Introduction
Terms of signing
Form of release letter
Content of release deed
Comment
A release deed or letter is a signed document through which an employee relieves its employer of all or part of his or her outstanding claims and terminates the obligation arising from his or her employment relationship.
At present, release deeds are regulated by neither the Code of Obligations (818) nor the Labour Law (4857). However, the Court of Appeals and legal doctrine have recently provided guidance with regard to the content and conditions of validity of a release letter. Due to enter into force on July 1 2012, the new Code of Obligations (6098) explicitly regulates execution of a release deed for the first time.
Article 420 of the new code stipulates that a release deed is valid provided that:
- it is executed in written form after at least one month from the date of termination of the employment contract;
- all receivables are itemised in the release deed; and
- all receivables of the employee are paid fully to his or her bank account.
Accordingly, a release deed that does not fulfil one of these conditions is null and void; in case of partial payment made to the employee's bank account, a release deed is deemed to be merely a receipt.
Under current practice, a release deed signed on the termination date is deemed valid. However, a blank paper signed by the employee during his or her recruitment is null and void, as future rights cannot be waived. Similarly, in line with the 'protection of an employee' principle of the Labour Law, recent decisions of the Court of Appeals have held that a release deed signed during the employment term regarding receivables arising from both employment and termination is null and void. Nevertheless, in certain circumstances - especially if proven that there is no conspiracy against the employee - a release deed issued during the employment term regarding the receivables accrued up to the signing date of such release (eg, wages, wage supplements, overtime wages or annual leave wages) may be deemed valid.
Article 420 of the new code regulates that a release deed cannot be signed until one month has passed from the termination date. Nonetheless, validity of a release deed signed during the employment shall remain problematic as above.
Under Article 420 of the new code, release deeds that are subject to the Labour Law are valid provided that they are executed in written form. Therefore, as of July 1 2012 release deeds that are not executed in written form will be deemed null and void.
Additionally, while there is no obligation to sign a release deed before a notary public, it is advisable to do so as it provides strong evidence against potential claims from the employee regarding conspiracy.
In practice, it is generally accepted that the employee does not release the employer by waiving his or her employment rights after receiving some of the receivables. Likewise, in a 2009 decision the Court of Appeals held that a release deed that contains a stated amount is merely a receipt construed to mean that the terminated employee is still entitled to request other claims accrued that have not been indicated in the letter, especially when there is a disproportion between the claim and the payment. However, release deeds issued at the date of termination which state that the employee has duly used the annual leave rights to which he or she has been entitled during his or her employment, and further state that the employee has been paid outstanding annual leave wages by stating a certain amount, shall be deemed to be written evidence for the utilisation of annual leave rights, and the employer's liability in respect of any annual leave wages will be terminated. Thus, in this case, even if the release deed includes a stated amount of money, it would not be deemed as a receipt, but as a written document terminating the rights in question.
According to Court of Appeal precedent, the obligation to pay receivables arising from an employment contract itemised within a release deed without indicating their amount are deemed terminated. The key point for this issue is the itemising of receivables. Expressions such as "I declare that I irrevocably and unconditionally discharge the employer against all rights, liabilities, obligations arising from my employment and the Labour Law" are not valid.
The new code provides that release letters that do not contain an amount are null and void. It further regulates that the release letter is valid provided that all rights and claims of the employee are fully and duly provided by the employer and the third paragraph regulates that a release deed that contains an amount shall be deemed as receipt of the amount stated. Hence, as of July 1 2012, executed release deeds that do not state an amount will be deemed null and void. Accordingly, an employer that makes a partial payment will remain liable for outstanding receivables.
Once the new code becomes effective, execution of a release deed will be technically impossible, since a release deed that does not contain an amount will be deemed null and void and a release deed that contains an amount indicating a partial payment will be deemed a receipt. Under Article 420 of the new code release deeds will be valid provided that the employer pays all receivables of the employee arising from employment contract. However, in this case, due to payments made to the employee for outstanding claims, the liability of the employer has been satisfied and in this respect it becomes technically impossible for the employee to release the employer of any debt, as none exists.
For further information on this topic please contact Melek Onaran Yüksel or İsmail Emrah Karadağ at YükselKarkınKüçük by telephone (+90 212 318 05 05), fax (+90 212 318 05 06) or email ([email protected] or [email protected]).