Turkey’s legislative body has carried out extensive amendments to the Labor Law, numbered 4857, in particular to provisions regarding temporary employment relationships (“TER”). TERs allow an employer (transferor) to put an individual on its payroll but effectively “lease” the employee’s services out to an another employer (transferee).
The employee under the TER regime remains in the employment and on the payroll of their transferor employer whilst working at the site of, and under the instructions of, the transferee.
The respective amendments mainly focus on:
- The parties who are allowed to initiate TERs, including the role of private employment offices (“PEOs”) in establishing TERs
- The term limitations on establishing TERs
Allowing PEOs to establish TERs again
Over the past decade several private employment offices (“PEOs”) had started operating as transferor employers without taking into consideration the limitations defined by the labour legislation. The establishment of TERs, which were envisaged as an exceptional practice under the then current legislation, had started to become a widespread practice. In light of this, the Regulation on Private Employment Offices was enacted in 2013 to clearly prohibit PEOs from establishing TERs. Accordingly, all PEOs who were engaged in employing individuals in order to “lease” them out to third parties were required to cease these operations. The amendment has lifted this prohibition and now allows PEOs to conduct operations involving TERs, albeit in a limited scope.
PEOs and holding companies in the establishment of TERs
The amendment also enforces limits on which parties shall have the authority to establish TERs. Accordingly, the current legislation only allows TERs to be established between:
- Companies operating within a group of companies (i.e. intra group)
- Employers who carry out similar operations
The amendment has not made any changes to the implementation of intra-group TERs. However, it has prohibited, by way of exclusion, the establishment of TERS between employers who carry out similar operations. In other words, companies will not be able to establish TER’s among themselves: they are required to utilize PEOs and lease employees directly from the PEOs.
Term limitations for establishing TERs
The amendment also includes various limitations for the terms by which TERs may be established and in accordance with the type of work which is being undertaken by the employee. No time limits apply to TERs for seasonal workers and individuals employed in home services such as patient care, care for the elderly and childcare. Limitations on the terms of the TERs shall be imposed in areas of work which are not covered by the legislation. Accordingly, TERs can be established for four (4) months and extended to a maximum of twelve (12) months in any field of work, for the reasons given below:
- Performance of work which is not part of the company’s daily operations and which is intermittent
- An urgent situation in terms of labor health and safety
- The arising of conditions that significantly affect production
In the event of an unpredictable and temporary increase in workload (excluding seasonal work), TERs may be established for a period of four (4) months, but this period may not be extended. If this limited term is exceeded, then the employee subject to the TER shall be considered the employee of the employer he / she has been performing work for. Thus, the respective employee will be able to direct all claims to the employer he / she has been transferred to.
The amendment, which has been much anticipated in some circles, will alter the current practices relating to TERs. The legislation will mainly effect employers who currently have or are planning to establish TERs. Moreover, the amendment will give PEOs the opportunity to expand their operations into the TER market, which is expected to be quite lucrative.