09. Transfer of Undertakings

Employees’ Rights in Case of a Transfer of Undertaking

Transfer of employees is not usually easily determinable and the employers must obtain employee approval in a workplace transfer as well.

Merger and Demerger:

Merger and demerger under Turkish Commercial Code is another method of automatic transfer of employment agreements, if the employee does not object to the transfer of the employment contract.  Article 178 of the Turkish Commercial Code regulates certain rights of employees to be transferred during a merger or full or partial demerger.

In a nutshell, as per Article 178 of the Turkish Commercial Code;

• Employees will not have the right to object against the transaction but they may object to the transfer of their individual employment agreement,
• The employee’s objection will also terminate the employment agreement at the end of the statutory notice period,
• The former employer and the new employer will be jointly and severally liable for the receivables of employees.

It must also be mentioned that in practice most of the employers in Turkey prefer to obtain consent of the employees before the completion of respective transaction, to have a better understanding on employment related obligations.

Individual Transfer of Employment:

The rules pertaining to transfer of employment agreements are stipulated under Turkish Code of Obligations.  In line with Article 429 of Turkish Code of Obligations:

• the transfer of an employment agreement to another employer requires written consent of the employee;
• the transferee becomes the new employer under the existing employment agreement together with all rights and obligations;
• the starting date of the employee with the former employer is taken into account when the calculation of the rights of the employee based on the term of employment.

Requirements for Predecessor and Successor Parties

With the transfer process, the transferee (i.e. the successor) becomes the new employer of the employment contract with all its rights and obligations. In terms of the employee’s rights related to the period of service, the date of employment with the former employer shall be taken as a basis regarding the calculation of employment receivables.

However, concerning transfer of employment agreements, there is no legal regulation on the determination of responsibility in terms of labour receivables that were borne but not paid in the period of the former employer. In its precedent judgements, the Supreme Court states that the transferee employer and the former employer will be jointly liable for a limited period of 2 years for employment receivables such as salary, overtime wage, week-end wage, and national holiday wage regarding the transfer of employment agreements. On the other hand, regarding the former employer’s responsibility for severance pay, the Supreme Court states that the responsibility should be limited to its period and the employee’s last salary on the date of transfer. Therefore, the severance pay should be calculated for the entire period of employment, before and after the transfer of the employment contract, but the former employer should be limited to their term and salary on the date of transfer.