This country-specific Q&A provides an overview to employment and labour law in Turkey.
It will cover termination of employment, procedures, protection for workers, compensation as well as insight and opinion on the most common difficulties employers face and any upcoming legal changes planned..
This Q&A is part of the global guide to Employment & Labour. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/employment-labour-law/
Does an employer need a reason in order to lawfully terminate an employment relationship? If so, describe what reasons are lawful?
The employer employing thirty or more employees (including all employees working in all entities and workplaces of the employer worldwide) may only terminate the employment relationship of the employee with at least six months seniority on a valid or justified ground.
If the employer does not employ thirty employees or if the employee is employed for less than six months, no reason is required to be asserted for termination.
While valid grounds may occur due the competences or behaviours of the employee or the necessities of the employer, enterprise or workplace, justified grounds refer to more severe situations, a list of which is provided (numerus clausus) under the Turkish Labour Code (“TLC”). The list of justified grounds comprises of health reasons, immoral, dishonourable or malicious conduct or other similar behaviours of the employee and force majeure situations.
What, if any, additional considerations apply if large numbers of dismissals (redundancies) are planned?
If the number of employees in the workplace are between;
- 20 and 100, and at least 10 employees,
- 101 and 300, and at least 10% employees,
- 301 and more, and at least 30 employees,
will be dismissed on the same date or different dates in one month, such dismissal will be defined as collective redundancy.
In case of a collective redundancy, the employer shall make a notification in writing to (i) the workplace union representative, (ii) the Regional Social Security Directorate, and (iii) Turkish Employment Agency. The notification should contain information regarding the date and cause of termination and the number of dismissed employees. The notice for termination shall be effective after thirty days following the notification made to the Regional Social Security Directorate.
If there is a union representative(s), then a consultation (which should then be documented) shall take place between such representative(s) and the employer, relating to the matters of whether it is possible to eliminate the collective dismissal, to lower the number of employees to be dismissed, and to minimise the negative effects. However, if the employer does not have a collective bargaining agreement or a union membership, a notification to the Regional Social Security Directorate and Turkish Labour Institution is sufficient.
What, if any, additional considerations apply if a worker’s employment is terminated in the context of a business sale?
Under Turkish law, in case of a business sale, all employment contracts with all rights and obligations arising thereof shall automatically transfer to the acquirer. Neither the acquirer nor the transferor employer shall terminate the employment relationship due to such sale or transfer of business. Also, such reason may not be asserted as a justified ground for termination by the employee. However, both employers’ right to terminate on a valid ground due to the necessities of the business organisation is reserved.
What, if any, is the minimum notice period to terminate employment?
The minimum notice periods regulated under TLC are,
- 2 weeks, if length of service is less than 6 months;
- 4 weeks, if length of service is between 6 months and 1.5 year;
- 6 weeks, if length of service is between 1.5 year and 3 years;
- 8 weeks, if length of service is more than 3 years.
Is it possible to pay monies out to a worker to end the employment relationship instead of giving notice?
The employer is entitled to make a payment in lieu of notice which changes between 2 to 8 weeks’ gross salary, depending on the employee’s length of service (See Question 4). There is no cap applicable to it and the actual salary of the employee, as well as the additional financial benefits (e.g. bonus) is considered.
Can an employer require a worker to be on garden leave, that is, continue to employ and pay a worker during his notice period but require him to say at home and not participate in any work?
Garden leave is not regulated under Turkish law. An employee whose employment contract is terminated shall continue to work during the notice period. However, a garden leave clause may be incorporated into an employment contract by mutual agreement of the parties, because its effect would be beneficial to the employee (in that they would be paid without working) and therefore would not contradict the rationale of the TLC.
Does an employer have to follow a prescribed procedure to achieve an effective termination of the employment relationship? If yes, describe the requirements of that procedure or procedures.
Termination on valid grounds and on justified grounds have different procedures to be followed by the employer in order to achieve an effective termination. However, irrespective of the type of ground for termination, a written termination notice shall be served to the employee, in which the reasons for termination was explained clearly.
1. Termination on valid ground
If the employer intends to terminate the employment contract on a valid ground (See Question 1), due to the principle of termination to be last resort, before terminating the contract the employer shall,
a. Give the employee a warning letter, explaining the valid grounds, in which (s)he will be requested to compile a defence. These valid grounds should be proven with concrete evidences and witnesses in case of a dispute.
b. After getting the defence, the employer may terminate the employment contract by,
- giving a written termination notice in which, the valid grounds, requiring the termination, is stated,
- recognising abovementioned notice periods (See Question 4) depending on employee’s length of service at the workplace, or paying a notice pay in lieu,
- paying the severance pay, which is equal to the last monthly gross salary of the employee, for each year of passed service,
- paying the vested, but uncovered allowances (if any) e.g. unused annual leave entitlement, unpaid salary or bonus.
Termination due to performance
If the valid ground for termination is the employee’s performance, then a specific procedure shall be followed. Firstly, the employer shall prove the performance decrease. Therefore, the employer shall need to create a performance evaluation system based on objective criteria and provide documents regarding the performance decrease.
Performance criteria shall be proper and realistic. The employer shall prepare performance evaluation forms regarding these standards for each employee. The performance evaluation criteria shall be predetermined and notified to the employee. In case the performance of the employee is lower than the stipulated criteria, the employer shall explain in detail his/her future expectations, the professional and personal improvements expected from the employee. After that, if there is no improvement on the performance, then the employer may terminate the employment relationship.
2. Termination on justified ground
In case of a termination on a justified ground (See Question 1), the employer shall terminate the contract within six days after learning the reason for termination and in anyway within one year following the action. However, if the employee gained some financial benefit due to such action, this one-year period will not be applied.
Mutual termination protocol
Although termination through mutual termination protocol is not designated under TLC, it is recognised by case law and hence is preferred by the employers to mitigate the reinstatement risk. Pursuant to case law, for a mutual settlement protocol to be construed as valid, a reasonable benefit shall be provided to the employee in addition to the termination payables that (s)he is entitled by law. Whilst a certain calculation criterion or a method is not defined by case law for the determination of the amount of the reasonable benefit, according to the well settled precedents of the High Court;
- When mutual termination is offered by the employee, the employee shall be entitled to an exit package consisting of notice pay, severance pay and an additional payment of up to 4 months’ salary,
- When mutual termination is offered by the employer, the employee shall be entitled to an exit package consisting of her notice pay, severance pay and an additional payment of minimum 4 months’ salary (See Question 15).
If the employer does not follow any prescribed procedure as described in response to question 7, what are the consequences for the employer?
The employee may claim reinstatement via court within one month following the termination, asserting that the termination is null and void since the mandatory procedure was not followed. If the court rules against the employer as a result of the reinstatement case, then the employer shall be required either,
- to make the employee start at his/her former position and pay an amount equal to employee’s 4 months’ salary to compensate the term passed in the meantime (in such case the notice and severance pays paid by the employer shall be returned to the employer); or
- (instead of making the employee start at his/her former position) to pay an amount equal to his/her 4 months’ salary to compensate the term passed in the meantime and pay a compensation equal to his/her salary of 4 to 8 months.
If the employer terminates the employment relationship on a justified ground by paying no compensation, but the court rules that there was no justified ground, then the employee may file another lawsuit for employee receivables. In this case, the employer shall also be required to pay severance pay, notice pay and uncovered allowances and overtime payments (if any).
How, if at all, are collective agreements relevant to the termination of employment?
Termination reasons and dispute resolution mechanisms may be stipulated under a collective agreement. In such case, for the termination to be valid, the employer shall terminate the employment relationship due to a termination reason stated under the collective agreement and also follow the procedure stated thereunder (if any).
Does the employer have to obtain the permission of or inform a third party (eg local labour authorities or court) before being able to validly terminate the employment relationship? If yes, what are the sanctions for breach of this requirement?
The employer does not have to obtain any permission of a third party but is required to inform the Social Security Institution regarding the redundant employee within ten days following the termination. If the employer breaches this requirement, a fine corresponding to one tenth of the minimum wage (app. TRY 160) shall be imposed.
Additionally, in case of a collective redundancy, the procedures explained in Question 2 shall be applied. If the employer breaches the obligations stated thereunder, a fine of TRY 693 per each employee shall be imposed.
What protection from discrimination or harassment are workers entitled to in respect of the termination of employment?
Under the equality provisions of the TLC, the employee may claim that (s)he is discriminated on the grounds that (s)he is not equally treated in terms of salary, compensation and other benefits when compared to other employees with similar conditions, and request the following:
- discrimination compensation up to his/her 4 months’ salary, and
- the rights and receivables (s)he has been divested of, such as the payment of any benefit (salary, bonus, allowances etc.) the employer provides to other employees with similar conditions.
Furthermore, Turkish Code of Obligations imposes an obligation on employers to protect the personality of their employees. According to this, employers are required to take necessary measures to ensure that the employees are not exposed to psychological and sexual abuse in the workplace. If an employee proves that (s)he has been exposed to harassment at the workplace (either by the employer itself or by other employees), the employer would be required to compensate the claimed material and moral damages (if any), unless the employer proves there is no negligence attributable to it.
As per the case law, harassment is deemed to occur, if an employee is specifically targeted, systematically and consistently abused for a certain period of time. However, in practice, it is hard to put forth and/or relate the losses with mental harassment and a moral compensation is not awarded for high amounts. When the precedents are referred, it is less than a month (and even half month) salary of the employee in most of the cases (this may be different depending on the degree of the abuse, though).
For both cases, in addition to abovementioned compensation and claims, such behaviour of the employer may cause a ground for termination on justified grounds by the employee. Then, the employee will be entitled to a severance pay and other employee receivables such as annual leave pay, overtime pay etc.
Finally, having pursued such claims before the courts and have not received any compensation, discriminated employees may apply to Turkish Institution of Human Rights and Equality (“Institution”). Upon an application, the Institution offers a settlement, if deems necessary, by means of a compensation or an injunction imposed on the employer for the benefit of the employee in an effort to discard the discriminative acts.
In cases where there are more than one employees at the same position and only one or some of them will be made redundant or when a termination decision is made over an incident that involves more than one employee, the employer should implement such decision in a consistent, objective and non-arbitrary manner. Under the equality provisions of TLC, the employer is required not only to treat its employees equitably during the course of employment but even while terminating their employment contracts. That is why, the High Court declares the termination that is found to be in breach of the duty of equality of the employer as void in reinstatement cases.
What are the possible consequences for the employer if a worker has suffered discrimination or harassment in the context of termination of employment?
The general principles stated in the answer to the Question 11 above, are also applicable in the context of termination of the employment. If the employment contract is terminated in breach of the employer’s duty to act equally or the employee suffered from harassment, the employee shall be entitled to ask for the compensations in Question 11. Along with these claims, the employee shall then initiate a reinstatement claim before the courts as in such cases, the High Court’s practice is to declare the termination void (See Question 8).
Moreover, an administrative fine may be imposed to the employer, upon a complaint to be raised by the employee who was discriminated, due to breach of equality provisions. The amount of the fine is around TRY 200 per employee.
Are any categories of worker (for example, fixed-term workers or workers on family leave) entitled to specific protection, other than protection from discrimination or harassment, on the termination of employment?
An employer employing 30 or more employees (including all employees working in all entities and workplaces of the employer worldwide) may only terminate the employment relationship of an employee with at least six months seniority on a valid or justified ground.
In general, according to TLC, employees who work in a workplace that employs 30 or more employees and who have been working in that workplace for at least six months enjoy special protection as to termination of their contracts. These specific provisions are called the job security provisions, according to which, the employment contracts of such employees can only be terminated either on valid or justified grounds (See Question 1).
Furthermore, TLC specifically regulates that pregnant employees should not be treated inequitably. Thus, pregnant employees are granted an explicit protection against any termination that may take place because of their unique situation.
Are workers who have made disclosures in the public interest (whistleblowers) entitled to any special protection from termination of employment?
Turkey has no specific whistle-blower protection regulation. But, under TLC, the employer will not have a valid ground for dismissal where it terminates an employee for seeking to enforce his/her rights or obligations arising from law or the employment contract through administrative or judicial authorities.
Although there is no direct whistle-blower protection, indirect protection may be applicable as per specific provisions in heavily regulated sectors such as banking and capital markets. Moreover, under Turkish Criminal Code, there is an obligation to notify a crime to the competent authorities. If the employer is involved in a criminal activity, the employees shall be obliged to make such notifications (with potential criminal sanctions in the event of non-compliance).
What financial compensation is required under law or custom to terminate the employment relationship? How do employers usually decide how much compensation is to be paid?
The employer shall be required by law to pay the following items concurrently with the related termination:
- Severance Pay - equal to the last monthly gross salary of an employee paid respectively for each year of his/her passed service. However, the monthly gross salary to be considered for severance pay calculation is capped. The cap is regularly updated by the government and is applied when the salary in question exceeds it. Currently, the severance pay cap for 2018 is determined as TRY 5,001.76.
- Notice Pay - changes between 2 to 8 weeks’ gross salary, depending on the employee’s length of service (up to 6 months of service– 2 weeks; between 6 months and 1.5 years of service – 4 weeks; between 1.5 years and 3 years of service – 6 weeks; more than 3 years of service – 8 weeks). There is no cap applicable for this and the actual salary of the employee, as well as his/her additional financial benefits (e.g. bonus) is considered. Yet it is possible to make the employee work during the notice period, instead of paying a notice pay.
- Vested, but uncovered allowances (if any) e.g. the amount corresponding to unused annual leave entitlement.
In case of a mutual termination protocol, in addition to the above payments, an amount changing from 4 to 12 months’ salary of the employee is also paid as an additional compensation. The exact amount to be agreed with the employee shall depend on the negotiations to be made with the employee. In recent precedents, the facts like seniority, position, job description, latest salary and social and familial status of the employee have been influential in determining the reasonable benefit. Yet amounts closer to 12 months are very rarely paid and are paid only to those that are at the very executive level (and have a command on the trade secrets of the company). For regular level white collar positions, it is around 4 to 8 months.
Can an employer reach agreement with a worker on the termination of employment in which the employee validly waives his rights in return for a payment? If yes, describe any limitations that apply.
The employer and the employee may execute a mutual termination protocol, but it does not in itself constitute a waiver to initiate a reinstatement claim by the employee. The job security provisions under TLC, allows the employee to claim reinstatement within one month following the termination and the High Court establishes that a waiver from such right to claim reinstatement is not possible. However, as the mutual agreement shall be made in writing and the associated payments shall be made via bank transfers, mutual agreements do mitigate the risk of reinstatement and increase the likelihood of dismissal of such cases as long as a reasonable benefit is paid.
Is it possible to restrict a worker from working for competitors after the termination of employment? If yes, describe any relevant requirements or limitations.
While the employee is under a statutory obligation not to compete with the employer during the course of employment, an agreement to prolong such restriction for a term after the termination of employment is also enforceable, provided that;
- Such agreement is made in writing (must be specific to the employee, a general reference to the employer’s code of conduct will not be valid),
- The employer has a reasonable interest in asking for such protection against competitors:
- The employee shall have access to the employer’s production, business secrets and its client portfolio
- The employer shall face the risk of incurring substantial losses due to the breach of non-compete covenant
- It does not include unfair restrictions on location and type of activities which put the economic future of the employee in jeopardy,
- Restricted activities should be directly related to the employee's job and limited to the job's subject matter.
- Restrictions should be geographically limited to the areas where the employer is actually conducting business activities; the scope of geographical area shall not be defined as wide as the whole of Turkey, and it shall not exceed the boundaries of the employer's actual sphere of activity.
- The restrictions are limited to a specific period of time; except under special circumstances, this shall not be more than two years.
Can an employer require a worker to keep information relating to the employer confidential after the termination of employment?
If the employer has a legitimate interest, the employee is under the statutory duty of confidentiality even post-employment. Therefore, inter alia, the employer may require a worker to keep information relating to the employer confidential after the termination of employment, if it has justified business interests at stake.
Are employers obliged to provide references to new employers if these are requested?
Although it is a common practice in Turkey, there is no statutory obligation for the employers to provide references to new employers. In case of providing references, the compliance with data protection legislation should be concerned, by considering the particularities of the specific cases for which reference is provided.
What, in your opinion, are the most common difficulties faced by employers when terminating employment and how do you consider employers can mitigate these?
It is considered to be very hard for the employer to win a reinstatement case, in case of dismissing an employee on justified or valid grounds under Turkish law, unless the employer has serious concrete written evidences. This is because the Turkish Labour Courts have a tendency to interpret the employment laws in favour of the employees. Although the principle of interpretation in favour of the employee does not have any explicit statutory grounds, it is an established practice of the Hight Court, which is uniformly implemented by the first instance courts. Therefore, a mutual termination protocol may be a preferable option for the employer to mitigate the risk of a reinstatement action by the redundant employee and it may also be advisable for the employee to take the exit package to reduce the legal costs to initiate an action before court.
Are any legal changes planned that are likely to impact on the way employers approach termination of employment? If so, please describe what impact you foresee from such changes and how employers can prepare for them?
Following the entry into force of the Code of Mediation for Legal Disputes in 2013, it has been noted that 72% of the overall disputes that were taken to mediation were related to employment law and almost all of such has resulted in settlement. Thus, to release the work load of the Labour Courts and to expedite the trial process, in late 2017, the Labour Courts Code has introduced a mandatory mediation process in employment law disputes (related to the employee receivables and reinstatement). Following the implementation of it, mediation has become a prerequisite to initiate a reinstatement claim or a claim on employee receivables before the court. This introduction is widely celebrated in the sector as, if implemented effectively, it is capable of reducing legal costs associated with employment law disputes as well as reducing the time and effort spent on long trial periods. However, if it degrades into a bureaucratic paper shuffling than a functioning alternative dispute resolution, it may, on the contrary to what is sought to be achieved, in fact prolong the entire process.