Lexology GTDT Market Intelligence provides a unique perspective on evolving legal and regulatory landscapes. This interview is taken from the Labour & Employment volume featuring discussion and analysis of legal developments, the enforcement of restrictive covenants and political debates about employment within key jurisdictions worldwide.
1 What are the most important new developments in your jurisdiction over the past year in employment law?
As of 1 January 2018, all individual labour disputes between employers and employees for receivables, compensation and reinstatement claims must first be referred to a mediator and then to litigation if there has been no settlement before the mediator. This is what we call ‘compulsory mediation’ in labour disputes. I think this was one of the most important developments last year. Compulsory mediation aims to push parties towards settlement without spending a huge amount of effort, many years and lots of money litigating before courts.
When we look at the 2 January 2018 to 19 September 2019 statistics about mediation, we see that 66 per cent (392,987 applications) of the cases put before mediators have been settled while the remaining 34 per cent (199,679 applications) have been referred to courts. Also, the greatest workload of the Supreme Court of Appeals has been generated by its chambers hearing labour disputes. As a result, it would not be wrong to say that compulsory mediation will help the high court reduce its workload and help it focus on improving the quality and stability of its case law. We can therefore say that this system has been useful to the market.
Another important development was the signing of a cooperation protocol in May 2019 between the two biggest trade unions active in the metal sector, namely Birleşik Metal-İş Trade Union and Türk Metal Trade Union. There are approximately 1.5 million employees working in the metal sector in Turkey. Needless to say, unions compete with each other to unionise workplaces and sign collective bargaining agreements with employers. They do not go into such cooperation to help the other union and, as a result, employers benefit from this competition most.
The new protocol recognises that a referendum will decide which union will unionise the relevant workplace. Both trade unions will recognise the outcome of that referendum and respect the employees’ choice of their preferred union. In case of a dispute, IndustriALL Global Union will act as the mediator since both Birleşik Metal-İş Trade Union and Türk Metal Trade Union are its members.
We expect that this approach will help extend collective bargaining agreement coverage in the metal sector and that this approach can trigger other trade unions in other sectors to take similar initiatives.
2 What upcoming legislation or regulation do you anticipate will have a significant impact on employment law in your jurisdiction?
The government plans to change the existing statutory seniority compensation (SSC) regime by the end of 2019. SSC is seen by the working class as a kind of ‘guarantee’ if they are dismissed by their employer in buying them time to find the next job. The planned changes are therefore strongly challenged by trade unions and the public as the planned changes are expected to replace the current system with a more disadvantageous one.
Currently, on top of a number of exceptions, an employee receives SSC if he or she is dismissed by his or her employer after the end of first year of employment for a reason other than ‘unethical and immoral behaviour’ per article 25/II of Turkey’s Labour Code. Such employee will receive one month’s gross salary per year of service to that employer. If, however, the employee’s monthly gross salary is above the statutory cap (currently 6379.86 Turkish liras), determined in the year of payment, then the cap applies instead of monthly salary. SSC is payable by the employer upon dismissal.
The planned changes signal that employers will be paying through the term of employment a percentage, likely to be 3 per cent of the employee’s monthly salary, into a special ‘fund’. SSC will be payable not by the employer and not payable immediately after dismissal. SSC will instead be paid to the employee by the fund, with 50 per cent of SSC being paid 15 years after dismissal or if the employee buys his or her first house. The remaining 50 per cent will be paid at the age of 56 or when the employee retires.
We expect that these changes will lead to serious resistance from the working class and nationwide slowing down of production of goods and services.
According to Turkish unions law, a trade union must have a minimum 1 per cent of all employees, who work in the same sector, as its members (nationwide condition) and a minimum 40 or 50 per cent of the employees, who work in one specific workplace, as its members (employer-specific condition), in order to become eligible to negotiate a collective bargaining agreement with that employer.
Until 12 June 2020, however, a provisional article of our unions law holds the unions, which, per July 2009 statistics, had as their members 10 per cent of the employees working in the same sector and that were established between July 2009 to 15 September 2012, exempt from the above-mentioned percentages and only demands that such unions meet the minimum employee thresholds within the targeted workplace (ie, the employer-specific condition).
Therefore, if not extended after 12 June 2020, unions that do not meet the nationwide condition will lose eligibility to unionise workplaces and sign collective bargaining agreements for their members. Since it takes a long time and much effort for trade unions to reach the 1 per cent nationwide threshold, this will likely result in a serious number of workers losing their right to choose the trade unions that they think are favourable to them. With the roughly 8 per cent collective bargaining coverage existence in the market, this will mean more unions will stay out of the game, which will likely deprive employees of the right to demand better working conditions.
3 How has the #MeToo movement impacted the investigation or settlement of harassment or discrimination claims in your jurisdiction?
It is difficult to say that the #MeToo movement has substantially impacted the investigation or settlement of harassment or discrimination claims in Turkey. Yes, this movement triggered the #SenDeAnlat movement in Turkey and received a lot of reaction and contribution from many women. It is, however, not really possible to say that it has substantially raised awareness and sensitivity in the public in respect of people starting to think about it deeper than usual and thus behaving accordingly.
Our laws prevent individuals from harassing others. Needless to say, this rule applies to employment relationships as well. Employers must ensure that an employee does not harass another employee and take all precautions to protect employees’ well-being. Nevertheless, harassment at work is a common problem in this market and workplace culture in Turkey has unfortunately not been pushed hard enough by the judiciary and the labour authorities to move toward a positive direction.
4 What are the key factors for companies to consider regarding the enforcement of restrictive covenants against departing employees?
Restrictive covenants are vital to companies when their high-ranking employees are leaving, especially when they are not ‘good leavers’.
We see in the market that most companies try to protect their business (non-compete), client portfolio and employees (non-solicitation) by imposing these restrictions in writing. These clauses look good on paper, but are literally ineffective if you, the employer, have not put them in the right employee’s employment agreement, imposed penalty payments in cases of violation, reserved that the restrictions will survive penalty payment and reserved the right to demand injunction to stop an ongoing breach. This is because, in Turkey, the law demands that the employer reserve these rights in order to be able to enforce them if the employee has violated these restrictions in the post-employment term.
Also, if the employee is not high-ranking enough (ie, does not have access to business secrets or client portfolio) and if the potential damage is not substantial to your business, then the restrictions will not be binding on the employee at all. What is ‘substantial’ is to be determined on a case-by-case basis.
If you have not imposed penalty payment for violation of the restrictions you will be asked to prove the exact amount of your losses caused by the violation of the restrictions, which is almost impossible to do. So, in order to avoid such risk, a reasonable amount of penalty, for instance two times the latest net monthly salary per month of breach, is advisable. On top of this, a post-employment restriction with a penalty payment obligation will deter the employee from violating the restrictions and thus help the employer reach its business objective to protect its commercial interests.
Lastly, post-employment restrictions are binding on the employees for two years maximum. Post-employment restrictions for more than two years will be binding only if there are justifying reasons.
So, to sum up, how the post-employment restriction clauses are drafted are decisive in assessing whether the employer is indeed covered from a legal perspective after the employee has left employment. Therefore, employers must pay specific attention to the drafting of post-employment restriction clauses.
5 In which industry sectors has employment law been a hot topic recently? Why?
We could say agriculture and construction, as death rates in these two sectors have been the highest of all other sectors in Turkey. These are the most active sectors, especially in summertime, and hence the deaths increase in summer. This is particularly true for the seasonal agriculture employees that travel around Turkey to work in the summer time. This heavy traffic brings with it the road accidents that unfortunately increase the death toll.
When we review the Occupational Heath and Safety Assembly’s (İSGM) reports, we see that, in the first nine months of 2019, a minimum of 1,174 employees were killed as a result of occupational accidents. This figure was a minimum of 1,923 in 2018 and a minimum of 2,006 in 2017.
Traffic accidents have been the leading cause of occupational deaths in Turkey in 2019. It is followed by crushes, heart attacks, electric shock, falls from heights, poisoning, being hit by an object and suicide.
In 2018, 438 employees in the construction sector and 457 employees in the agriculture sector died due to occupational accidents. Most of these employees were uninsured.
Turkey has adopted health and safety legislation together with its secondary legislation. It has, however, not taken the necessary steps for the successful implementation of these norms in real life. This is partly because the government’s resources to inspect employers and remedy the missing points are inadequate and partly because the judiciary has not been willing to punish the truly responsible but only the secondary responsible, such as subcontractors in a construction site.
6 What are the key political debates about employment currently playing out in your jurisdiction? What effects are they having?
The planned changes in the existing SSC (explained in question 2) have been the subject of key political debate in Turkey. The government has taken this as a to-do item in their 2019 annual plan and given year-end as the deadline to put it in practice. The government sees this as an opportunity to better regulate SSC payment conditions and to guarantee that employees receive this upon termination as a separate fund that will make this payment to the employee. The opposition and the vast majority of the unions are, however, of the opinion that the planned changes will only help the government create a new pool of funds for themselves to use and that guaranteeing payment to the employees is not the real concern here. If the government passes this law with the above-mentioned payment conditions, I would guess that employees will lose a serious benefit that barely keeps them happy at the moment. Therefore, we believe and hope that there will be amendments to the bill before it is passed in order to ensure that all stakeholders can meet halfway.
The Inside Track What are the particular skills that clients are looking for in an effective labour and employment lawyer?
Clients need practical and commercial advice. Clients also need employment lawyers who understand their HR structures and corporate sensitivities. Employment lawyers must be responsive since most HR issues require quick attention. Lastly, an employment lawyer must identify the best suitable option for the specific case and present their legal solution in more understandable business language.
What are the key considerations for clients and their lawyers when handling employment disputes?
Whether the dispute will be too expensive from both budgeting and reputation perspectives and what message this dispute will give to the internal team. Clients look to their lawyers to manage their expectations and businesses need clear direction to decide whether it should back up and try to settle or litigate.
What are the most interesting and challenging cases you have dealt with in the past year?
We have been representing a client against an aggressive union, whereby we challenged their mandate to negotiate and sign a collective bargaining agreement with the client. In this lawsuit, we demanded that the court apply the collusion test to a number of union members and thus cancel the union’s mandate. Our demand is an exceptional one since the Supreme Court of Appeals has always applied the collusion test to the employers and not to the unions. We are, however, asking the court to apply the same test to the unions since our request is fully legal. If we win this difficult lawsuit, this decision will be the first of its kind where a union was subjected to the collusion test.
In a series of eight lawsuits, we have demanded some four million Turkish liras from previous employees of a client company and the family members of these employees. Since some of these lawsuits were heard by labour courts, we were frequently challenged by the judges since labour courts are sometimes unreasonably in favour of employees no matter what they may have done. We have, however, won two of these lawsuits despite these difficulties.