CMS Expert Guide to employment termination law and legislation

Global comparison

1. Dismissal of employees

1.1 Reasons for dismissal

The employer must establish a real and serious reason to dismiss an employee.

It may be:

  • a personal reason, notably a fault (disciplinary ground), poor performance, disablement of the employee when the employer is unable to relocate / redeploy him to another position or make reasonable adjustments to his post; or
  • an economic reason, such as economic difficulties, technological changes or the absolute necessity of restructuring to safeguard competitiveness. The economic reason is analysed at the level of the group’s companies established in France operating in the same business sector. The redeployment obligation for economic dismissal is limited to jobs available “in French territory in the company or in other companies of the group, the organisation, activities, and operating location of which allows mobility of some or all of the personnel“;
  • the refusal to amend the employment contract following a collective performance agreement

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).

The reasons for dismissal must be provided if a contract is terminated without notice or if a contract of unfixed duration is terminated with notice. The reason must be real and specific, so the employee can easily understand the grounds for dismissal. The reasons for termination with notice may be attributable to the employee (e.g. non-performance or improper performance of the employee’s duties), or not attributable to the employee (e.g. redundancy). The Polish Labour Code does not list such reasons.

Termination without notice (summary dismissal) may be justified for a number of reasons, but is only permitted when certain statutory conditions are met.

In the remaining case, involuntary termination does not require justification.

1.2 Form

The stages in the individual dismissal procedure are as follows:

  • The employee is formally invited to a preliminary meeting.
  • At least five business days after the formal invitation, a preliminary meeting is held during which the employer explains the reasons for the contemplated dismissal and listens to the employee’s explanation.
  • The employee may be assisted by a third party (an employee of the company or an adviser of the employee mentioned on an official list prepared by the Prefect, depending on the existence of employee representative bodies in the company).
  • The dismissal letter must be sent to the employee at least two (or seven for a dismissal due to economic reasons) business days after the meeting (and within a month for a disciplinary dismissal).

The dismissal letter must be a registered letter whose receipt must be acknowledged by the employee, signed by either a legal representative of the firm or a person duly empowered by a legal representative, and who must belong to the company.

Applicable collective bargaining agreements can provide for a more favourable timeframe and / or procedure.

The letter must explicitly mention the grounds for dismissal. There are other mandatory provisions such as the possibility of choosing to benefit temporarily the supplementary health care scheme in force in the company, etc.

The grounds set out in the dismissal letter may be specified by the employer or at the employee’s request after the letter has been sent. If the employee does not make such a request, the letter’s lack of an adequate explanation will not in itself support a finding that the dismissal lacks real and serious cause, but will merely entitle the employee to compensation of no more than one month’s salary.

A special procedure (possible involvement of the works council, see below,
meeting and notification of the dismissal) applies in the case of a dismissal for economic reasons or when the dismissal concerns a ‘protected employee’ (e.g. members of the social and economic council, and trade union delegates notably).

A specific procedure prior to the dismissal exists for employees who have been recognised as physically incapable of performing their work by a labour doctor (redeployment obligation, possible involvement of the social and economic council, etc.).

For a dismissal based on a disciplinary reason, the employer should move rapidly as the procedure must begin within a few weeks of the employer becoming aware of the reason for dismissal and no more than two months after the discovery of the facts.

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.

Similar rules apply to both ordinary termination with notice and summary dismissal without notice.

The employee must be served with the original letter of dismissal, and not  an electronic file, e-mail, fax or photocopy. The letter of dismissal must be  in Polish and signed by a person authorised to act on behalf of the company. It is possible to request that the employee signs other language versions of the letter in addition to the Polish version. The letter of dismissal must include information about the employee’s right to appeal to a labour court. The deadline for an employee to appeal against enforced dismissal is 21 days.

1.3 Notice period

The notice period is set by the applicable collective bargaining agreement and the Labour Code, and generally lasts between one and three months. The contract may be terminated without notice in the event of gross misconduct or intentional misconduct.

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.

Statutory notice periods vary depending on the type of employment agreement and the length of service with a given employer.

For a contract of unfixed duration and a fixed-term contract, the notice period is:

  1. two weeks for an employee with less than six months’ service; or
  2. one month for an employee with at least six months’ but less than three years’ service; or
  3. three months if the employee has been employed for three years or more.

Probationary period employment contracts have shorter notice periods, of three working days to two weeks, depending on the agreed length of the probationary period. Polish law recognises probationary period contracts as a separate type of employment contract and not as an initial period of an indefinite term employment contract. After the probationary period, a new contract can be agreed.

Notice periods of a week or multiple weeks always end on a Saturday, and notice periods of a month or multiple months always end on the last day of the month.

The contractual or statutory notice period does not have to be observed for a summary dismissal.

1.4 Involvement of works council

The social and economic council must be informed and consulted (with an advisory but formal vote of its members) when a mass redundancy is planned, or for the planned dismissal of a protected employee or physically disabled employee.

No involvement.

A single dismissal for employee-related reasons (e.g. performance-related dismissal) is not subject to any collective notification or consultation requirement.

Only group dismissals or significant reductions of the workforce undertaken as a part of a restructuring trigger the notification and consultation requirement. The employer must notify / consult a works council about any matters relating to employment status and structure, any predicted or proposed changes in this respect, and actions taken to maintain the current level of employment. However, this will only be necessary when the anticipated changes are permanent or significant (in relation to the employer’s size).

Works council members may not be dismissed involuntarily (either with or without notice) during their term of office without the prior consent of the works council.

1.5 Involvement of a union

When a company employs more than 50 workers, trade unions may be involved in a mass redundancy procedure to negotiate an ‘employment saving plan’.

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.

Notification is required if the employer wishes to dismiss with notice a permanent employee (employed under an employment contract for an unfixed duration) who is a trade union member, or whose rights and interests the trade union has agreed to defend.

The trade union must be informed in writing, including the reasons for termination, at least five days before the employee receives the letter of termination. If the trade union decides that the dismissal is unjustified, it may present the employer with its substantiated objections in writing. An employer may proceed to dismiss having considered the opinion of the trade union (although this opinion is not binding). If the submission of a trade union opinion is delayed or absent, the employer may proceed without any additional consideration.

Notification is also required if the employer wishes to dismiss an employee without notice. In such a case, the trade union has three days to express its opinion in writing.

Trade union officers, or other employees named in a special resolution   of the trade union’s board of management, are protected against involuntary dismissal and may not be dismissed without trade union consent. The number of employees protected under a special resolution depends on   the number of employees who are members of the trade union or the number of the company’s officers (a decision left up to the trade union’s board of management).

1.6 Approval of state authorities necessary

This is required when dismissing ‘protected employees’ and now the validation or homologation of the employment saving plan is also required for mass redundancy procedures.

Not necessary.

Not generally necessary.

However, employers have certain obligations to inform the Labour Offices of a group redundancy procedure, particularly for large-scale redundancies.

1.7 Collective redundancies

Different procedures apply according to the company’s workforce and the number of employees concerned (the procedures are ‘lighter’ in small companies that dismiss fewer than ten employees).

The main principles are the same:

  • The employer has a duty to inform and consult the staff representative bodies;
  • All documentation related to the collective redundancy must be sent to the state authorities

In case of mass redundancies (more than ten employees in a company employing at least 50 employees):

  • The employer has a duty to inform and consult the social and economic council, involving at least two meetings (the social and economic council may be assisted by an accountant in some cases). Please note that, with the new law, the duration of the consultation has been regulated.
  • An ‘employment saving plan’ (a social plan providing real alternatives and social measures accompanying the redundancy, such as redeployment, redeployment leave, training, etc.) should be drafted. There are two options for drafting it: either through a collective agreement negotiated with trade unions or unilaterally by the employer (only in the absence of trade unions in the company or if no agreement is found and then only after consultation with the social and economic council).
  • This employment saving plan should then be sent to the state authorities that will either validate it (if agreed with trade unions) or homologate it (if unilaterally drafted by the employer). If the state authorities do not agree with the plan, the employer may present another draft after consulting the social and economic council.

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.

A group dismissal occurs when an employer employing at least 20 employees terminates the employment relationships of at least the following numbers of employees within 30 days, with notice, and for non-employee-related reasons:

  1. ten employees − if the employer employs fewer than 100 employees; or
  2. 10% of the total workforce − if an employer employs at least 100 but fewer than 300 employees; or
  3. 30 employees − if the employer employs at least 300 employees or more.

These thresholds include terminations on mutual agreement if at least five such terminations have been initiated by the employer.

Small companies (employing fewer than 20 employees) are not subject to the group dismissal procedure, and may proceed without any prior notification of / consultation with employee representatives or local authorities.

1.8 Summary dismissals

The term ‘summary dismissals’ has no real meaning in France. Dismissal without a notice period is only possible where there has been a serious breach, but even in that case, the form described above for dismissal procedure, including the preliminary meeting and registered letter, must still be applied. In case of dismissal without notice, the employee has no dismissal indemnity or notice period indemnity, because there is no notice period. Such dismissed employees are still entitled to unemployment insurance benefits, however. The dismissal procedure must begin within a few weeks of the employer becoming aware of the reason for dismissal and no more than two months after the discovering of the facts.

Please see above our explanation regarding extraordinary termination.

Dismissal without notice is only permitted in specified circumstances.

An employee may be summarily dismissed (disciplinary dismissal) if he:

  1. commits a serious breach of his basic employee’s duties; or
  2. commits a crime while employed (the offence must be obvious or confirmed by the judgment of a final court), provided that such crime makes his further employment impossible; or
  3. through his own fault loses a license necessary for the performance of duties connected with the post.

Summary dismissal may only be exercised within one month of the employer becoming aware of the reasons for dismissal.

It is also possible for the employer to summarily dismiss an employee without fault due to long-term absence from work, where:

  1. the employee is unable to work by reason of illness:
    1. for a period longer than three months, if the employee has less than six months’ service with a given employer; or
    2. for a period longer than the period the employee has been receiving sick pay and sick benefit (typically 182 days) and the first three months of rehabilitation benefit (additional 90 days); and
  2. the employee’s justified absence from work for other reasons lasts longer than one month.

1.9 Consequences if requirements are not met

The amount of damages depends on the actual loss suffered by the employee. For dismissals notified on or after 24 September 2017, the ordonnance n° 2017-1387 provides that the damages have a preset minimum and a maximum amount depending on the employee’s length of service. The ordonnance also stipulates specific lower minimum amounts for companies that usually employ fewer than 11 employees, but the maximum remains identical.

In some circumstances, the dismissal will be void, allowing the employee to request reinstatement. (These circumstances may include collective redundancies without a social plan, dismissal after an occupational injury or in discriminatory dismissals, or dismissal of a protected employee without state authority authorisation). In such a case, the compensation cannot be less than six months’ salary.

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.

If the termination of a contract without notice, or termination of a contract of unfixed duration with notice, is unlawful the employee may claim reinstatement or compensation.

Reinstatement cannot be claimed for an unlawful termination with notice during a fixed-term or probationary contract.

If the contract is of unfixed duration, compensation of between two weeks’ and three months’ salary (and not less than the employee’s salary during the notice period) may be awarded.

In an unlawful termination without notice, an employee may in general only claim compensation of up to three months’ salary. Further entitlement can be claimed on the basis of general civil law rules.

1.10 Severance pay

Dismissal indemnity is payable unless the dismissal is due to gross misconduct or intentional misconduct. The amount payable is mainly set by the collective bargaining agreement but must not be less than 1 / 4 of the monthly salary per year of service for the first ten years of service, plus 1 / 3 of the monthly salary for each year of service after ten years. Indemnity is also payable for unused accrued holiday entitlement and for the notice period if the employer chooses to release the employee from performing it.

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.

If an employer employs more than 20 employees, and dismisses an individual solely for non-employee-related reasons (e.g. due to a reduction in the workforce or redundancy of a work post), it must pay a severance payment equivalent to:

  1. one month’s salary − for employees with less than two years’ service with a given employer; or
  2. two months’ salary − for employees with between two and eight years’ service; or
  3. three months’ salary − for employees with more than eight years’ service.

However, severance pay is capped by statute at 15 times the national minimum monthly salary (capped at PLN 39,000 from January 2020, equivalent to approx. EUR 9138).

1.11 Non-competition clauses

A non-competition clause is only valid if provided in the work contract, and if:

  • The employer demonstrates that this clause is necessary to safeguard his interests and proportionate (e.g. the lower is the position the less the clause is justified);
  • Its scope is limited to a reasonable area, a reasonable period of time, and precise activities; and
  • The employee receives a monthly indemnity during the term of the clause (the indemnity amount is set by the work contract or collective bargaining agreement, but is generally between 20% and 50% of the employee’s monthly salary).

This clause can be waived by the employer in the letter of dismissal or according to the provision of the applicable collective bargaining agreement and / or employment contract.

The examination of the terms of the applicable collective bargaining agreement is key on this matter.

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.

Post-contractual non-competition clauses

Post-contractual non-competition restrictions are permitted when an employee has access to confidential information, the disclosure of which could damage the employer. In this case, the parties should in this case enter into a separate post-termination non-competition agreement. This should specify the restricted time period and compensation due to the employee (which must not be lower than 25% of the employee’s salary for the duration of the agreement). Compensation may be paid in monthly instalments.

1.12 Miscellaneous

Specific and restrictive rules and procedures apply in the case of pregnant women, women on and returning from maternity leave, young fathers, and employees recovering after a work-related accident or suffering from a work-related illness. Women on maternity leave cannot be dismissed during this period.

Since 2008, a new means of termination has been introduced, namely “by mutual agreement”. This new possibility is called ‘rupture conventionnelle’ (mutual termination of the employment contract). The termination is agreed by both employer and employee and there is no cause or reason to demonstrate.

The employee is entitled to unemployment insurance benefits and dismissal indemnity provided by law or the applicable collective bargaining agreement (or more if agreed).

A strict procedure including preliminary meetings and consideration periods should be followed (both parties have the benefit of 15 calendar days to retract, from the date on which the form is signed); a specific form must be filled in and signed by both parties.

The specific form must be sent to the state authorities for agreement. The state authorities have a 15-open day period to review the form. Within these 15 days, the state authorities can agree to the termination, disagree or stay silent (silence amounts to agreement). However, the state authorities must expressly agree for protected employees. Otherwise the termination is void.

Since September 2017 it has been possible for the employer to negotiate a collective agreement through a ‘rupture conventionnelle collective’ (mass mutual termination of the employment contract) with trade unions. Such an agreement can only implement voluntary departures and thus excludes any dismissals designed to eliminate jobs. This new method of terminating contracts is entirely excluded from the rules governing economic dismissals. The labour administration is informed as soon as negotiations to conclude such an agreement start and reviews the agreement’s contents before validating it.

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.

Not applicable.

2. Dismissal of managing directors

2.1 Reasons for dismissal

The company may generally revoke the appointment of the managing director without cause, unless stated otherwise in the by-laws of the company or the resolution of appointment. However, a fair reason is legally required in certain forms of companies (e. g. the civil form or commercial forms such as certain limited companies (‘SA’) or limited liability companies (‘SARL’)).

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).

A management board member may be dismissed from the corporate function without cause, unless the company deed or articles of association provide otherwise.

Apart from dismissal from the board, the contract under which the management board member received remuneration (if concluded) must be terminated separately. Polish law does not provide for a specific type of contract for board members.

In civil law relationships, if the contract (e.g. management contract) is terminated without significant reason, the company should cover any loss incurred by the management board member. Further entitlements may be provided for individual contracts.

A management board member may also be employed under an employment contract. If this is the case, the reasons for dismissal must be provided if a contract is terminated without notice or if a contract of unfixed duration is terminated with notice. The reason must be real and specific, so the managing director can easily understand the grounds for dismissal. The reasons for termination with notice may be attributable to the managing director (e.g. non-performance or improper performance of the managing director’s duties), or not attributable to the managing director (e.g. redundancy). The Polish Labour Code does not list such reasons.

Termination without notice (i.e. summary dismissal) may be justified for a number of reasons, but is only permitted when certain statutory conditions are met.

In the remaining case, involuntary termination does not require justification. Further entitlements may be granted in individual contracts.

2.2 Form

A resolution taken by the shareholders or board of directors, depending on the form of the company and the internal organisation of the management. The managing director must be notified in writing of the revocation, and the change of managing director must be published in a public Corporate Register.

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.

In the case of limited liability companies (‘spółka z ograniczoną odpowiedzialnością’), management board members may be dismissed from office by a resolution of shareholders unless the company deed states otherwise.

In case of joint-stock companies (‘spółka akcyjna’), a management board member can be dismissed by the supervisory board, unless the articles of association state otherwise. The shareholders can also dismiss a management board member at any time.

The management board member concerned and court register should then be notified of the decision regarding the dismissal, but the dismissal is valid from the date of the relevant resolution (unless the resolution itself states otherwise).

If a management board member has an additional civil contract (e.g. a management contract), this must be terminated separately as it does not automatically expire upon the management board member’s dismissal from the board.

In dealings with a company’s management board member, the company should be represented by the supervisory board (if any is present) or an attorney-in-fact appointed by a resolution of shareholders meeting. These rules do not apply to a former management board member deemed to be an ordinary worker from the time of his dismissal from the board. Any additional contracts with the former management board member may be terminated by the board.

2.3 Notice period

There is no notice period, except where one is provided by the by-laws of the company or in the resolution of appointment of the managing director.

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.

A management board member may be dismissed from the corporate function without any notice period. However, notice periods may be stipulated in civil contracts.

2.4 Involvement of works council

No.

No involvement.

No involvement.

2.5 Involvement of a union

Not applicable.

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.

For management board members employed under employment contracts, notification is required if the employer wishes to dismiss with notice a permanent managing director (employed under an employment contract for an unfixed duration) who is a trade union member, or whose rights and interests the trade union has agreed to defend.

The trade union must be informed in writing of the reasons for termination at least five days before the employee receives the letter of termination. If the trade union decides that the dismissal is unjustified, it may present the employer with its substantiated objections in writing. Having considered the opinion of the trade union (which is not binding), an employer may still proceed to dismiss. If the submission of a trade union opinion is delayed or absent, the employer can proceed without any additional consideration.

Notification is also required for an employer to dismiss a managing director without notice. In such a case, the trade union has three days to express its opinion in writing.

Trade union officers, or other managing directors named in a special resolution of the trade union’s board of management, are protected against involuntary dismissal and may not be dismissed without trade-union consent. The number of employees protected under a special resolution depends on the number of employees who are members of the trade union or the number of company officers. (This decision is the responsibility of the trade union’s board of management).

2.6 Approval of state authorities necessary

No.

Not necessary.

Not required.

2.7 Collective redundancies

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.

A group dismissal occurs when an employer of at least 20 employees terminates the employment relationship of at least the following numbers of employees within 30 days, with notice, and for reasons unrelated to work performance:

  1. ten employees − if the employer has fewer than 100 employees;
  2. 10% of the total workforce − if an employer has at least 100 but fewer than 300 employees; or
  3. 30 employees − if the employer has at least 300 employees or more.

These thresholds include termination based on mutual agreement if the employer has initiated at least five such terminations.

Small companies (employing fewer than 20 employees) are not subject to the group dismissal procedure, and may proceed without any prior notification or consultation with employee representatives and local authorities.

2.8 Summary dismissals

Not applicable.

Please see above our explanation regarding extraordinary termination.

For management board members employed under an employment contract, dismissal without notice is only permitted in specified circumstances.

A managing director may be summarily dismissed (i.e. a disciplinary dismissal) if the individual:

  1. commits a serious breach of his basic duties;
  2. commits a crime while employed (the offence must be obvious or confirmed by the judgment of a final court), provided that such a crime makes his continued employment impossible; or
  3. through his own fault loses a license necessary for the performance of duties connected with the position.

Summary dismissal may only be exercised within one month of the employer becoming aware of the reasons for dismissal.

It is also possible for the employer to summarily dismiss a managing director without fault due to long-term absence from work, where:

  1. the managing director is unable to work due to illness:
    1. for a period longer than three months, if the managing director has less than six months of service with a given employer; or
    2. for a period longer than the period the managing director has been receiving sick pay and sick benefits (typically 182 days) and the first three months of a rehabilitation benefit (additional 90 days).
  2. the managing director’s justified absence from work for other reasons lasts longer than one month.

2.9 Consequences if requirements are not met

Damages may mainly be claimed:

  • for lack of fair reason in companies where such a reason is legally required to revoke a representative; or
  • if the revocation is notified under hurtful circumstances (e.g. is very sudden and unexpected, or is publicly announced before the director is informed), or if the managing director has not been granted a reasonable opportunity to make his point before the decision to revoke him is made (absence of due process).

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.

For management board members employed under an employment contract if the termination of contract without notice or termination of contract of unfixed duration with notice is unlawful, the managing director may claim reinstatement or compensation.

Reinstatement cannot be claimed for an unlawful termination with notice during a fixed-term or probationary contract.

If the contract is of unfixed duration, compensation of between two weeks’ and three months’ salary (and not less than the managing director’s salary during the notice period) may be awarded.

In an unlawful termination without notice, a managing director may in general only claim compensation of up to three months’ salary. Further entitlements can be claimed on the basis of general civil law rules.

2.10 Severance pay

There is no mandatory severance pay for the capacity as director, unless stated otherwise in the by-laws of the company or in the resolution of appointment of the managing director.

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.

For a management board member employed under an employment contract, if an employer of more than 20 employees dismisses an individual solely for non-employment-related reasons (e.g. due to a reduction in the workforce or redundancy of a work position), the employer must pay a severance payment equivalent to:

  1. one month’s salary − for employees with less than two years’ service with a given employer; 
  2. two months’ salary − for employees with between two and eight years’ service; or
  3. three months’ salary − for employees with more than eight years’ service.

However, severance pay is capped by law at 15 times the national minimum monthly salary. (From January 2020, the cap is PLN 39,000 or EUR 9,138).

Both civil law and employment contracts may include voluntary severance payments.

2.11 Non-competition clauses

The terms of any non-competition clause must be agreed between the parties. 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.

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.

For management board members employed under an employment contract, post-contractual non-competition restrictions are permitted when a managing director has access to confidential information, the disclosure of which could damage the employer. In this case, the parties should enter into a separate post-termination non-competition agreement. This should specify the restricted time period and compensation due to the managing director (which must not be lower than 25% of the managing director’s salary for the duration of the agreement). Compensation may be paid in monthly instalments.

Civil law contracts may provide for competition restrictions. Statutory provisions on minimum compensation do not apply to management board members employed under a civil law contract.

2.12 Miscellaneous

The director may also be an employee. In this case, a proper dismissal process will have to be implemented in addition to the revocation process and corresponding dismissal indemnities paid.

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.

Not applicable.