Dismissals in Turkey

1. Dismissal of employees

1.1 Reasons for dismissal

Turkish law foresees two types of dismissals for employees: ordinary termination and extraordinary termination. Each type of termination is then further differentiated according to whether the employment security terms are applicable (as outlined below).

Ordinary Termination

Where the employment security provisions apply to the dismissed employee

Whether the employer is obligated to rely on a reason in an ordinary termination depends on whether the employee to be dismissed benefits from “employment security provisions” applicable under Turkish law.

Employment security provisions would be applicable to an employee if:

  1. The employer in question employs at least 30 employees; and
  2. The employee in question has been employed by the said employer for at least six months based on an indefinite term employment agreement.

If the conditions above are satisfied and the employee benefits from employment security provisions, the employer is obligated to supply a valid reason to dismiss such employee. Turkish law does not provide an exhaustive list of valid reasons for termination. However, the following reasons provided under the law are generally considered as guidelines   for this purpose:

  1. The employee is incapable of performing their duties or they behave in an unacceptable manner;
  2. Business necessity; or
  3. Workplace necessity.

Where the employment security provisions do not apply to the dismissed employee

Where the conditions for employment security are not applicable, an ordinary termination does not need to be justified (i.e. the employer may dismiss the employee without having to supply any grounds).

However, where the employee has been terminated in bad faith, they may claim a “bad faith compensation” (kötü niyet tazminatı). For further details, please see our explanation regarding Consequences if requirements are not met below.

Rules applicable without regard to employment security provisions

In an ordinary termination, the employer is obligated to observe the statutory notification periods regardless of whether the employee in question benefits from employment security provisions. For further details regarding such periods, please see our explanations below regarding Notice periods.

Furthermore, any employee who has been employed for at least one year will be entitled to severance payment upon an ordinary termination of their employment. For further details regarding severance payment, please see our responses below to Consequences if requirements are not met and Severance pay.

Lastly, upon the ordinary termination, the employer is obligated to grant the employee the right to seek new employment during the notification period. Accordingly, an employee will be allowed at least two hours per day to find new employment (unless the employment is terminated immediately by way of paying the employee an amount corresponding to his / her notification period, as indicated in our explanations below in Consequences if requirements are not met).

Extraordinary Termination

In the presence of just reasons, Turkish law provides employers the right to dismiss an employee immediately without having to comply with any notification periods and, in certain instances, without having to pay any severance pay as further detailed in our responses to Severance pay below.

Turkish law does not provide an exhaustive list of just reasons for extraordinary termination but the following reasons indicated under the law are considered to give guidelines as to what constitutes a just reason:

  1. Health reasons;
  2. Acts of the employee breaching moral principles and principle of good faith or similar situations;
  3. Force Majeure; and
  4. Apprehension or detention of the employee

Please note that the distinction based on the applicability of employment security provisions explained above for an ordinary termination is also applicable for an extraordinary termination.

Please see our responses below regarding Consequences if requirements are not met for further details of the legal ramifications of an unjust termination (i.e. where the termination is absent of the alleged just reasons).

1.2 Form

As a matter of validity, notice (bildirim) for dismissal must be in writing and signed by the employee to confirm they have received such notice. In addition, it is advisable to have two witnesses present at the time of notice to evidence a possible refusal by the employee to take receipt of the termination notice.

It is also advisable to send an official notification (tebligat) to the employee’s registered address of residence following due receipt of the termination notice (or refusal of the same) to ensure that the employee is duly notified of the termination. For such purpose, specific rules under the notification procedures legislation shall become applicable.

Lastly, please note that an employee may not be terminated due to his / her performance or behaviour without granting such employee a right to defend himself / herself.

1.3 Notice period

Ordinary Termination

For an ordinary termination explained above, the notice periods depend on the length of employment. The relevant periods are as follows:

  1. For employees whose term of employment is shorter than six months, the statutory period is two weeks;
  2. For employees whose term of employment is between six months and one and a half years, the statutory period is four weeks;
  3. For employees whose term of employment is between one and a half years and three years, the statutory period is six weeks; and
  4. For employees whose term of employment is longer than three years, the statutory period is eight weeks.

In principle, Turkish law allows for the employer and the employee to agree on extended notification periods. However, the Turkish Court of Appeals has made at least one ruling where it has stated that an employee, upon his / her termination of the employment, would only be bound to observe the periods indicated above (and not those agreed under the employment agreement). Therefore, if the employee terminates his / her employment, he / she may not be required to observe a notification period longer than those prescribed under the law (as indicated above).

Extraordinary Termination

For an extraordinary termination, a notice period does not need to be observed by the employer (i.e. the dismissal will be effective immediately).

However, in an unjust termination (where the alleged just reasons for termination do not exist), compensation pertaining to the notification periods will be applicable. For further details, please see below our responses to Consequences if requirements are not met.

1.4 Involvement of works council

No involvement.

1.5 Involvement of a union

A union will be involved in the dismissal of employees if collective employment agreements have been entered into by employees’ unions and employers (or employers’ unions) that foresee the establishment of certain bodies (composed of the representatives of labour unions and the employers) (e.g. disciplinary boards) authorized to make advisory opinions on dismissals. While such advisory opinion is not directly binding on the employer, Turkish courts may still determine that a termination that goes against such opinion is an invalid termination.

1.6 Approval of state authorities necessary

Not necessary.

1.7 Collective redundancies

Collective redundancy is recognized under Turkish law and the relevant provisions will be applicable when the employment of the following numbers of employees are terminated on the same day or within a period of one month following the same procedures and principles as termination with a valid reason:

  1. Ten employees in a workplace where 20 – 100 employees are employed;
  2. 10% of employees in a workplaces where 101 – 300 employees are employed; or
  3. 30 employees in a workplace where at least 301 employees are employed

Collective redundancy is subject to judicial review upon petition by the employees. The judicial review will determine whether the collective redundancy has been implemented for valid reasons and the necessary conditions have been satisfied. For such purposes, the court will make use of data from all types of workplace records and expert opinions, and will reach its own decision.

Certain procedures must also be followed for the due implementation of a collective redundancy. To elaborate, where a collective redundancy is in question, the employer is obligated to inform the regional Directorate of the Employment and Social Security Ministry and Turkish Employment Office at least 30 days before the implementation of such collective redundancy. In the event that the employer does not inform the relevant state institutions, it will incur an administrative fine of TL 857 (app. EUR 141) (as of 2019) for every employee affected by the collective redundancy.

It should also be noted that the notification period for the termination starts within one month of having informed the relevant state institution. Without such notification, notification periods for the termination cannot be duly initiated.

1.8 Summary dismissals

Please see above our explanation regarding extraordinary termination.

1.9 Consequences if requirements are not met

There are different consequences under Turkish law for an ordinary termination and an extraordinary termination in which a valid or just reason is absent. These are as follows:

Ordinary Termination

Where the employment security provisions apply to the dismissed employee

In this scenario, the notification periods indicated above must be observed by employers when terminating an employee. As such, the employer would be obligated to either

  1. Allow the employee to work during the notification period (duly paying him / her for the work performed during such the period); or
  2. Pay the amount corresponding to the notification period if the employer wishes to terminate the employee immediately.

In addition to this, in case of a termination, the employee may seek remedy before a mediator and if the matter is not resolved before the mediator, then the employee will be entitled to initiate a “lawsuit for re-instatement” (işe iade davası), in each case claiming that such dismissal is not based on one of the valid reasons explained above.

Where the parties are unable to resolve this dispute before the mediator and this matter is referred to a court and the said court determines that the ordinary termination is absent of a valid reason, it will render a judgement about:

  1. The re-instatement of the employee to the position he / she held prior to termination; and
  2. The amount of compensation the employer is obligated to pay to the employee in case the employer will not re-instate the employee.

If the employer re-instates the employee, it is obligated to pay to the employee a (maximum) amount equal to four months’ salary as well as any other receivables of the employee, which is meant to compensate the employee for the duration of the lawsuit during which the employee did not work.

If the employee chooses not to re-instate the employee, it is obligated to pay compensation to the employee equal to

  1. Four months’ salary as well as any other receivables of the employee, which is meant to compensate the employee for the duration of the lawsuit during which the employee did not work; and
  2. Four to eight months’ salary as compensation for undue termination.

In both scenarios, the salary taken as the basis for the compensation amount is the monthly salary the employee received immediately prior to termination.

Lastly, amounts corresponding to unused leave periods (if any) will also become payable to the employee.

Where the employment security provisions do not apply to the dismissed employee

In this case, the employer must observe the notification periods or make the corresponding payments as indicated above in our responses to paragraph Where the employment security provisions apply to the dismissed employee.

In addition to the above, if the employment has been terminated in bad faith (e.g. solely to avoid paying certain receivables to an employee, due to the employee’s involvement with a labour union etc.), the employer would be obligated to pay a bad faith compensation. Such compensation is equal to three times the amount pertaining to the notification periods of the employee.

Lastly, amounts corresponding to unused leave periods (if any) will also become payable to the employee.

Severance Payment

Any employee who has been employed for at least one year will benefit from severance payment upon ordinary termination of his employment relation by the employer regardless of whether the employee benefited from employment security provisions. For further details, please see our responses to Severance pay below.

Extraordinary Termination

Where the employment security provisions apply to the dismissed employee

In this scenario, as the dismissal will be effective immediately, in the absence of such just cause for termination, the employer would be obligated to compensate the employee for the amount pertaining to the notification periods (as indicated above).

Furthermore, the employee will also be entitled to initiate a lawsuit for re- instatement. Please see our responses above to Where the employment security provisions apply to the dismissed employee regarding the possible outcomes of such lawsuit.

Lastly, amounts corresponding to unused leave periods (if any) will also become payable to the employee.

Where the employment security provisions do not apply to the dismissed employee

In this case, as the dismissal will be effective immediately, in the absence of such just cause for termination, the employer would be obligated to compensate the employee for the amounts pertaining to the notification periods (as indicated above).

The bad faith compensation indicated in our responses above to Where the employment security provisions do not apply to the dismissed employee are also be applicable in this case.

Lastly, amounts corresponding to unused leave periods (if any) will become payable to the employee.

Severance Payment

If the employee was employed for at least one year, he / she will benefit from a severance payment upon an unjust termination of his / her employment regardless of whether he / she benefited from employment security provisions.

For further details, please see our responses to Severance pay below.

1.10 Severance pay

As indicated above, in an ordinary termination, employees who have worked for the employer in question for at least one year, will be entitled to severance pay regardless of whether they benefited from employment security provisions prior to termination and even if there was a valid reason for their dismissal.

As for an extraordinary termination, employees who have worked for the employer in question for at least one year will be entitled to severance pay if they were terminated based on any grounds other than “acts breaching moral principles and principle of good faith or similar situations”. Further, an employee will be entitled to severance pay at any rate if he / she was terminated on an unjust basis (i.e. if the alleged just reasons for termination do not exist).

Regarding the amount of the severance payment, note that upon termination, an employee, in principle, is entitled to 30 days of pay for each year of employment prior to termination. However, this payment is subject to a ceiling of approximately TL 7,117 (EUR 800,subject to an inflation markup bi-annually). Consequently, even if the 30 day salary of the employee was higher than TL 7,117, the employee may only receive this amount as severance payment for each year of employment.

For calculation of the severance pay, the gross salary will include tax and security premiums deducted from the salary as well as additional moneys and monetary rights provided to the employee, including bonuses, child support payments, and monetary assistance in relation to health and transportation to and from work.

1.11 Non-competition clauses

During the term of the employment agreement, employees are under a non-compete obligation as per the terms of Turkish law.

For any non-compete obligations to prevail after the employment relationship, they must be limited by time and geographical scope so as not to prejudice the economic well-being of the employee.

From a timing perspective, Turkish law, in principle, allows for a two-year period as a valid non-compete term starting from the termination of the employment relationship. As for the geographical scope, Turkish law requires that the non-compete obligation is limited to certain regions or cities where the employment of the employee by a competitor would be most detrimental for the initial employer. Where a non-compete obligation is found to be in excess of the said limitations, it will be limited by Turkish courts. Accordingly, in a dispute, the court will not take into account the contractual non- compete obligation but determine the scope of the non-compete obligation that could duly be agreed between the parties and proceed on that basis.

There is no specific regulation or established precedent under Turkish law regarding a non-compete in favour of a third person who is not the actual employer of the employee in question (e.g. the parent company of the employer). As such, it is likely that a non-compete obligation in favour of such third person would be unenforceable under  Turkish law.

1.12 Miscellaneous

It should be noted that Turkish courts are extremely employee friendly. Therefore, complying with the necessary principles and procedures with regard to a termination is essential. For this purpose, all the relevant documents (e.g. the employment agreement) must be reviewed very carefully and all notices and notifications (i.e. the termination notices / notifications) must be prepared in a diligent manner and duly served.

Lastly, Turkish employers are obligated to treat employees equally and where a termination has been effected on a discriminatory basis, an employee may claim a discrimination compensation (ayrımcılık tazminatı). Such compensation will equal four months’ of the employee’s salary when subject to discrimination as well as any further receivables the employee should have received had he / she not been subject to such discrimination.

2. Dismissal of managing directors

2.1 Reasons for dismissal

First, Turkish law only recognizes a distinction between the termination of employees and

  1. Employer representatives and deputy employer representatives who manage an enterprise in its entirety; and
  2. Employer representatives who manage a workplace in its entirety and who are authorized to employ and dismiss employees.

(Persons in (i) and (ii) above are collectively referred to as “Managers” for the purposes of this Guide)

For the purposes of (i) above, employer representatives and deputy employer representatives are usually considered to be the general managers (genel müdür) and deputy general managers (genel müdür yardımcısı), respectively, of the relevant entities. Managing directors should fall in the scope of “general managers” as explained above.

As for (ii) above, any person who has been given both powers indicated in it will also be subject to the regime explained below. However, in Turkish legal practice, persons other than employer representatives and deputy employer representatives, would rarely hold all of such powers together.

Turkish law foresees two types of dismissals for Managers, namely ordinary termination and extraordinary termination.

Ordinary Termination

Under the employment security provisions of Turkish law, certain employees are granted specific remedies in case of an ordinary termination.

Under Turkish law, employment security provisions do not apply to Managers. Therefore, a manager may be terminated without a valid reason and remedies against such ordinary termination (such as initiating lawsuit for reinstatement (işe iade davası)) will not be available. However, the employer is still obligated to observe the notification periods for the ordinary termination of a Manager. For further details regarding such periods, please see our explanations below regarding Notice periods and Consequences if requirements are not met.

Furthermore, any Manager who has been employed by the employer in question for at least one year will be entitled to severance pay for an ordinary termination. For further details, please see our responses to Consequences if requirements are not met and Severance pay below.

In addition, where the Manager has been terminated in bad faith, he / she may claim a “bad faith compensation” (kötü niyet tazminatı). For further details, please see our explanations below regarding Consequences if requirements are not met.

Upon the ordinary termination of a Manager, the employer is obligated to grant the Manager a right to seek new employment during the notification period. Accordingly, such Manager shall have at least two hours per day to find new employment (unless the employment is terminated immediately by way of paying the Manager the amount corresponding   to his / her notification period, as indicated in our explanations below in Consequences if requirements are not met).

Lastly, upon an ordinary termination, an amount corresponding to unused leave periods will also become payable to the Manager.

Extraordinary Termination

In the presence of just reasons, Turkish law provides employers the right to dismiss a Manager immediately without having to comply with any notification periods or having to pay any severance pay.

While the law does not provide an exhaustive list, the following just reasons indicated under the law are considered as a guideline for this purpose:

  1. Health reasons;
  2. Acts of the manager breaching moral principles and the principle of good faith or similar situations;
  3. Force Majeure; and
  4. Apprehension or detention of the manager

Please see our responses below regarding Consequences if requirements are not met for further details as to the legal ramifications of an unjust termination (i.e. where the termination is absent of the alleged just reasons).

2.2 Form

There is no requirement for a due notice of termination of a Manager to be given in writing. However, it would be advisable to give such notice in a written form and have two witnesses present at the time of the notice for evidentiary purposes.

Further, it would also be also advisable to send an official notification (tebligat) to the Manager’s registered address of residence to ensure that the Manager is duly notified of the termination. For this purpose, specific rules under the notification procedures legislation become applicable.

In addition to the above, in most cases there will be a shareholders’ resolution and / or a board of directors’ resolution for the appointment of the Manager and this resolution will be registered with the relevant trade registry and published in the trade registry gazette. Where the Manager is terminated, a new shareholders’ resolution and / or a board of directors’ resolution will need to be made regarding the revocation of the appointment of the Manager in question and the new resolution will also need to be registered with the relevant trade registry and published in the trade registry gazette.

2.3 Notice period

Ordinary Termination

For an ordinary termination explained above, the notice periods depend on the length of employment. Accordingly, please find below the relevant periods:

  1. For Managers whose term of employment is shorter than six months, the statutory period is two weeks;
  2. For Managers whose term of employment is between six months and one and a half years, the statutory period is four weeks;
  3. For Managers whose term of employment is between one and a half and three years, the statutory period is six weeks; and
  4. For Managers whose term of employment is longer than three years, the statutory period is eight weeks.

Please note that Turkish law, in principle, allows for the employee and   the employer to agree on an extended notification period. However, the Turkish Court of Appeals has made at least one ruling where it has stated that an employee, upon his / her termination of the employment, would only be bound to observe the periods indicated above (and not those agreed under the employment agreement). As this ruling would also be valid for Managers, if a Manager terminates his / her employment with the employer, he / she may not be required to observe a notice period longer than those indicated above.

Extraordinary Termination

For a due extraordinary termination, a notice period does not need to be observed by the employer (i.e. the dismissal will be effective immediately).

However, in an unjust termination (where the alleged just reasons for termination do not exist), compensation pertaining to the notification periods will be applicable. For further details, please see below our responses to Consequences if requirements are not met.

2.4 Involvement of works council

No involvement.

2.5 Involvement of a union

A union will be involved in the dismissal of Managers if collective employment agreements have been entered into by employees’ unions and employers (or employers’ unions) which foresee the establishment of certain bodies (composed of the representatives of labour unions and the employers) (e.g. disciplinary boards) authorized to make advisory opinions on dismissals (although such collective labour agreements would usually apply to blue-collar employees only). While such advisory opinion is not directly binding on the employer, Turkish courts may still determine that a termination that goes against such opinion is invalid.

2.6 Approval of state authorities necessary

Not necessary.

2.7 Collective redundancies

No specific provisions are applicable to a collective redundancy concerning Managers. However, in determining whether a collective redundancy has occurred, the number of terminated Managers (if any) will also be taken into consideration.

2.8 Summary dismissals

Please see above our explanation regarding extraordinary termination.

2.9 Consequences if requirements are not met

There are different consequences under Turkish law for an ordinary termination and an extraordinary termination which is absent of a valid or just reason. These are as follows:

Ordinary Termination

In an ordinary termination, the employer would be obligated to observe the notification periods indicated above. As such, the employer would be required to either

  1. Allow the Manager to work during the notification period (duly paying him / her for the work performed during such period); or
  2. Pay the amount corresponding to the notification period if the employer wishes to terminate the Manager immediately. Furthermore, any Manager who has been employed for at least one year will benefit from severance payment upon ordinary termination of his employment relation by the employer. For further details, please see our responses to Severance pay below.

In addition to the above, if the employment was terminated in bad faith (e.g. solely to avoid the payment of certain receivables to a Manager etc.), the employer is obligated to pay a bad faith compensation. Such compensation equals three times the amount pertaining to the notification period of the Manager.

Lastly, any amount pertaining to unused leave periods will also become payable to the Manager.

Extraordinary Termination

In this case, as the dismissal will be effective immediately, in the absence of such just cause for termination, the employer is obligated to compensate the Manager for the amount pertaining to the notification periods (as indicated above).

Furthermore, if the Manager was employed for at least one year, upon an unjust termination, he / she will benefit from severance payment upon an unjust termination of his / her employment. For further details, please see below our responses to Severance pay.

In addition, the bad faith compensation indicated above for ordinary terminations also become applicable.

Lastly, any amounts pertaining to unused leave periods become payable to the Manager.

2.10 Severance pay

As indicated above, in an ordinary termination, a Manager who has worked for the employer in question for at least one year is entitled to severance pay even if there was a valid reason for his / her dismissal.

As for an extraordinary termination, Managers who have worked for the employer in question for at least one year will be entitled to severance pay if they were terminated based on any grounds other than “acts breaching moral principles and principle of good faith or similar situations”.

Further, a Manager will be entitled to severance pay at any rate if he / she was terminated on an unjust basis (i.e. if the alleged just reasons for termination do not exist).

Regarding the amount of the severance payment, note that upon termination , a Manager, in principle, is entitled to 30 days of pay for each year of employment prior to termination. However, this payment is subject to a ceiling of approximately TL 7,117 (EUR 800,subject to an inflation markup bi-annually). Consequently, even if the 30 day salary of the Manager was higher than TL 7,117, the Manager may only receive this amount as severance payment for each year of employment.

For calculation of the severance pay, the gross salary will include tax and security premiums deducted from the salary as well as additional moneys and monetary rights provided to the Manager, including bonuses, child support payments, and monetary assistance in relation to health and transportation to and from work.

2.11 Non-competition clauses

During the term of their employment, Managers are under a non-compete obligation as per the terms of Turkish law.

For non-compete obligations to prevail following the end of the term of employment relationship, such non-competition clauses must be limited by time and geographical scope.

From a timing perspective, Turkish law, in principle, allows for a two-year period as a valid non-compete term starting from the termination of the employment relationship. As for the geographical scope, Turkish law requires that the non-compete obligation is limited to certain regions or cities where the employment of the Manager by a competitor would be most detrimental for the initial employer. Where a non-compete obligation is found to be in excess of the said limitations, it is subject to limitation by Turkish courts. Accordingly, in a dispute, the court will not take into view the contractual non-compete obligation but will determine the scope of the non-compete obligation that could duly be agreed between the parties and proceed on that basis.

Please note that there is no specific regulation or established precedent under Turkish law regarding a non-compete in favour of a third person who is not the actual employer of the Manager in question (e.g. the parent company of the employer). As such, it is likely that a non-compete obligation in favour of such third person would be unenforceable under Turkish law.

2.12 Miscellaneous

It should be noted that Turkish courts are extremely employee friendly and the same approach would prevail for the Managers. Therefore, complying with the necessary principles and procedures with regard to a termination is essential. For this purpose, all the relevant documents (e.g. the employment agreement) must be reviewed very carefully and all notices and notifications (i.e. the termination notices / notifications) must be prepared in a diligent manner and duly served.