job training in areas where his performance was lacking; and the principles of proportionality and last resort were not observed in the termination process. Therefore, the decision to dismiss the case rather than grant it, based on an erroneous assessment, is incorrect…”

It is important for an employee to know in advance which duties and objectives they will be evaluated on and according to which criteria, so that they can demonstrate the performance expected of them. For this reason, using criteria established after the evaluation period has ended—or criteria not previously communicated to the employee—as the basis for termination due to poor performance may undermine the objectivity of the evaluation. In particular, if the employer implements a specific performance evaluation system, the evaluation periods, objectives, and performance metrics must be clearly established in advance.

C. Performance Criteria Must Be Appropriate for the Workplace and the Nature of the Job

The criteria used in performance evaluations must be appropriate to the workplace’s field of activity and the employee’s duties and responsibilities. Criteria that are unrelated to the employee’s job description or whose outcomes depend largely on factors beyond the employee’s control should not be used as the sole basis for determining poor performance. In this context, when determining performance criteria, the employee’s position, job description, working conditions, and the nature of the work performed must be taken into account. For example, while sales targets may be important in the evaluation of an employee in a sales position, applying the same criteria to an employee performing a different type of work would not result in a sound performance evaluation.

D. Performance Goals Should Be Realistic and Reasonable

The targets used as the basis for performance evaluations must be set at a realistic level that the employee can achieve with reasonable effort. Excessive or unattainable goals set without considering the employee’s working conditions, duties, and responsibilities, as well as the workplace’s current capabilities, may prevent the accurate identification of poor performance. In this evaluation, consideration must be given not only to whether the goal was achieved but also to the impact of conditions beyond the employee’s control on the setting of the goal and the resulting outcome. For example, economic conditions, customer potential, regional differences, or changes in the resources provided by the employer may affect performance outcomes. Therefore, falling short of the set target alone should not be considered sufficient grounds to conclude that the employee is inadequate.

E. Persistent Poor Performance

For poor performance to serve as grounds for termination, it must, as a general rule, have persisted for a certain period and exhibit a pattern of continuity. The fact that an employee falls below the expected performance level during a single evaluation period or only temporarily should not, on its own, be considered a deficiency that makes the continuation of the employment relationship impossible. Therefore, when evaluating performance, the employee’s work results from previous periods must be considered in conjunction with the duration of the low performance. Particularly in the case of a sudden or short-term decline in an employee who previously demonstrated satisfactory performance, it is important to assess whether this is due to temporary causes. Thus, it must be established that the grounds for termination constitute a persistent performance deficiency rather than a temporary setback.

Furthermore, there is no single time criterion applicable to all jobs and positions regarding how long a performance deficiency must persist. The length of the evaluation period should be determined based on the specific circumstances of the case, taking into account the nature of the work, the performance measurement cycles in place, the employee’s performance in previous periods, and the reasonable time that must be granted for the employee to remedy the current performance deficiency.

V. TERMINATION PROCESS

A. Issuing a Warning to the Employee and Providing an Opportunity to Improve Performance

If poor performance is identified, rather than proceeding directly to termination, it is important for the employer to first inform the employee of the performance deficiencies and provide the employee with an opportunity to improve their performance. In this context, the employee must be clearly informed of the specific areas in which their performance falls below the expected level, and a reasonable period of time—determined based on the specific circumstances of the case—must be granted to allow them to address these shortcomings. In practice, this process can also be carried out as part of a performance improvement plan. In such a plan, it would be appropriate to define as clearly as possible the areas in which the employee is underperforming, the specific and measurable goals to be achieved, the evaluation period, the training or other support to be provided by the employer, and the possible outcomes at the end of the evaluation period. If the employee’s poor performance stems from a lack of knowledge, skills, or professional competence, the provision of training, guidance, or similar support should be specifically considered. Conducting interim evaluations during the process and providing the employee with feedback on their progress is also important to demonstrate that a genuine opportunity has been provided to address the performance deficiency. In this way, it can be determined whether the performance deficiency is remediable and whether the employee has achieved the expected performance level despite the opportunities provided to them, before resorting to termination.

B. Hearing the Employee’s Defense

One of the procedural considerations to be observed in terminations based on poor performance is the requirement to hear the employee’s defense. Pursuant to Article 19(2) of the Labor Law, “An employee’s employment contract of indefinite duration may not be terminated for reasons related to the employee’s conduct or performance without first hearing the employee’s defense against the allegations made against them.” Accordingly, before a decision to terminate based on poor performance is made, the employee must be given the opportunity to present a defense against the allegations made against them. When requesting a defense, it is important that the issues related to poor performance be communicated to the employee in a concrete and understandable manner. This allows the employee to explain that the poor performance is not due to their own inadequacy but stems from working conditions, the resources provided by the employer, or other reasons beyond their control. Furthermore, it is appropriate to grant the employee a reasonable period of time to prepare their defense. Hearing the employee’s defense serves to evaluate the causes of the poor performance and ensures that the termination decision is based on concrete evidence. If termination is pursued after the defense has been heard, the notice of termination must be issued in writing in accordance with Article 19(1) of the Labor Law, and the reason for termination must be stated clearly and unequivocally. In terminations based on poor performance, it is important not to rely solely on a general statement of performance inadequacy; rather, the poor performance forming the basis for termination must be demonstrated in concrete terms.

C. The Principle of Termination as a Last Resort (Ultima Ratio)

In terminations based on poor performance, the principle that termination is a last resort (ultima ratio) must be observed. Accordingly, termination is considered a measure to be resorted to only when it is not possible to continue the employment relationship through less severe and reasonable measures aimed at remedying the poor performance. In this context, if measures such as providing the employee with opportunities to improve their performance and offering the necessary training and support fail to yield results, the possibility of reassigning the employee to a different role or position—depending on the specific circumstances of the case—may also be considered. However, the principle that termination should be a last resort should not be interpreted as imposing an obligation on the employer to create a new position for the employee in every situation. If, despite these opportunities, it is not reasonably possible to continue the employment relationship, termination based on poor performance may be considered. Indeed, in its decision dated December 25, 2014, Case No. 2014/28944, Judgment No. 2014/40311, the 9th Civil Chamber of the Court of Cassation, regarding a termination based on poor performance, stated: “… In the specific case at hand, although the court dismissed the case on the grounds that the plaintiff’s employment contract was validly terminated due to poor performance, the case file indicates that the defendant employer had not previously established objective performance evaluation criteria, that performance was assessed solely based on sales, the defendant employer had not provided the plaintiff employee with training to improve his performance, the joint field visits could not be considered training, and the possibility of evaluating the plaintiff in another region had not been explored; thus, the termination did not comply with the principle of last resort, and the dismissal of the case rather than its acceptance was erroneous…”

VI. EVIDENCE AND JUDICIAL REVIEW IN TERMINATION DUE TO POOR PERFORMANCE

The distribution of the burden of proof in disputes regarding the validity of termination based on poor performance is governed by Article 20 of the Labor Law. Pursuant to Article 20 of the Labor Law, “The burden of proving that the termination is based on a valid reason rests with the employer. If the employee claims that the termination is based on another reason, the employee bears the burden of proving this claim.” Therefore, it is not sufficient for the employer to merely allege that the employee’s performance is poor; the employer must substantiate this claim with concrete and verifiable data.

In the case law of the Court of Cassation, when assessing whether an employer has proven the grounds for termination based on poor performance, consideration is given not only to the performance results obtained but also to the nature of the performance evaluation system and the process followed prior to termination. In a decision dated July 1, 2013, Case No. 2013/2628, Ruling No. 2013/19969, issued by the 9th Civil Chamber of the Court of Cassation regarding this matter, it states: “… As for the claim that the plaintiff’s performance was inadequate, not only was a performance evaluation system based on objective criteria and an established framework not presented, but it was also not proven that the plaintiff’s evaluated performance consistently fell short. Furthermore, the plaintiff was not given a period of time to rectify any performance deficiencies, if any, nor were the specific reasons for such deficiencies addressed. Consequently, the defendant employer failed to prove a valid reason for termination. The decision to dismiss the case with a written justification rather than granting the claim was erroneous…”

In proving poor performance, the following documents are important: performance evaluation forms prepared by the employer; records showing goals and results; KPIs and similar organizational performance data; data regarding previous evaluation periods and comparable employees; job descriptions; written notices and warnings issued to the employee; requests for the employee’s defense; records of performance reviews; and documents related to the training and performance development process. These documents not only establish the existence of poor performance but also enable verification of whether the performance evaluation was based on objective criteria and whether the process followed prior to termination was conducted properly. Therefore, in performance-based terminations, the systematic documentation of the process is of particular importance to the employer in terms of providing evidence.

The court’s review, however, is not limited to determining whether the employee’s performance was below the expected level. In judicial review, the following factors are evaluated as a whole: whether the performance system is based on objective and measurable criteria; whether the criteria were established in advance and communicated to the employee; whether the goals are appropriate to the nature of the job and achievable; whether the poor performance is persistent; and whether the employee was given the opportunity to improve their performance. Depending on the nature of the dispute, an expert examination may also be sought to review the performance data and the evaluation system.

Ultimately, in a termination based on poor performance, it is not sufficient for the employer to merely demonstrate that “the employee failed to meet their goals.” The employer must provide concrete evidence to demonstrate that the poor performance cited as the basis for the termination and the process followed were in compliance with the law.

VII. THE INVALIDITY OF PERFORMANCE-BASED TERMINATION AND ITS CONSEQUENCES

An employee covered by job security must apply to a mediator within one month of the notice of termination being served, requesting reinstatement on the grounds that no reason was stated in the notice or that the stated reason is invalid. If no agreement is reached at the conclusion of the mediation process, a lawsuit for reinstatement may be filed in labor court within two weeks from the date the final minutes were drawn up. As failure to comply with these time limits results in the forfeiture of the right to bring the claim, they must also be observed when challenging a termination based on poor performance.

If it is determined that a termination based on poor performance is not supported by a valid reason or that the necessary conditions were not met during the termination process, the consequences set forth in Article 21 of the Labor Law apply to employees covered by job security. Pursuant to Article 21 of the Labor Law, “If a court or an arbitrator determines that the employer failed to provide a valid reason or that the reason provided is invalid, and rules that the termination is invalid, the employer is required to reinstate the employee within one month.” In this context, the inability to demonstrate poor performance with objective and concrete evidence, the lack of legally valid performance criteria, or failure to follow the required procedures during the termination process may, if the conditions are met, lead to a ruling that the termination is invalid and that the employee must be reinstated.

A ruling that the termination is invalid does not automatically result in the employee resuming work. The employee must apply to the employer to resume work within ten business days of being notified of the final court or private arbitrator decision. The employer, in turn, is obligated to reinstate the employee within one month of receiving the employee’s application within the prescribed timeframe. If the employee fails to apply within the specified timeframe, the termination carried out by the employer is deemed a valid termination, and the employer is liable only for the legal consequences thereof.

If the employer fails to reinstate an employee who has applied within the prescribed time limit, compensation for failure to reinstate becomes applicable. Pursuant to Article 21 of the Labor Law, this compensation is set at an amount equal to the employee’s wages for a minimum of four months and a maximum of eight months. In addition, the employee is paid the wages and other entitlements accrued for the period during which they were not employed, up to a maximum of four months, until the decision becomes final. Compensation for failure to reinstate and wages and other entitlements for the period of unemployment are distinct in nature and constitute separate consequences arising from the invalidity of the termination.

For this reason, in performance-based terminations, establishing a legally compliant performance evaluation system and conducting the termination process in accordance with proper procedures is important not only for the validity of the termination but also in terms of reinstatement—and the associated financial consequences—that the employer may face later. Failure to adequately demonstrate poor performance or deficiencies in the termination process may result in the employer being liable not only for the employee’s reinstatement but also for wages and other entitlements for the period of unemployment, as well as additional compensation in the event the employee is not reinstated.

VIII. CONCLUSION

Performance evaluation is an important tool that enables an employer to monitor an employee’s work performance and make decisions regarding the continuation of the employment relationship. However, identifying poor performance does not necessarily mean that this situation constitutes a valid reason for termination.

In practice, performance-based terminations can give rise to disputes and reinstatement lawsuits due to the failure to correctly identify the cause of poor performance, the lack of objective and measurable evaluation criteria, or the failure to conduct the termination process in accordance with proper procedures. For this reason, employers must accurately assess whether the poor performance stems from the employee’s capability or conduct and whether the specific circumstances meet the conditions for termination based on valid or just cause; it is crucial for employers to establish performance criteria in advance and communicate them to the employee, document the performance process with concrete data, follow the procedural steps prior to termination—including obtaining the employee’s defense and observing the principle of termination as a last resort—and issue the termination notice in writing with a clear and specific justification. Structuring the performance evaluation and termination process in accordance with the law from the very beginning will help prevent potential disputes and ensure that the termination is legally sustainable when subject to judicial review.

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.