07. Termination of Employment Contracts

Grounds for Termination

Types of Termination

A. Termination by Notice

As mentioned above within the title “Notice Period” under Section III Employment Contracts, according to Article 17 of the Employment Law, both the employer and the employee can terminate the employment agreement, which has been signed for indefinite period through a notice. The terminating party must comply with the termination procedure explained in Article 17 of the Employment Law.  Pursuant to Article 17/3 of the Employment Code, these periods are relatively compulsory. Therefore, the parties cannot decrease or fully cancel these periods, but they can enter into a written contract in order to extend these periods. However, the employer can terminate the contract without complying with the notice periods specified in Article 17 by paying the wages corresponding the notice period.

B. Termination On Grounds of Just Cause

Articles 24 and 25 of the Labour Law specifies the situations which result in the immediate termination of the employment contract by the employee and the employer, on grounds of just cause, and such situations are listed in limited numbers.

b.1.)       The Employee’s Right of Termination on Grounds of Just Cause: In accordance with Article 24 of the Employment Code, the employee is entitled to terminate the employment agreement, whether it is an agreement for definite or an indefinite period, before it expires or without having to comply with the notice periods, in the following cases:

• Health Reasons

1. If the performance of the work stipulated under the employment contract endangers the employee’s health or life;
2. If the employer or another employee, who is constantly near the employee and with whom he is in direct contact, gets infected with contagious disease or a disease which is not in connection with the work.

• Situations against moral and goodwill principles, or other similar behavior

1. If the employer has misled the employee while entering into the employment agreement, by stating incorrect employment conditions or by giving false information or by making false statements concerning any essential point of the contract;
2. If the employer speaks or acts against the honour or reputation of the employee or a member of the employee’s family, or if harasses the employee sexually;
3. If the employer assaults or threatens the employee or a member of his family, or encourages or provokes them to commit an illegal action, or commits an offence against the employee or a member of his family which is punishable with imprisonment, or asserts or accuses the employee in matters affecting his honour with serious and groundless accusations;
4. If the employee is sexually harassed by another employee or by third persons in the workplace and the employer does not take adequate measures despite being informed of such conduct;
5. If the employer fails to calculate or pay the wages in accordance with the Employment Law or the terms of the contract;
6. If, in cases where wages have been fixed at a piece or task rate, the employer assigns the employee fewer pieces or a smaller task than was stipulated and fails to compensate this deficit or fails to implement the conditions of employment.

• Force majeure

If the work within the workplace of the employee gets suspended for more than one week due to a force majeure

b.2.)       Employer’s Right of Termination on Grounds of Just Cause: In accordance with Article 25 of the Employment Law, the employer can immediately terminate the employment agreement, whether it is an agreement for definite or an indefinite period, before it expires or without having to comply with the notice periods, in the following cases:

Health Reasons

1. If the employee gets infected with a disease or becomes handicapped due to his/her own deliberate actions, loose living or addiction to alcohol, and as a result does not show up to work for three successive days or for more than five working days in a month.
2. If the Health Committee determines that employee’s disease is incurable and that it may cause harm if the employee continues working

Situations against moral and goodwill principles, or other similar behavior

1. If the employee has misled the employer while entering into the employment agreement, by falsely claiming that he possesses the qualifications or requirements which constitute an essential feature of the contract, or by giving false information or making false statements;
2. If the employee speaks or acts against the honour or reputation of the employer or a member of the employer’s family, or asserts or accuses the employer in matters affecting his honour with groundless accusations;
3. If the employee sexually harasses another employee of the employer;
4. If the employee bullies the employer, a member of the employer’s family or a fellow employee, or shows up to work drunk or under the influence of drugs, or abuses such substances at work;
5. If the employee commits a dishonest act against the employer by performing acts such as breach of trust, theft or disclosure of the employer’s professional secrets;
6. If the employee commits an offence on the premises of the undertaking which is punishable with imprisonment for at least seven days and which cannot be postponed;
7. If the employee does not show up to work for two consecutive days, or twice in one month on the working day following a rest day or on three working days in a month, without the employer’s permission or a valid reason;
8. If the employee refuses, after being warned, to perform his duties;
9. If either willfully or through negligence, the employee endangers the work safety, or damages machinery, equipment or other articles or materials in his care, whether these are the employer’s property or not, and if such damage cannot be compensated by the employee’s thirty days’ salary.

Force majeure:

If the work within the workplace of the employee gets suspended for more than one week due to a force majeure

If the employee’s absence from work exceeds the notice periods after being taken into custody or arrested.

B. General Rules Regarding Termination by Just Cause

Employment agreements with definite and indefinite periods will be immediately terminated if the parties terminate such agreements with just cause. Both the employer and the employee can terminate employment agreement on grounds of just cause. Reasons of just cause are limited and listed in the Employment Code for both of the parties.

The party terminating the contract on the grounds of just cause must clearly state the will to terminate. The cause of termination must also be stated clearly, due to the fact that the terminating party will have the burden of proof in the event of a future dispute.

The right to terminate the employment agreement with just cause must be used either within six working days as of the date of discovery or in any case within one year following the incident. These periods are final terms. However, the employer will not be subject to the time limit for the termination, if the employee has had any material gains through his/her acts.

• Consequences of Termination by The Employer

The employer will be under the obligation to pay severance pay while terminating the employment agreement with just cause, except for the  situations which are against moral and goodwill principles. If the employer fails to prove the just cause, the employer will be obliged to pay the notice pay in addition to the severance pay. The employer is also under the obligation to pay any unpaid salaries and unused annual leaves in any case, even if the employment agreement is terminated with just cause.

Employment security rules apply to the employment agreements with indefinite periods. In this case, the employee can claim re-employment by stating that the termination is unjust and invalid. If the court accepts the employee’s claims, and the employee is not re-engaged in work by the employer, the employer will be obliged to pay compensation not to be less than the employee’s four months’ wages and not more than employee’s eight months’ wages. Additionally, the employer will be obliged to pay the employee four months’ wages for the time which the employee has not worked.

Collective Dismissals

Pursuant to Article 29 of the Employment Law, a collective dismissal takes place when an employer terminates the employment contracts of:

• At least 10 employees if there are between 20-100 employees in total.
• At least 10% of the employees if there are between 101-300 employees in total.
• At least 30 employees if there are more than 301 employees in total.

The terminations of employment agreements must result from economic, technological, structural or similar requirements regarding the enterprise, business or work, and must be performed on the same date or at different days within the same month.

The employer has liabilities while implementing collective dismissal. First, the employer must notify the trade union representatives, if any, the Provincial Directorate of Social Security Institution and the Turkish Employment Agency at least 30 days in advance in written form. Such notification must include the reasons of collective dismissal, the number and group of workers which are to be affected and the date of termination proceedings.

If the employer does not comply with the rules of collective termination, such employer will be obliged to pay an administrative fine in the amount of TRY 1.559 for each employee, for the year 2022. The employer’s payment of this penalty does not affect the validity of the terminations. Employees’ rights regarding terminations are reserved and they can file lawsuits based on such rights.

Individual Dismissals

Employment agreements with definite and indefinite periods will be immediately terminated if the parties terminate such agreements with just cause. Both the employer and the employee can terminate employment agreement on grounds of just cause. Reasons of just cause are limited and listed in the Employment Code for both of the parties.

Is Severance Pay Required?

For an employee to be entitled to severance pay, he/she must work continuously for at least 1 year in the workplace or workplaces of the same employer. If the employee has worked at the employer’s workplace for less than 1 year, it is not possible for the employee to receive severance pay. Even if the employee works in different workplaces or even in different companies of the same employer, the period of employment shall be collectively taken into account in calculating the 1 year.

In addition to the above, if the employee resigns without a just cause or if the employer terminates the employment agreement based on a just cause, the employee will not be entitled to any severance payment.

Separation Agreements

A. Is a Separation Agreement required or considered best practice?

It is not required. However, it is a preferred option considering that the conclusion of a potential employment lawsuit may take years. Principally, a separation agreement (mutual termination agreement) prevents potential future disputes.

B. What are the standard provisions of a Separation Agreement?

It should be arranged in writing for proof. If the employment agreement is to be terminated through a mutual termination agreement, and if the termination offer has come from the employer, the employer must pay an additional “reasonable benefit” in addition to the employment receivables such as severance payment, notice payment, overtime (if any), unused annual leaves (if any), bonuses/premiums (if any) and other receivables which the employee is entitled to. Even though such “reasonable benefit” may vary based on each specific case, it should be a minimum of 4 months’ salary. Please be advised that a mutual termination agreement which does not include an additional reasonable benefit to the employee will be deemed invalid. On the other hand, if the mutual terminaiton offer has come from the employee, it is not necessary for the employer to make an additional payment of 4 months’ gross salary. Remaining employment receivables must still be paid

C. Does the age of the employee make a difference?

The retirement age makes no difference. However, the employee who is entitled to retirement can resign due to retirement and claim severance pay by presenting the letter he/she received from the relevant institution to his/hers employer. This is a legal right granted to the retired employee.

D. Are there additional provisions to consider?

It is also seen in practice that the employee whose employment agreement is terminated signs a release letter. The release letter is a document which states that the employee has received all his/her rights and receivables from the employer and that he/she has no other rights and receivables. However, there are certain conditions for a release letter to be valid. If these conditions are not met, the release letter will not be deemed valid.

Remedies for Employee Seeking to Challenge Wrongful Termination

In case one of the parties fails to comply with the termination periods, the employment agreement will still be deemed as terminated. However, in such situation, the other party will have the right to claim notice pay from the other party. It is important to underline that not only the employee, but also the employer can request notice payment. Additionally, even if the employee does not have any loss, he/she can claim the notice payment and severance payment.

Furthermore, provided that the employer collectively has more than 30 employees, the employee’s length of service is longer than 6 months and the employee is not the employer’s representative or assistant authorized to manage the entire enterprise who is also authorized to recruit and to terminate employees; such employee will have the right to file a re-employment lawsuit against the employer. If the court determines that the employment agreement has been terminated without a valid reason or a just cause, the employee will be required to re-instated back to his/her previous position. If the employer does not wish to re-employ the employee, such employer can pay an amount between 8 – 12 months’ salary, based on the court judgement.

Whistleblower Laws

Whistleblowing is not regulated in a uniformed source but rather it is regulated under multiple laws and regulations.

Article 18 of the Employment Law specifically provides that terminating an employment agreement on the basis that the employee has filed a complaint or participated in proceedings against the employer (such as external reporting), seeking fulfilment of obligations or rights arising from law or the employment agreement, will not be considered a valid reason for the employer to terminate the employment agreement. This provision provides protection to whistleblowers towards any termination by their employers. Employers must also protect whistleblowers against retaliation from other employees. The Supreme Court has an established practice of protecting the right of employees to file complaints. It has ruled in most cases that if an employee reports his/her employer’s alleged fraudulent act based on a reasonable belief and if such employee believes that the employer is involved in a criminal act, such employer cannot use this as the basis of retaliation and/or termination with just cause or valid reason.

Article 278 of the Turkish Criminal Law and Article 158 of the Law of Criminal Procedure require all individuals who have knowledge of criminal offences in progress or have been completed (if it is possible to limit the consequences of the offence) to report these offences to the Public Prosecutor’s Office. However, legislation does not define a time limit for making such reports. There are no legislative requirements regarding the level of suspicion which must exist before reporting a criminal offence to the Public Prosecutor’s Office. However, it would be prudent to externally report any conduct which goes beyond a reasonable suspicion.

The Witness Protection Law no. 5726 provides certain protections to persons reporting a crime. However, the Witness Protection Law only applies to persons reporting crimes that are subject to an aggravated life sentence, life sentence, and crimes that are punished with a minimum of ten years or more, as well as terrorism-related crimes.