Introduction
New code
Fixed-term employment contracts
Successive contracts, termination and compensation
Under the Labour Law (4857), an employment contract may be established for either a fixed or flexible term. A contract for a fixed term has a specified duration, while a contract for a flexible term is open-ended.
Although flexible-term employment contracts are the most usual form of contract, the conclusion of fixed-term contracts in exceptional cases has led to much debate - in relation to their conclusion, renewal and termination. In contrast to the former Code of Obligations (818), the new code (6089) regulates new principles regarding fixed-term employment contracts and includes provisions on compensation claims.
The connection between the Labour Law and the new code must be established, in order to make a correct legal assessment regarding the provisions on fixed-term employment contracts and other labour law issues. In the general preamble of the new code, it is expressly stated that provisions on employment contracts will cover those employees that do not fall within the scope of the Labour Law. Thus, in cases where there is conflict between the Labour Law (which is a specific law) and the new code (which is a general law), the Labour Law will be applied to the employment relationship. Likewise, the Labour Law will continue to be applied in relation to issues that are expressively stipulated in the Labour Law and the new code will be applied regarding those issues that are not regulated in the law.
The new code does not require there to be an essential (objective) reason for the initial conclusion of a fixed-term employment contract, but does require an essential (objective) reason for successive fixed-term employment contracts. However, the Labour Law requires an essential (objective) reason for both the initial conclusion and successive renewal of fixed-term employment contracts. Hence, the Labour Law provides that employers can enter into a fixed-term contract only if:
- the work undertaken by the employee lasts for a specific period of time; or
- the employee is employed for the completion of certain work or because of the emergence of certain facts at the workplace, which justify the conclusion of employment contract for a fixed term.
In this respect, the new code is more flexible than the Labour Law
Fixed-term employment contracts
Employees working with fixed-term employment contracts do not benefit from the job security provisions of the Labour Law, which provide favourable conditions for employees. Similarly, fixed-term employment contracts end on the expiry of the term of the contract and employees are entitled to neither severance pay nor notice pay. In this context, since the reasons that justify the signing of fixed-term employment contracts which may have disadvantageous consequences for employees concerning protection against dismissal, are not enumerated on a limited basis in the Labour Law, it is accepted that fixed-term employment contracts may be concluded in similar cases where objective reasons are present. For instance, since the public's admiration and demand is important for performing artists, it is accepted that fixed-term employment contracts may be concluded with such employees. Likewise, since the success of the team depends on the harmony between the players, the members of the team are frequently changed and the performance of sportsmen is prioritised, fixed-term employment contracts may be concluded with professional sportsmen.
Moreover, in line with certain court precedents of the Court of Appeal, it has been accepted that there is an objective reason to conclude fixed-term employment contracts with senior executives, because of their position and the nature of their work. For example, a general manager is an executive and undertakes the duty of management at high level. Thus, the performance results of the general manager carry significance for the running of the business. Parallel to court precedents, the doctrine accepts that fixed-term employment contracts are concluded with executives and considers that in such case the objective reason criteria is fulfilled. In such case the criteria of employment contract depending on success is accepted as objective reason to conclude fixed-term employment contracts with executives.
Successive contracts, termination and compensation
Similar to the former Code of Obligations, the new code stipulates that fixed-term employment contracts end on the expiry of the term of the contract without any notification requirement, unless otherwise agreed.
In the former code, it was regulated that if a fixed-term employment contract implicitly continued after its expiration, such contract would be renewed for the same duration, not exceeding one year. However, parallel to the provisions of the Labour Law, the new code explicitly regulates that if a fixed-term employment contract implicitly continues after its expiration, such contract will turn into a flexible-term employment contract. Successive fixed-term employment contracts may be concluded only if there is an essential (objective) reason. Thus, the new code provides compliance with the Labour Law regarding renewal in this respect. Furthermore, if it is determined that the employment contract will be terminated by a termination notice and both parties have not used such termination notice, the fixed-term employment contract will become a flexible-term employment contract. Thus, it is assured that employees will benefit from the conditions of flexible-term employment contracts and their seniority rights will be calculated by also considering the duration of the first employment contract.
Under the new code, if the employment contract lasts more than 10 years, both parties may terminate the employment by complying with a termination notice period of six months. In such cases, the termination will take effect at the beginning of the month following such period. In the former code, it was regulated under the section regarding employment contracts that after a maximum term of 10 years, the employee may terminate the employment relationship any time after the expiry of 10 years with a notice period of one month. As there is no provision in the Labour Law regarding this issue, this provision will also be applicable to employment relationships subject to the Labour Law.
Moreover, in accordance with court decisions and doctrine, the new code explicitly regulates that in case of termination of fixed-term employment contracts before their expiry date, the employee may request the payments that he or she should have earned from his or her employer if the employment relationship had been terminated at the expiration of the fixed term, as compensation. Thus, the employee may claim for wages and benefits for the remainder of the fixed-term employment contract. However, any amounts that the employee has saved because of termination of his or her fixed-term employment, any earnings that earned from another work after the termination date or any earnings that the employee intentionally abstained from earning may be deducted from such compensation. Moreover, the same provision regulates that employees may be entitled with another compensation to be determined by the court by considering the conditions and specifics of each particular case.
As another new provision which will also be applicable to fixed-term employment contracts subject to the Labour Law, the new code regulates that if the employee suddenly quits employment or does not start working without any just cause, the employer may claim for compensation in the amount of one-quarter of the employee's monthly wage. Furthermore, the employer may request indemnification for its additional damages. However, in cases where the employer has incurred no losses or its damages are less than one-quarter of the employee's monthly wage, the court may deduct the compensation amount. If the right of compensation has not ended via set-off, the lapse of time to request compensation is 30 days from the date on which the employee has quit employment or has not started working and the employer shall use its right by pursuing or instigating a lawsuit within this duration.
For further information on this topic please contact Katharina Cihan Akyürek at YükselKarkınKüçük by telephone (+90 212 318 05 05), fax (+90 212 318 05 06) or email ([email protected]).