In its fight against COVID-19 pandemic, Turkey has adopted the Law No. 7244 on Reducing the Effects of the Novel Coronavirus (COVID-19) Pandemic on Economic and Social Life and the Law on the Amendment of Certain Laws ("Omnibus Law"). Article 9 of the Omnibus Law introduced "prohibition of termination" for any kind of employment and service agreements, with certain exceptions.
This prohibition prevents termination of employment agreements by employers, based on valid reasons (for instance, business requirements or underperformance or incompetency of the employee), health reasons or compelling reasons, which are the most common grounds that employers resort to in face of COVID-19 outbreak.
Nevertheless, due to the economic reflections of COVID-19 outbreak, it is possible for private companies to engage in downsizing and therefore resort to termination of employment agreements based on valid reasons, after the aforesaid prohibition is lifted. Such termination cannot be arbitrary under any circumstances and must meet the criteria required by laws, as well as the established practice of High Court of Appeals.
In this regard, "staffing norm practice", which is a settled practice for public institutions and organizations in order to determine employment surplus and increase efficiency at the workplace, might be guiding for companies that face financial difficulties in connection with COVID-19 outbreak and consider resorting to downsizing on that account. In other words, companies may consider engaging in "staffing norm practice" with a view to ensure that their downsizing practice is in line with Turkish labour law.
- Prohibition of Termination of Employment Agreements in Turkey
Pursuant to Article 9 of the Omnibus Law, which was adopted with a view to reduce the effects of the COVID-19 pandemic, employers are prohibited from terminating any kind of employment or service agreement. Initially, this prohibition was envisaged to be in effect for three months starting from April 17, 2020 (i.e. until July 17, 2020) and the President was given the authority to extend this "prohibition of termination" period up to a total of six months (i.e. until October 17, 2020).
Subsequently, with the Presidential Decree published on the Official Gazette dated June 30, 2020, the initially envisaged three-month period was extended to four months (i.e. until August 17, 2020). Thereafter, Law No. 7252 on the Establishment of Digital Platforms Commission and Amendment of Certain Laws ("Law No. 7252") was published in the Official Gazette of July 28, 2020. The amendment introduced by Article 5 of the Law No. 7252 has given the President the authority to extend this prohibition period by three-month periods at most till June 30, 2021.
On a side note, the only exception provided for this prohibition was the employer's right to execute immediate termination with just cause connected to employee's behaviour breaching moral and good faith principles or due to similar cases, as per Article 25/II of the Turkish Labour Code numbered 4857 ("TLC") or other applicable laws. Law No. 7252, by amending Provisional Article 10 of TLC, introduced new exceptions to the prohibition of termination of employment agreements. The new exceptions provided for this prohibition are as follows:
- end of fixed term employment or service agreements;
- closure and end of operation of the workplace for any reason;
- end of the work in case of service procurement and construction works, which are conducted in accordance with the applicable legislation.
Lastly, with the Presidential Decree published on the Official Gazette dated July 31, 2020, the prohibition of termination period has been extended for one more month as of August 17, 2020 (i.e. until September 17, 2020).
- Termination of the Employment Agreement based on downsizing
1. Requirement to Present a Valid Reason
As per Article 18 of the TLC, for workplaces that have more than 30 employees, indefinite-term employment agreement of an employee who has worked more than six months, may only be terminated with prior notice for a valid reason on the basis of; (a) incapability (underperformance) of an employee, (b) misbehaviour of an employee and (c) conditions of work, workplace or enterprise (this obligation to present a valid reason for termination is called "job security provision").
In such case, pursuant to Article 19 of TLC, the employment agreement shall be terminated in writing and the reason for termination must be clearly and definitely expressed. Furthermore, written defence of the employee shall be taken if the employment agreement is to be terminated for one of the first two [(a) or (b)] of the aforementioned valid reasons.
Moreover, in Turkish labour law, termination based on valid grounds is subject to strict criteria, which are determined by both the legislation and jurisprudence. In terms of redundancy cases, the steps required by the law and court precedents might be briefed as follows:
(i) genuinely searching for alternative positions to employ the possibly-redundant employee and offering such position, if any;
(ii) documenting a newly-formed organizational chart in order to show the new structure of the company along with available and filled positions;
(iii) taking a board decision that lays out the process to be followed for possibly-redundant employee (i.e. searching for positions, offering these positions and if there is no alternative position or the position offer is rejected, dismissing the employee).
Also, it is crucial that actions that are taken due to the business requirement in question must not be arbitrary and must be in compliance with the actions that are taken by the company afterwards. For instance the company, after eliminating a position, must not hire another employee for that position after a short while. So, the actions and policy behind it must be implemented in a consistent manner throughout the company.
That said, "staffing norm practice", which is essentially regulated for and conducted by public institutions and organisations, might constitute a guideline for a lawful downsizing of a private company, in order to eliminate arguments indicating that termination of employment agreement was unlawful due to not following the abovementioned criteria and therefore "arbitrary".
2. Staffing Norm Practice
Briefly, staffing norm practice means setting "staff standards" and taking action accordingly.1 These standards are obtained through two steps2: (i) organisational analysis (i.e. restructuring an organisation without formation of a new company, by paying regard to new organisational goals and conditions)3 and (ii) job analysis (i.e. "the process of collecting information about the tasks a job that is required to be performed and the knowledge, skills and abilities necessary to perform those tasks").4
Accordingly, while organisational analysis constitutes the basis of a new organisation chart; job analysis identifies the specifics of a job, the conditions surrounding the performance of a job, the qualifications required for duly performing a job, as well as the number of employees necessary to perform a job.5
In this regard, staffing norms practice facilitate "quantitatively and qualitatively" determining staff needs in a work organisation, by taking into consideration the total workload of a workplace6, and a report/study/survey is prepared to establish the findings and conclusions that represents the result of implementation of staffing norms practice.
3. Termination of Employment Agreements on the basis of Staffing Norm Practice
Pursuant to Article 20/2 of the TLC, employers bear the burden of proof to demonstrate that the termination in question is based on a valid reason. In case of terminations on the grounds of operational requirements, employers are required to demonstrate that such termination was a consequence of a duly adopted operational decision followed by a serious, non-arbitrary and consistent application of that decision.7
In light of the foregoing explanations, companies that expect to go through downsizing - after the lift of prohibition of termination - in connection with the economic effects of COVID-19 might consider engaging in staffing norm practice to demonstrate their "serious, non-arbitrary and consistent" approach in termination of employment agreements on the grounds of operational requirements (i.e. downsizing).
In this regard, even though staffing norm practice is actually regulated for public institutions and organizations, the jurisprudence of the High Court of Appeals indicates that this practice might be utilised as a criterion in determining the employment surplus also for the companies operating in the private sector.8
Accordingly, if a private company decides to engage in staffing norm practice and as a result of this practice it is revealed that staffing norm number is less than the current number of employees, it might terminate certain employees' employment agreements based on a valid reason arising from operational requirements (i.e. downsizing).9 In order to lawfully proceed with termination on the aforesaid grounds, the employer is required to take an operational decision to adopt staffing norm practice and put this decision into effect in an objective and concrete manner in line with the report/study/survey that is the product of this practice; only then it may resort to termination in accordance with the outcome of the staffing norm practice.10 In other words, employer's mere statement that it made a decision for downsizing and terminated some employment agreements on that account is not sufficient for a termination to be lawful.
In that sense, in a possible dispute, the courts shall evaluate dismissal of employees - who were deemed to be employment surplus as a result of staffing norm practice - on (i) consistency, (ii) arbitrariness, (iii) proportionality and (iv) necessity tests; while the courts will not be making review of expediency.11 In this regard, a staffing norm practice that is conducted and implemented objectively, precisely and consistently, along with a report/study/survey that could be the final product of such practice, would be the proof of the employer's manner of re-organisation and therefore operational requirements; since it would speak to all requirements sought by the High Court of Appeals' case-law.
The COVID-19 outbreak had and continues to have severe effects upon pace and quality of our lives. All measures implemented due to COVID-19 outbreak have led to unprecedented occupational repercussions and economical flux, which inevitably have given rise to financial challenges for many businesses. Therefore, it is possible that private companies would adopt operational changes and go through downsizing. Even though downsizing based on operational requirements is not currently an option for employers due to the prohibition of termination in effect in Turkey; after this prohibition is lifted, financial difficulties incurred in connection with the pandemic might require employers to take additional steps, such as termination of employment agreements on valid grounds.
As indicated, in Turkish labour law, termination based on valid grounds is subject to strict requirements, which are determined by both the law and court precedents. In that sense, employers must follow certain steps in order to lawfully dismiss an employee on operational grounds. In relation to a possible downsizing, employers might consider adopting "staffing norm practice" as a guideline, which is a method used to determine employment surplus and thereby increase efficiency in public institutions and organisations. Duly conducted staffing norm practice, along with a report/study/survey that shows the results of this practice, would demonstrate the way which downsizing would be realised and also show the consistency, non-arbitrariness, proportionality and necessity sought by the courts for termination of an employment agreement based on valid reasons.
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in September 2020. A link to the full Legal Insight Quarterly may be found here
1. Feyza Kalav-Idrisoglu, "Staffing Norms Practice In Turkish Public Administration: A Critical Evaluation", Thesis, M.S. Department of Political Science and Public Administration, February 2018, p. 51, 52.
3. Jonathan Law, "A Dictionary of Business and Management", (5th edn OUP 2009).
4. N. Joseph Cayer, "Public Personnel Administration", (4th edn Canada: Wadsworth Publishing Company 2004), p. 60.
5. Kalav-Idrisoglu (n 1), p. 52; Kamil Ufuk Bilgin, "Kamu Kaynaklarinin Etkin Kullanimi Için Norm Kadro Uygulamasi" (2002), Yaklasim Dergisi, p. 20-23; Cayer (n 4).
6. Kalav-Idrisoglu (n 1), p. 53.
7. Nursen Genç Erdem, "Is Sözlesmesinin Isletme, Isyeri Ve Isin Gereklerinden Kaynaklanan Nedenlere Dayali Feshi" (2018), Master's Thesis, Maltepe University, Institute of Social Sciences, p. 111.
8. The decision of the 9th Civil Chamber of High Court of Appeals numbered E. 2019/7757 K. 2019/21568 and dated December 3, 2019; The decision of the 9th Civil Chamber of High Court of Appeals numbered E. 2018/10609 K. 2019/9447 and dated April 22, 2019; The decision of the 9th Civil Chamber of High Court of Appeals numbered E. 2018/10614 K. 2019/5279 and dated March 11, 2019; The decision of the 9th Civil Chamber of High Court of Appeals numbered E. 2018/4502 K. 2018/22900 and dated December 11, 2018; The decision of the 9th Civil Chamber of High Court of Appeals numbered E. 2018/2519 K. 2018/21168 and dated November 21, 2018.
9. Erdem (n 7), p. 112.
11. Ibid, p. 113.
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.