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 Employment Relationship Act (‘Zakon o delovnih razmerjih’ or ‘ZDR-1’) distinguishes between ordinary and extraordinary termination of the employment contract. Ordinary termination is termination with notice period, which is only possible due to a business reason, reason of fault, incapacity to work, inability to work due to disability, or the unsuccessful completion of a probationary period, any of which render continuation of the employment under the conditions of the existing employment contract impossible.

A business reason occurs when the performance of certain work is no longer required under the conditions of the current employment contract due to economic, organizational, technological, structural or similar reasons on the employer’s side.

Reasons of incapacity are: non-achievement of expected work results because the worker has failed to carry out the work in due time, professionally and with due quality, or non-fulfilment of the conditions for carrying out work as stipulated under the law and executive regulations issued on the basis of law due to which the worker fails to fulfil or cannot fulfil the contractual or other obligations arising out of the employment relationship.

Extraordinary termination is termination without notice period and is only possible if:

  • it is based on one of the exhaustively provided reasons in ZDR-1; and
  • taking into account all the circumstances and interests of employer and employee, continuation of the employment until the end of the notice period or until the expiry of the employment contract is considered impossible; and
  • it is given within 30 days of establishing the reason for extraordinary termination, and within six months of the occurrence of that reason.

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.

Termination notice must be given in writing, providing for an explanation of the reasons for termination and pointing out possible legal remedies available the employee and his rights regarding unemployment insurance.

In case of ordinary termination of an employment contract due to reason  of fault, the employer must, before serving the employee with termination notice, give the employee a written warning regarding fulfilment of his obligations and the possibility of termination if he fails to comply. Such a warning can be issued within 60 days of establishing the breach and within six months of the occurrence of the breach. If employee commits another breach of this or any other obligation from the employment, within a year after the warning and if such breach is serious enough, the employer may terminate the employment contract.

In case of ordinary termination given by employer due to reason of fault or incapacity (or in case of extraordinary termination), the employer must notify the employee in writing about the initiated proceeding before serving the employee with a termination notice. The notification must include details of the alleged violations of the employee’s obligations or his / her alleged incompetence and thus provide the employee the opportunity to defend him- / herself within a reasonable period. The notice must be given at least three business days prior to the date of the hearing during which the employee can present his / her defence. The employer is (in some exceptional cases) released from such duty if it would be unreasonable to expect it to provide the employee such an opportunity. The employee can also request that a representative of his trade union and / or his legal representative are / is present at the hearing.

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.

Ordinary termination

The notice period depends on the length of service with the respective employer. As a general rule, the statutory minimum notice periods (unless otherwise determined by a collective bargaining agreement, employer's by-laws or an individual employment contract) are:

  1. in case of unsuccessful completion of a trial period: seven days;
  2. in case of ordinary termination by the employee:
    • 15 days for employees with less than one year of service and
    • 30 days for employees with more than one year of service;
  3. due to ordinary termination by the employer due to business reasons or incapacity:
    • 15 days for employees with less than one year of service;
    • 30 days for employees with more than one year of service; and
    • for employees with two or more years of service, the 30-day notice period increases for two days for each year of employment with the employer but cannot exceed 60 days. For employees with 25 years or more years of service, the notice period is 80 days, unless otherwise provided by a collective bargaining agreement.      

If the employment contract is terminated due to employee fault, okthe statutory notice period is 15 days.

Extraordinary termination: there is no notice period.

Bankruptcy, liquidation proceeding, winding down of the employer or a compulsory settlement.

In a bankruptcy procedure, the bankruptcy administrator may terminate employment contracts of employees who have become redundant due to initiation of the bankruptcy procedure with a 15-day notice period.

In case of winding down of the employer for other reasons, the notice period is 30 days.

In the event of confirmed compulsory settlement, the employer may terminate the employment contracts of those employees who have been characterized as redundant in the redundancy programme with a 30-day notice period. Compulsory settlement (or compulsory composition) is a proceeding for an insolvent debtor which: (i) enables financial reorganisation of the debtor; and (ii) assures partial payment of the creditor’s claim, both aimed at ensuring the further operation of the debtor.

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.

The employer must inform and consult the works council or workers’ representative in relation to the collective dismissal of a large number of employees.

Save for exceptional cases, the employer cannot terminate the employment contract of a member of a works council or a workers’ representative without the prior consent of the works council. The immunity applies for the length of the appointment and a year after the lapse of the mandate.

If the employer intends to dismiss an employee who is not a trade union member, the employer must, at the employee’s request, notify the works council / works representative in writing of its intention to terminate (ordinary or extraordinary termination) the employee’s employment contract. The works council / works representative must give its opinion within six days. Silence is deemed to mean the works council / works representative does not oppose to the termination. It may oppose the termination if it considers there are no substantial reasons for the termination or the termination procedure has not been carried out in accordance with the ZDR-1. The employer is not bound by the opinion of the works council / works representative and can continue with the termination despite a negative opinion.

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.

If the employer intends to dismiss an employee who is a trade union member, the employer must, at the employee’s request, notify the trade union in writing of its intention to terminate (ordinary or extraordinary termination) the employee’s employment contract. The trade union must give its opinion within six days. Silence is deemed to mean the union does not oppose to the termination. It may oppose the termination if it considers there are no substantial reasons for the termination or the termination procedure has not been carried out in accordance with the ZDR-1. The employer is not bound by the opinion of the trade union and can continue with the termination despite a negative opinion.

An employer cannot terminate an employment contract of an appointed
or elected trade union representative without the prior consent of the trade union. The immunity applies for the length of the appointment and a year after the lapse of the mandate.

The trade union is involved in mass redundancies (see below).

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.

The employer may only dismiss an employee who is pregnant, during breastfeeding (one year after birth) or on parental leave, and for one month thereafter, only with the prior consent of the labour inspectorate, if there are reasons for extraordinary termination of the employment contract, or if proceedings for terminating the employer’s business have been initiated.

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.

The employer must prepare a redundancy programme if it is established that for business reasons, the work performed by a certain number of workers will become unnecessary in the next 30 days. The numbers of workers who need to be made redundant for this to apply are as follows: 

  1. at least 10 workers where the employer employs more than 20 and fewer than 100 workers; or
  2. at least 10% of workers where the employer employs at least 100 workers but fewer than 300 workers; or
  3. at least 30 workers where the employer employs 300 workers or more.

In determining which workers are to be made redundant, the employer must take the following criteria into consideration: the employee’s qualifications, work experience, performance, length of service, medical health and social status, whether the employee is a parent of three or more minors, or if
the employee is the sole provider for a family with minors. The employer can determine his own criteria instead of those provided by the collective bargaining agreement if the trade union agrees with them.

The employer must inform and consult trade unions, the works council and the National Employment Office (‘Zavod za zaposlovanje Republike Slovenije’) regarding its intention to institute mass redundancies and a redundancy programme for business reasons. The employer cannot terminate employment contracts until 30 days after the National Employment Office has been informed in detail of the mass redundancy. The National Employment Office may increase this period to 60 days.

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.

Not applicable.

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 court finds that the employer has failed to comply with statutory requirements, it will declare the employment termination unlawful and reinstate the employee with retroactive effect (ex tunc), recognizing the employee’s period of service and other rights arising from the employment relationship.

Instead of reinstatement, the court may, at employer’s or employee’s proposal:

  1. determine that the termination was invalid and that the employment relationship lasted until the first instance judgment was issued; or
  2. recognise the employee’s period of service and other rights arising out of the employment relationship – the employee is then given the rights arising out of the employment relationship as if the employment contract had not been terminated; or
  3. award appropriate monetary compensation of a maximum of 18 months’ salary, calculated on the basis of the average monthly salary received in the final three months preceding the termination.

The employee may seek legal protection due to unlawfulness of termination within 30 days from the service of the termination notice.

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.

An employee whose employment contract has been terminated for a business reason or reason of incapacity, is entitled to a severance payment. The amount depends on the number of (full) years of service with the employer (including the employment with the employer’s legal predecessors). The basis for calculation is the average monthly salary, which the employee has received or would have received if working in the last three months prior to the end of employment.

Severance pay is calculated as follows:

  • 1/5 of the average monthly salary for each year of employment with the employer if the duration of the employment is between one and ten years; or
  • 1/4 of the average monthly salary for each year of employment with the employer if the duration of the employment is between ten and 20 years; or
  • 1/3 of the average monthly salary for each year of employment with the employer if the duration of the employment exceeds 20 years.

The amount of the severance payment may not exceed ten times of the average monthly salary received in the final three months preceding the termination unless an applicable collective bargaining agreement stipulates otherwise.

In the event of termination of the employment contract for a fixed period concluded for one year or less, generally with few exemptions, the employee is entitled to severance pay in the amount of 1 / 5 of the base (base being the employee’s average monthly salary for full-time in the last three months, or during the working period prior to the termination). If the contract is concluded for a period longer than one year, the severance pay increases proportionally.

The same provisions regarding severance payment as above apply to workers whose employment contract has been terminated in a bankruptcy / liquidation / winding down of the employer or compulsory settlement proceeding. In a compulsory settlement proceeding, however, the employer and worker may stipulate in writing the manner, form or reduction of the severance payment if a greater number of jobs with the employer would be jeopardised by a full payment.

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.

A non-competition clause is only valid if agreed upon in writing in the employment contract. ZDR-1 allows the use of this clause for employment contracts for indefinite term as well as for fixed term employment contracts for managerial workers. The clause can last only up to two years following termination. The clause must provide for a method of calculating the compensation to be given to the employee, otherwise it is invalid. The employee must receive at least one-third of his average monthly salary (calculated over the three months immediately preceding termination) for each month of
the restricted period. If the clause prevents the employee from gaining a comparable salary, the employee is entitled to compensation during the restricted period.

A non-competition clause may be agreed only when the employment contract is terminated by mutual agreement, due to ordinary termination of the contract by the employee, ordinary termination by the employer due to reason of fault, or extraordinary termination of the contract by the employer and if the employee has gained technical, production or business know-how and business connections while carrying out work or in connection to
his / her work. However, the non-competition clause must not prevent the employee from obtaining appropriate employment. 

The parties can mutually agree to waive the enforcement of the clause if they wish to do so.

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.

The employer cannot, without the prior consent of the relevant organization, terminate the employment contracts of works council members or supervisory boards representing workers, workers’ representatives (including those on the council of an institution), or appointed or elected trade union representatives.

Other categories of protected workers include older workers, parents and disabled persons.

The employer may not terminate the employment contract of an older employee, who has reached the age of 58 or of an employee, who has less than five years until qualifying for an old-age pension due to a business reason without his written consent.

This protection does not apply if:

  1. the employee is assured a right to unemployment benefit until he fulfils the minimum conditions for receiving an old-age pension; or
  2. appropriate new employment is offered to the employee; or
  3. in the event the employee has already fulfilled the above conditions for protection against the termination of the employment contract when he concluded the respective contract, unless the contract was concluded according to item (ii); or
  4. proceedings have been initiated for terminating the business of the employer.

The employer is not allowed to terminate the employment contract of mothers during their pregnancy, while breastfeeding of children up to the age of one, or the contracts of parents during their parental leave in the form of full absence from work, and for one month thereafter. This notwithstanding, the written employment contract can be terminated with the prior consent of the labour inspectorate, if there are reasons for extraordinary termination of the employment contract, or if proceedings for terminating the employer’s business have been initiated.

The employer may terminate the employment contract of a disabled person:

  1. due to his incapacity to perform work subject to the conditions set out in the employment contract; or
  2. due to business-related reasons;
  3. but both are subject to the conditions set out in legislation governing pension and disability insurance or work rehabilitation, and the employment of disabled persons.

This does not apply if proceedings have been initiated for terminating the business of the employer.

2. Dismissal of managing directors

Under Slovenian law, the managing director, that is a legal representative of the company does not need to have an employment agreement with the company, or any other type of agreement, in order to be able to represent the company.

The table below sets out the position under Slovenian law in respect to a ‘managing director’, who has been appointed for the term of office in accordance with the Slovenian Companies Act, with or without a management agreement (civil).

If the ‘managing director’ is in an employment relationship with the company, both corporate and employment aspects must be taken into account. From the employment perspective, the employer and managing director can agree to regulate their employment relationship differently than prescribed by law regarding:

  1. the conditions and limitations of fixed-term employment,
  2. working time,
  3. provision of breaks and rest periods,
  4. the remuneration,
  5. disciplinary responsibility, and
  6. termination of the employment contract.

If the parties do not agree to regulate their relationship differently, the statutory provisions apply (please see the general section above).

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).

The managing director of a limited liability company may be recalled at any time by a resolution of a general assembly, irrespective of whether the managing director has been appointed for a fixed or indefinite period. The conditions for the recall of the managing director are to be determined in the contract concluded between the managing director and the company (management agreement). If the company has a supervisory board, then the supervisory board appoints and recalls (dismisses) the managing director.

At joint stock companies, the supervisory board may (prior to the end of a manager’s term of office) recall (dismiss) members of the management board for the following reasons:

  1. if the member is in serious breach of his obligations; or
  2. if the member is not able to manage the operations; or
  3. if the general assembly passes a vote of no confidence in him (unless the vote of no confidence has been passed based on clearly unsubstantiated reasons); or
  4. if other economic and business reasons exist (e.g. significant changes in shareholder structure, reorganisation, etc.)

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 limited liability companies, managing directors are recalled by shareholders’ resolution. In joint-stock companies, members of the management board are recalled by the supervisory board. In a one-tier system, the board of directors recalls the executive directors (if appointed). The manager / managing director must be notified in writing about the recall.

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.

No statutory notice period. The notice period depends on the provisions of the management contract or other contract setting out the legal basis for the (contract / letter of) appointment of the manager.

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.

No involvement.

2.6 Approval of state authorities necessary

No.

Not necessary.

The recall resolution must be registered in the court/business register. The registration has a declaratory effect.

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.

Not applicable.

2.8 Summary dismissals

Not applicable.

Please see above our explanation regarding extraordinary termination.

Not applicable.

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.

The managing director cannot be reinstated (even if the recall was unjustified). However, the managing director has the right to compensation or reimbursement for damages in accordance with the general principles of civil law. There is no statutory compensation. Compensation is based on income, and provisions for its calculation are to be set out in the management contract or other contract setting out the legal basis for the appointment of the manager.

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.

The amount of severance pay is not regulated by the Companies Act. According to the Companies Act, however, in joint stock companies the severance pay may be paid out only in case of early termination (and only due to specific reasons), whereby the general assembly may determine the highest amount. Severance pay is set out in the articles of association of the company or in (the managing director’s) contract.

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.

The articles of association of the company may provide a non-competition clause. To be valid, the prohibition on competition cannot be longer than two years, unless the member of the management board has been recalled (for the reasons set out above) by the supervisory board, or the managing director has been recalled by the general assembly. In these circumstances, the prohibition cannot be longer than six months.

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.