Sponsored briefing: Economic crisis and the popularisation of voluntary termination of labour contracts

Murat Uyanık of Yavuz & Uyanık discusses Turkish labour law developments

Turkey’s progress towards full membership of the EU had gained pace by the beginning of the 2000s. To achieve full legislative alignment with the EU acquis, the Turkish labour law was renewed and a new concept was introduced to the country’s labour law sphere: employment protection.

Employment protection ensured that employers could not terminate labour contracts without a just reason. At the same time, the courts were authorised to invalidate any such terminations. Unfortunately, these changes were not compatible with the general economic structure and practices of Turkey. Accordingly, employers started looking for ways to evade these provisions. Voluntary termination agreements became popular in Turkish labour law as a result.

On paper, voluntary termination agreements are based on the mutual consent of the employer and the employee. Therefore, they allowed employers to avoid re-employment lawsuits, which require termination of the labour contract by the employer. The Court of Cassation quickly became aware of employers disguising one-sided terminations as terminations by mutual consent of the parties. The court then commenced closely examining voluntary termination agreements and cancelling them in favour of employees where it was not satisfied that the relevant criteria were met. In another attempt to avoid paying full compensation, employers forced employees to request termination of their labour contracts provided that limited compensation amounts were paid to them. However, these arrangements were also often not upheld by the Court of Cassation and full compensations were deemed to be payable by employers.

Following January of 2018, mediation became mandatory under Turkish labour law in order to decrease the number of labour lawsuits and mediation agreements given the force of a court ruling. The current economic realities of the labour sector lead mediation agreements to include similar terms and conditions with voluntary termination agreements. Employers are now using these agreements to lay off a large number of employees at once and pay less than they would be required to pay as a result of re-employment lawsuits or terminations by employers. On the other hand, employees are co-operating in order to receive much needed cash in a relatively short amount of time. Thereby, mediation agreements are used as a means to terminate labour contracts by mutual consent.

Nevertheless, employers should not yet get comfortable with the rather desirable results achieved through this settlement method. The general approach of the Court of Cassation in labour issues suggests that the court is likely to interpret an arrangement where employees settle for much less than their rightful claim as taking advantage of their weaker financial position. Indeed, the court cancelled a mediation agreement five months ago for this very reason. Therefore, if the economic crisis deepens and the number of laid off employees increases, it is reasonable to expect many more lawsuits to come before the Court of Cassation and the attitude of the court will determine the next steps for employment protection.