Turkish Law Blog
Termination of Employment Contracts by Employers as per Turkish Labor Law
There are two separate systems provided in the Turkish Labor Law (the Law) for the termination of employment contracts. The first system is noted as the ‘freedom of termination’ (Art. 17), which essentially means that the employer is free to terminate employment contracts as it deems fit, provided that a contract is an employment contract for an indefinite duration. In this system, the employer is not required to provide any justification for the termination and can terminate the contracts without any just cause by only paying the severance compensations.
However, the Law also introduced a second system called “employment security” (Art. 18), under which the employers are required to provide valid or rightful causes for terminations for a termination to be deemed valid. Accordingly, employers cannot terminate the employees benefiting from this employment security system as they deem fit and without any rightful or just cause, as such terminations will not be deemed as valid terminations as per Article 18 of the Law.
II. Conditions for Employment Security
Article 18 of the law clearly defines the conditions of employment security. Accordingly, any worker/employee who has been working for at least six months in a workplace that employs at least 30 employees shall benefit from the employment security rules.
Although the conditions set forth for the employment security system seem simple, determining the total employee count in a specific workplace can be quite complex in certain situations. First and foremost, it should be noted that if an employer company has more than one workplace (for example two or more different shops or factories in different locations), the employee count of that employer shall be total employees employed in all its workplaces. For example, if an employer has 20 employees working in factory ‘A’ and 15 employees in factory ‘B’, then the total employee count of that employer shall be noted as 35, and any employee working in either factory A or B shall benefit from the employment security rules.
Another issue in determining the employee count is when that determination shall be made. Consider a company where the employee count changes often, where most employees are working for very short terms and the total employee count fluctuates (for example, in some months the total employee count exceeds 30, and in others it is less than 30). In this case, the time of determination of the employee count is very important, as depending on the employee count in a specific timeframe, the applicability of employment security rules will change. It should be noted that the Law does not provide clear instructions regarding this issue and therefore it is not clear which employee count shall be considered in determining the applicability of employment security rules. Although the Law does not provide specific instructions, the Court of Appeals precedents cleared this issue by stating that in determining whether the employment security rules apply to a termination, the total employee count at the date of the termination shall be taken into account.
III. Termination of Employment Contracts Benefiting from Employment Security
As noted above, the employment contracts of employees not benefiting from employment security rules can be terminated without providing any rightful cause/reason, meaning the employers can terminate any contract as and when they deem fit, as long as the employment security rules do not apply to that contract. If, however, an employment contract is protected by the employment security rules, then such a contract can only be terminated with either a valid cause (Art. 18) or a rightful cause (Art. 25). Any other termination (without providing a valid or a rightful cause) of a contract protected by employment security rules shall be deemed invalid.
a) Termination Based on Valid Cause
This type of termination is based on Article 18 of the Law. In this termination method, the employer can validly terminate an employment contract (provided it satisfies the relevant conditions) by paying the severance compensation of the employee. According to Article 18 an employment contract can be validly terminated due to the inadequacy of the employee, the behavior of the employee or due to the necessities of the workplace and the work.
Unfortunately, the Law does not provide clear instructions on what constitutes a valid cause, but rather provides general and vague definitions. It is therefore essential to review the precedents of the Court of Appeals to determine what type of behaviors or inadequacies of the employee or what kind of necessities of the workplace can be deemed as valid causes for termination. The Court of Appeals precedents provide extensive information and guidelines in determining whether a specific action or condition or omission constitutes a valid cause for the purposes. Accordingly, each case should be reviewed based on its own merits and facts in determining whether a termination of a contract based on a specific cause will be deemed as a valid termination. It is crucial to note at this point that the general rule for employment terminations is that the termination shall only be considered as a last resort and that the employers are obligated by the law to try to avoid termination if any other option other than termination is available (such as offering a different position and/or less salary to the employee etc.). Therefore, it is extremely important to determine whether the planned termination will be deemed valid before the courts, before proceeding with the termination.
b) Termination Based on Rightful Cause
Unlike the above noted termination based on valid cause, the conditions for this type of termination are more clearly defined and listed exhaustively in Article 25 of the Law. The causes noted in this article are separated into three categories; health reasons, behavior violating moral principles and the principle of good faith, and compelling reasons. The listed causes can be summarized as below:
1. Health Reasons:
i. If the employee becomes ill or incapacitated due his/her own gross negligence or way of life, or his/her fondness of alcohol, and his/her absence in work exceeds three back to back days or exceeds five days within a single month.
ii. If the Medical Board determines that the illness of the employee cannot be cured and that it is dangerous for the employee to continue working in the workplace.
2. Employees behavior violating moral principles and the principle of good faith:
i. Misleading/deceiving the employer
ii. Words and deeds/acts violating honor and dignity of the employer,
iii. Sexual harassment by the employee,
iv. Taunting/bullying the employer and intoxication,
v. Acts/deeds contrary to the principle of truthfulness and loyalty,
vi. Committing a criminal offense in the workplace,
vii. Absence from work,
viii. Failure to fulfill his/her duties
3. Compelling Reasons: The Law does not list specific examples for this category, but rather states that in case of a force majeure event that prevents the employee from resuming work for more than one week, the employer shall have the right to termination based on rightful cause.
As noted above, the system introduced by the Law for termination of employment contracts is quite complex. It should also be noted that the Law is designed in such a way as to favor the employees over the employers. This is because employers are, due to the nature of their position as work providers, are much more powerful and have more resources than employees. Therefore, the Law aims to balance this inequality of power and resources between the employers and the employees by mostly favoring the employees. The courts are of the same opinion and generally rule in favor of the employees. Due to these facts, it is extremely important for businesses to diligently review the status of each of their employees and to carefully handle the termination procedures in order to avoid any litigation and any additional costs.