CMS Expert Guide to employment termination law and legislation

Global comparison

1. Dismissal of employees

In Belgium, a distinction is made between blue-collar workers and white-collar workers. Blue-collar workers provide manual labour; white collar workers provide intellectual labour.

The main difference between these two statutes were the lengths of the notice periods, which were equalised on 1 January 2014.

Today, the distinction between blue-collar workers and white-collar workers is still made in the method of payment of remuneration, the calculation of notice period in case of employment before 1 January 2014, and some working conditions.

1.1 Reasons for dismissal

The Belgian legal system does not differentiate specific reasons for dismissal. The main distinction is between a “regular” dismissal with compensation (period of notice or indemnity in lieu of notice) and a dismissal with serious cause (summary dismissal). A dismissal because of business reasons falls under the normal dismissal with compensation.

According to Collective Bargaining Agreement n° 109, the employer does not have to state the motives for a regular dismissal on his own initiative, but only if the employee makes a written request.

If an employee requests the employer’s motive for the dismissal, the employer needs to prove that the dismissal was “based on reasons which are related to the capabilities or the behaviour of the worker or which are based on the operational necessities of the company… and which would have been decided upon by a normal and reasonable employer”.

If the employer fails to provide this proof, the dismissal will be considered a “clearly unreasonable dismissal” and the employee will then be entitled to a gross indemnity equal to between three and a maximum 17 weeks’ remuneration (at the determination of the labour courts).

The reasons for regular termination as set out in the Labour Act are as follows:

  • if the need for work ceases to exist for economic, technical or organisational reasons (‘notice due to business reasons’); or
  • the employee is incapable of fulfilling his employment-related duties due to certain personal characteristics or qualifications (‘notice due to personal reasons’); or
  • the employee intentionally breaches a contractual obligation (‘notice due to misconduct’); or
  • if the employee did not satisfy the employer’s requirements during the probationary period.

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

Not applicable.

Written form, including reasons for termination. Decision is to be delivered to the employee.

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

Notice must be given in writing and must comply with the mandatory language requirements applicable in Belgium.

The employer gives notice to perform, either by registered mail or through a bailiff (“gerechtsdeurwaarder” / ”huissier de justice”). If the employee gives notice to perfom, he can also request the employer to sign a duplicate of the notice letter. The notice letter must specify the length of the notice period and the day on which the notice period begins.

For termination with immediate effect, there is no specific form of notice (except for a dismissal for serious cause). Nevertheless, a registered letter or a letter signed for receipt by the employee is recommended for reasons of proof.

Termination of an employment contract of unlimited duration

Employment agreement with performances before 1 January 2014

For the determination of the applicable notice period, two distinct periods will be considered:

  1. before 1 January 2014, and
  2. on or after 1 January 2014.

The notice period includes results before and after 1 January 2014.

Period before 2014

For white-collar workers employers to give notice, seniority acquired before 1 January 2014 will qualify for a notice period of:

  1. either a notice of three months per started period of five years of seniority for white collar-workers earning EUR 32,254 gross or less; or
  2. one month per year of service for white-collar workers earning more than EUR 32,254 gross with a minimum of three months.

For blue-collar workers, the following scheme is applicable for the calculation of the first part of the notice period (calendar days):

In certain industry sectors, different notice periods were applicable for blue-collar workers. These periods need to be applied in the first step of the calculation.

The notice period if the white-collar worker gives notice is:

  1. 1.5 months in the first five years of employment and three months  in case of a seniority higher than five years for white-collar workers earning EUR 32,254 gross or less; or
  2. 5 months per period of five years of service with a maximum of 4.5 months for white-collar workers earning more than EUR 32,254 gross or a maximum of 6 months for white-collar workers earning more than EUR 64,508 gross.

If the maximum (3, 4.5 or 6 months) referred to above is reached, the notice period corresponds to this maximum and, thus, it is not necessary to calculate the notice for the period from 1 January 2014 (see below).

Period from 1 January 2014

For the period as from 1 January 2014, fixed notice periods based on the seniority of the employee (white and blue-collars)  – as from that date – apply.

Attention: if notice is given by the employee, the sum of the notice period before 1 January 2014 and as from 1 January 2014 is limited to 13 weeks.

Employment agreement with performances from 1 January 2014

For the termination of employment agreements with performances as of 1 January 2014, the aforementioned notice periods, applicable for the second part of the calculation, will apply. Exceptions were made for some industries (e.g. construction sector).

Agreements on the notice period

Since 1 January 2014, individual negotiations before the termination of the employment contract have no longer been possible when dealing with the notice period or indemnity in lieu of notice for white-collar workers. However, valid agreements on termination modalities, existing on 31 December 2013 and concluded at an individual level remain valid and enforceable.

Since 1 January 2014 it has only been possible to deviate from the legal notice periods by means of a company-level collective labour agreement.

Following termination, parties may negotiate the notice period or the indemnity in lieu of notice.

Special terms

Different notice periods apply in case of counter-notice by the employee whose employment contract was previously terminated by the employer and who wishes to leave the employer earlier for a new job. These notice periods are limited to four weeks.

If notice is given to an employee in order to terminate the employment agreement from the first day following the month in which the employee attains the statutory pension age, the basic terms apply with a maximum notice period of 26 weeks.

Protected employees

Some categories of employees have special statutory protection against dismissal and are entitled to additional compensation if dismissed (e.g., employees that filed a harassment or discrimination complaint, employees with a political mandate, employees on parental leave).

These categories of protected employees may not be dismissed for reasons related to the grounds on which they are protected. In most cases, the employee can claim damages equal to six months’ remuneration on top of normal notice requirements when the employer is unable to prove that the reasons for the termination are unrelated to the grounds for the protection.

Incapacity to work

If employee is absent due to incapacity to work after the notice of termination has been given, the employer may immediately terminate the employment agreement upon payment of indemnity in lieu of notice corresponding to the remaining notice period. In such case and under certain conditions, the period covered by the guaranteed salary is deducted from the remaining notice period.

Termination of an employment contract of limited duration (fixed-term or well-defined job)

Fixed-term contracts expire automatically on the date agreed by the parties; consequently, no notice of termination needs to be given or indemnity offered in lieu of notice.

If the parties continue performances after the employment contract term has expired, the contract will be subject to the same rules as an employment for unlimited duration.

A fixed-term contract can also be terminated before the agreed term unilaterally by either party or even during a period of incapacity to work.

Since 1 January 2014, each party has been able to terminate the contract by giving notice during the first half of the agreed term of the contract (limited to a maximum of 6 months); the notice period has to end within this first half of the agreed term (or the period of 6 months referred to above).

Notice must be given in the same manner as for an employment agreement for unlimited duration and will also start to run from the Monday following the week in which notice is given. The periods of notice to be given are the same as those for termination of an employment agreement for unlimited duration.

For successive contracts for a limited period, this rule can only be used for the first contract.

If the contract ends after this first half of the agreed term, the party terminating will have to pay an indemnity in lieu of notice. This amount will be equal to the amount of remuneration that would have been paid until the end of the contract, although limited to twice the amount of the indemnity in lieu of notice that should have been paid had an employment agreement for unlimited duration been offered.

Regular termination: notice period ranges from two weeks to three months, dependent on the employee’s length of service with the same employer.

The three-month period is extended by an additional two weeks / one month for 50 / 55-year-old employees who have 20 or more years’ continuous service with the same employer.

Extraordinary termination (summary dismissal): no notice period. Termination during probationary period: notice period of at least seven days.

Termination by employee: notice period cannot be longer than one month if the employee has a good reason.

If the employment is terminated because the employee  breaches his contractual obligations, notice periods are halved.

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

The main role of the works council is to be informed and consulted about a range of economic and employment issues, although it does have some limited decision-making powers.

The employer must inform and consult the works council on cases of mergers, closures, business transfers, large-scale redundancies, etc.

Furthermore, the works council has a decisive competence in setting up the general criteria for collective dismissal.

The works council must be informed of the employer’s intention to dismiss. The works council‘s consent is required for dismissal of the following employees:

  • members of the works council; and
  • candidates running for works council positions and members of the election committee for a period of three months following the announcement of the results of the election to the works council; and
  • employee representatives in a body of the employer; and
  • employees with diminished ability to work and employees in immediate danger of physical disability; and
  • employees over 60 years of age.

No involvement.

1.5 Involvement of a union

The central role of the trade union delegation is to negotiate new agreements and ensure that existing ones are complied with. The trade union delegation also deals with disputes between the employer and the employees, both on an individual and collective basis.

If there is no works council, consent is given by the union commissioner (the union representative employed with the respective employer). The union‘s consent is required for the dismissal of a union commissioner during their period of office and for six months thereafter.

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

Collective dismissal and closure

There is no approval of state authorities necessary in case of collective dismissal and closure.

However, the sub-regional employment service and the federal employment services must be informed about the intention to proceed with a collective dismissal and about the outcome of the information and consultation procedure with the works council.

Protected employees

Employee members of the works council or the health and safety committee can only be dismissed for “serious cause” or for economic or technical reasons. In both cases the employer must seek authorisation in advance, either from the labour court in the case of “serious cause” or from the competent joint committee where the reasons are economic or technical.

If the works council or union commissioner do not consent, consent can be substituted by a judicial or an arbitral decision.

Not necessary.

1.7 Collective redundancies

Specific rules apply to collective dismissals or closures. The employer must respect the information and consultation procedure prior to the decision to proceed with a collective dismissal or closure.

The employees will be entitled to specific indemnities in case of collective dismissal with or without closure. Although there is no legal obligation to do so, it is quite common for social partners to negotiate and conclude a social plan.

Furthermore, the employer must take measures to re-activate the employees affected by the collective dismissal.

Employer who expects to terminate at least 20 employees, five of which due to business related reasons, all within a 90-days’ period, is obliged  to duly consult the works council / union commissioner in order to possibly reach an agreement to save the employees and / or limit the number of terminations. The employer is obliged to provide the works council / union commissioner with written information concerning the reasons for termination, total number of employees, number, professions and positions of employees who are supposed to be terminated, election criteria for such employees, amounts and way of calculating their severance payments and measures undertaken to prevent such terminations. Employer is obligated to consider and explain all possibilities and suggestions that may lead to avoidance of terminations. Also, the Croatian Employment Agency needs to be informed about the previously mentioned points and consultations with the works council / union commissioner.

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

For a dismissal with a serious cause, the contract must be terminated within three working days after the day on which the act constituting the serious cause came to the employer’s knowledge. Dismissal for serious cause should preferably be notified by registered letter.

Additionally, the employee must also be given written notice with the reasons for the termination, ultimately by registered letter within three working days after the dismissal for serious cause.

The termination must be carried out by a person authorized to dismiss the employee.

Summary termination (summary dismissal) is defined as termination without notice, and is only lawful where there has been: 

  1. a serious breach of employment obligations, or
  2. the employment relationship between the parties is no longer possible for another important reason (there are, therefore, two possible reasons: (i) breach of employment obligations; or (ii) another important fact; in either case, the employment relationship must not be possible any longer).

The employee is to be dismissed within 15 days of the day of becoming aware of the fact / reason for dismissal.

Please see above our explanation regarding extraordinary termination.

1.9 Consequences if requirements are not met

In general, Belgian employment law favours a complementary indemnity (payment of damages) rather than an obligation to reinstall the employee.

If it is decided the dismissal is illegal, the employee is to be reinstated. Reinstatement is possible even before the end of the court procedure to determine the legality of the dismissal if the employee so requests. If the parties do not wish to continue with their employment relationship, the court shall at the employee‘s request determine:

  1. the date of termination of the employment contract; and
  2. compensation for damages, which ranges from three to eight times the employee’s average monthly salary over the previous three months (depending on the employee’s age, length of contract and obligations in relation to supporting family members or other dependants as defined by family law).

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

A party that terminates the employment contract without notice must pay compensation equal to the current annual remuneration (including benefits) corresponding to the notice period that should have been respected.

According to Belgian employment law, different non-competition clauses may apply.

An employee with an open-ended contract who has two years’ continuous service with the same employer (and is not being dismissed due to an intentional breach of contractual obligation) is entitled to a severance payment. The statutory minimum severance payment is calculated by multiplying one-third of the average monthly salary in the preceding three months by the number of years’ continuous service with that employer. The severance payment is capped at six times the average monthly salary, unless otherwise provided for by law, by-law, collective agreement or work contract

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

General non-competition clause

A non-competition clause in the employment contract of an employee, not a sales representative, is only valid if:

  1. the scope is limited to similar activities and to competing companies; and
  2. the scope is limited to a well-defined geographic area in which competition may exist (limited to the Belgian territory);
  3. the duration of the clause does not exceed 12 months after the termination of the employment agreement; and
  4. the clause provides for the payment of an indemnity by the employer to the employee equal to at least 50% of the gross remuneration that the latter could have earned during the duration of the non-competition clause.

The non-competition clause is only enforceable if:

  1. it is a written agreement compliant with the mandatory language requirements applicable in Belgium;
  2. certain remuneration thresholds are met;
  3. all the validity conditions are fulfilled (territory, duration, similarity of activities and financial compensation) and
  4. the employment agreement is terminated (i) after the first six months of the execution of the employment contract and (ii) by the employee without serious cause or by the employer for serious cause.

The employer may waive the application of the clause within 15 days of the end of the employment. If the application of the clause is not waived within these 15 days, the employer must pay a non-competition indemnity to the former employee. However, the judge can mitigate the effects of a non-competition clause that is contrary to the public order.

International scope and / or R&D Department

The same conditions as the general non-competition clause apply, except for:

  1.  the geographical scope is not limited to Belgian territory,
  2. the employee who must have acquired a special knowledge in industrial or commercial matters;
  3. the duration may exceed 12 months,
  4. it is also valid in case of termination within the first six months of the execution of the employment contract or in the case of termination by the employer without serious cause. However, such derogations must be expressly provided for in a written agreement.

There is an important point regarding the waiver of a non-competition clause with an international scope. In the event of a dismissal subject to a notice period, the employer will have to inform the employee at the time of notification of any intention to effectively apply the clause at the end of the notice period. As a second step, no later than 15 days after the final termination of the employment contract, the employer will then have to waive the non-competition clause if he/she still wishes to do so. If these two steps are not fulfilled, the employer will have to pay the non-competition indemnity to the former employee.

Sales representatives

The same conditions as the general non-competition clause apply, except that   

  1. the geographical scope is limited to the area of activities,
  2.  the employer does not need to pay a lump-sum compensation,
  3. it concerns similar sales activities.
After termination of the employment

Unlike non-competition clauses included in the employment contract, post- contractual non-competition covenants are not subject to specific conditions. However, their duration, as well as the penalty in case of a breach, must be reasonable in the circumstances (seniority, salary, etc.).

Post-contractual non-competition clauses must last no longer than two years from the date of termination of the contract. The employer is obliged to pay compensation (at least one-half of the average monthly salary paid in the last three months of employment). The covenant will not be valid if the employee is a minor or if the employee‘s salary amounts to less than the average national salary.

The non-competition clause does not apply if: (i) the employee terminates the contract without notice period (extraordinary termination) and does not state that he does agree that the clause applies; or (ii) if the employee is dismissed without a justified reason, unless the employer undertakes to pay the prescribed remuneration for the duration of the clause.

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

Not applicable.

Not applicable.

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

On 28 February 2019, the new Belgian Companies and Associations Code was adopted by the Belgian Chamber of Representatives. This reform has had various implications for the status of directors, which will be examined below.

The Belgian Companies and Associations Code confirms explicitly that company directors operate on a self-employed(independent) basis. In certain company forms, the board of directors can also delegate the powers related to the day-to-day activities of the company to a manager in charge of daily management. This manager can be a third party or a director of the company. If a director is appointed in charge of the daily management, this mandate is called “managing director”.

The daily management can be performed either on a self-employed basis (with or without a separate service agreement) or as an employee. Essential for the daily management as an employee is the relationship of subordination (i.e. power to decide what an employee must do and how it must be done). We refer to part 1 of this Guide for all aspects of the employment contract.

In this Annex, we examine the situation of a company director as well as a self-employed manager in charge of daily management. Both mandates can either be performed directly by a natural person or through a legal entity. In case of the latter, the legal entity must appoint a natural person  as legal representative who exercises the mandate and duties in the name and for the account of the legal entity.

It should be noted that the title ‘managing director’ is not recognised under the Croatian Companies Act or other relevant applicable legislation. The Croatian Companies Act recognises only a ‘director’, who is authorised to represent the company and obliged to be registered as a member of the management board with the respective commercial court.

A managing director need not to have an employment agreement with the company, or any other type of agreement, in order to be able to represent the company.

Where a managing director has a  managing / service agreement  which falls under the regulation of Croatian obligatory law, only the provisions of the managing / service agreement apply. If aspects of the relationship are not dealt with in the managing / service agreement, the relevant provisions of the Croatian Obligations Act will apply.

Where a managing director does not have any employment or managing / service agreement with the company, he shall be treated as a member of the management board only.

The table below sets out the position under Croatian law with respect to the managing directors of a limited liability company, with and without service agreements.

2.1 Reasons for dismissal

The mandate of a director of a public limited company (“SA / NV”) can in principle be revoked “ad nutum” (immediately, without indemnity and without having to give a reason for the dismissal). Henceforth, the revocability “ad nutum” is no longer a rule of public order, but a supplementary rule. In other words, this means that the revocability "ad nutum" remains the default rule, unless the bylaws, the terms of appointment of a director, or a management contract state otherwise and provide for a period of notice or an indemnity in case of dismissal.

However, in any case, the General Shareholders’ Meeting retains its right to revoke “ad nutum” a director if there are "justified grounds” for doing so. The Code does not define this concept. According to the preparatory works, it includes, for example, a serious criminal offence in the professional sphere or a tax fraud. Unlike the summary dismissal in the case of employees (see section 1), strict timing does not apply to dismissal under justified grounds. In any case, it is important to note that the director can always challenge “justified grounds” and launch proceedings before the Enterprise Courts.

The same principles were already applied for the private company with limited responsibility (‘BV / ‘SRL’) and will continue to apply.

For daily management, the procedure for the nomination and dismissal can be stipulated in the company’s bylaws, but in practice it is often regulated in a separate service agreement. If the procedure for dismissal is not specified, the mandate can be revoked “ad nutum” and no reason needs to be given.

No special reasons required (unless otherwise specified within the statute of the company or the contract itself).

Where the managing director has a service agreement, the provisions of that service agreement (and consequently the Croatian Obligations Act) will apply.

If the managing director is a member of the management board according to the statute of the company (and not only appointed by resolution of the shareholders), the company statute may set out that revocation is only possible for special reasons.

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

The mandate of a director can be revoked by decision of the General Shareholders’ Meeting. The mandate of a manager in charge of the daily management can be revoked by decision of the board of directors.

The revocation of both a director or a manager in charge of daily management must be published in the Official Belgian State Gazette (‘Belgisch Staatsblad’ / ‘Moniteur Belge’).

Valid shareholders’ resolution on revocation of appointment as member  of the management board. Registration of this revocation with the court registry. Termination of the service agreement in the same form in which the agreement has been signed (Obligations Act provisions shall apply).

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

As stated above, the principle of the revocability "ad nutum" remains the default rule, unless the bylaws, the terms of appointment or a separate agreement stipulate otherwise. The same  principles apply without distinction to the NV/SA and the BV/SRL.

For the daily management, the procedure for the nomination and dismissal can be stipulated in the company’s bylaws or in a separate service agreement.

If nothing is specified therein, the mandate for the daily management can be revoked without any notice period.

According to the Croatian Companies Act, the appointment of a director of the company can be revoked at any time without notice (for no special reason). Some restrictions (not strictly defined) can be set out within the statute of the company.

If the director has a service agreement, the notice period will be as set out in the service agreement.

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

In companies listed on the stock market, the termination indemnity of the executive directors, the members of the board committee and other persons in charge of daily management may not exceed 12 months’ remuneration. The Belgian Company Code permits derogations from this rule, provided that the Works Council (or in its  absence, the Committee for Prevention and Protection at work or the union delegation) is notified beforehand and the prior consent of the General Shareholders’ Meeting is obtained. If a departure fee of more than 18 months' remuneration is granted, a motivated advice from the Compensation Committee is also required, in addition to the approval by a General Shareholders’ Meeting.

No involvement.

No involvement.

2.5 Involvement of a union

No involvement.

No involvement.

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 required.

Respective commercial court brings a resolution on registration of the resolution in the court registry. The court’s resolution and registration are declaratory.

Not necessary.

2.7 Collective redundancies

Not applicable.

Not applicable.

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

Not applicable.

Not applicable.

Please see above our explanation regarding extraordinary termination.

2.9 Consequences if requirements are not met

A company is bound by the actions of a dismissed company representative until and unless such a dismissal has been officially published in the Official Belgian State Gazette. However, if this protection is beneficial to third parties, it cannot be invoked by third parties that know that the company representative has already been dismissed.

If there is no valid shareholder resolution, the revocation will be invalid and the court will refuse to register it in the court registry. Where the managing director has a service agreement, he could claim:

  1. compensation for damages; or
  2. fulfilment of contractual obligations in accordance with the provisions of the Croatian Obligations Act.

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

There is no mandatory severance pay, unless stated otherwise in the bylaws of the company. Parties may agree upon severance pay in a separate agreement (when such an agreement is permitted).

Severance pay may be specified in the managing director’s service agreement (this is usually a large sum).

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

It is possible to agree upon a non-competition clause. If the scope of the clause is too wide (according to its geographic area, its length, or the activities it concerns), its validity may be challenged or the clause may be mitigated  by the court.

The managing director, as a member of the management board, is prohibited from doing the following without the approval of the supervisory board (or the shareholders, if the company does not have a supervisory board):

  1. being a member of the supervisory board or management board of another company with the same business activities; or
  2. performing business activities equal to those of the company for his or somebody else’s account; or
  3. using the company’s premises for performing business for his own or somebody else’s profit. The company is entitled to compensation for any damage caused.

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

Not applicable.

Not applicable.

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.