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The employer must establish a real and serious reason to dismiss an employee.
It may be:
A claim for unfair dismissal can be made if the reason for dismissal was not one of a number of ‘fair reasons’ (e.g. conduct, capability, "some other substantial reason", statutory ban or redundancy).
Most employees need a particular length of service to bring a claim for unfair dismissal. At present this is two years’ service. However, all employees can bring a claim for unfair dismissal if the reason for dismissal is deemed to make the dismissal automatically unfair (e.g. for whistleblowing or for family reasons such as dismissals for reasons connected to pregnancy, parental leave, or requests for flexible working).
Even if the dismissal is deemed to be for a fair reason, to avoid a successful claim for unfair dismissal the employer must still follow a fair procedure and act reasonably in dismissing the employee.
If the reason for the dismissal involves discrimination against the employee (because of a protected characteristic such as sex, race, age or disability), employees may make a discrimination claim irrespective of their length of service.
Employees with two years of service have the right to request a written statement of reasons for dismissal. Employers must provide the statement within 14 days of the request.
Irrespective of length of service, employees dismissed during pregnancy or statutory maternity or adoption leave are automatically entitled to a written statement of reasons for dismissal without having to request it.
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).
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:
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:
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).
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:
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 stages in the individual dismissal procedure are as follows:
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.
Employees may be dismissed orally or in writing. In misconduct and capability dismissals the ACAS Code of Practice states that the employee should be invited to attend a meeting to explain their version of events. A letter should then be sent to confirm the reason for the dismissal and the date of dismissal in writing to avoid any dispute over the effective date of termination. A right of appeal should be offered. Failure by the employer to follow the Code of Practice does not give an employee a remedy for breach. However in the event that an unfair dismissal claim is successful and there has been non-compliance with the Code the tribunal has the power to increase the award of compensation by up to 25%.
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.
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.
There is a statutory minimum notice period of between one and 12 weeks, dependent on length of service.
The contract of employment can provide for a longer notice period. Failure by the employer to comply with the contractual notice period can result in a claim for ‘wrongful dismissal’.
For an ordinary termination explained above, the notice periods depend on the length of employment. The relevant periods are as follows:
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).
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.
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 general legal requirement for involvement, but staff forums may be involved in the case of collective redundancies (see below).
No involvement.
When a company employs more than 50 workers, trade unions may be involved in a mass redundancy procedure to negotiate an ‘employment saving plan’.
No involvement normally other than in the case of collective redundancies (see below) or if the employee exercises their right to be accompanied by an appropriate trade union representative to a disciplinary meeting.
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.
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 necessary.
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:
In case of mass redundancies (more than ten employees in a company employing at least 50 employees):
If 20 or more employees are proposed to be made redundant at one "establishment" within a period of 90 days or less, consultation with employee representatives (who may be trade union representatives) must begin at least 30 days (or 45 days if 100 or more employees are to be made redundant) before the first dismissal takes effect.
Additionally, employers are obliged to notify the Secretary of State (for Business Innovation and Skills) where they are proposing to dismiss as redundant 20 or more employees within a 90-day period.
The Secretary of State must receive notification at least 30 days (or 45 days if 100 or more employees are to be made redundant) before the first dismissal takes effect.
A copy of the notification must also be provided for the employee representatives.
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:
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 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.
Summary dismissal (dismissal without notice) is only lawful where the employee has committed a breach of contract that is sufficiently serious to entitle the employer to treat the employment contract as terminated with immediate effect. A typical example is where the employee has committed gross misconduct.
Please see above our explanation regarding extraordinary termination.
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.
The employee may have various claims, such as an unfair dismissal claim where the primary remedy is financial compensation. However, there is also scope for the claimant to request reinstatement or re-engagement, and in very limited circumstances (e.g whistleblowing) the claimant can request interim relief, and if the tribunal grants this, then an employer must continue paying the claimant's wages until the date of the substantive hearing. Most employment-related claims in the UK are made in employment tribunals.
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:
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
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:
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
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.
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.
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.
The employment contract may provide for the employer to make a payment in lieu of notice, for example, equal to the salary that the employee would have earned during the notice period. If this is not provided for in the contract, the parties can agree for such a payment to be made, for example, as ‘damages’ for breach of contract.
If an employee with two years’ continuous service has been made redundant, they will be entitled to a statutory redundancy payment. The amount is calculated according to a statutory formula based on the employee’s age, length of service and weekly pay (capped at GBP 538 as at April 2020), up to a maximum of GBP 16,140 (as at April 2020). The employment contract may provide for an enhanced redundancy payment.
If the employee has been unfairly dismissed, and brings a successful claim in an employment tribunal they may be able to claim a ‘basic award’ calculated according to the same formula as the statutory redundancy payment (but employees cannot usually recover both a statutory redundancy payment and a basic award), and a ‘compensatory award’ which is capped at the lower of one year’s salary and GBP 88,519(as at April 2020). If an order for reinstatement or re-engagement is made there is scope for this cap to be lifted.
Employees who argue that they were dismissed for making a protected disclosure (whistleblowing) are not restricted by the statutory cap referred to above.
Similarly, the statutory cap does not apply where the dismissal was related to a prohibited ground under the Equality Act 2010. In these scenarios the potential awards can be significant.
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.
A non-competition clause is only valid if provided in the work contract, and if:
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.
Restrictive covenants will be void for unlawful restraint of trade and so are unenforceable unless they protect the legitimate business interests of the employer and go no further than is necessary to provide that protection, in terms of activity, duration and geographical area. However they are widely used in senior level contracts. It is always recommended to take advice on tailoring such a clause for each individual employee and to ensure that when employees are promoted or their role changes that the restrictions are suitably updated.
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.
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.
Employers may wish to avoid a potential dispute over a termination of employment by obtaining a waiver of rights from an employee in consideration for a termination payment. In the UK this agreement is referred to as a settlement agreement and there are a number of statutory formalities to include before such an agreement is enforceable in respect of statutory rights, including the requirement that the individual takes independent advice on the terms of the agreement. There are also risks attached to making an offer to an employee to enter into a settlement agreement and therefore legal advice should be taken before doing so. In addition, in 2019 the UK Government announced legislation on the use of non-disclosure agreements in discrimination cases which was expected to come into force in 2020, however given the pandemic, this has been delayed and no new time frame has been given. The UK statutory equality body, the Equality and Human Rights Commission issued guidance on this subject in October 2019 setting out good practice for employers to consider.
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.
In the United Kingdom (UK), the rights and obligations of a ‘director’ are the same whether they are for a ‘managing director’ or any other type of director. However, not all directors are employees. ‘Managing directors’, for example, are employees of the company, but ‘non-executive directors’ are not employees. Normal practice is for a managing director to have a service agreement supplementing their statutory and common law obligations as a director. Often a managing director's employment contract will require them to resign any directorships when their employment terminates, so that their directorship and employment terminate simultaneously. It Is therefore often simpler (and preferable) to remove a managing director by dismissing them from their employment, and then requiring them to resign their directorship. Please see the section "Employees: United Kingdom" for information on the relevant issues when taking that approach, as well as the "Miscellaneous" section below.
This table only covers removal of the director from office as a director and does not cover termination of any contract of employment or other employment issues.
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’)).
The company may remove the director for any reason, unless the articles of association of the company or any other agreement between the director and the company provide otherwise. There is however a statutory procedure that the shareholders of any UK company can use to remove a director (see below). This procedure will apply regardless of any agreement between the company and the director, or any provision of the company's articles.
First, Turkish law only recognizes a distinction between the termination of employees and
(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.
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.
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:
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 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.
The Companies Act 2006 gives shareholders a mandatory right to remove a director by ‘ordinary resolution’ (i.e. a simple majority of the shareholders attending and voting) at a meeting notwithstanding any other agreement between the director and the company. The resolution will be of no effect if passed in writing instead of at a meeting. At least one of the shareholders must give at least 28 clear days’ notice in writing before the meeting of an intention to move the resolution at the meeting. On receiving that notice, the company must forward the notice of the resolution to the director concerned and call a general meeting of the company to vote on the resolution. The director has the right to be heard at the meeting and to make written representations.
The company's articles of association or shareholders' agreement may contain provisions that make it difficult in practice to remove a director or provide that they can be reinstated. The company's articles of association and shareholders' agreements should therefore be checked before considering taking this route.
A company's articles of association may set out additional (and usually less complex or time-consuming) bases on which a director can be removed. For example, the 'Model Articles' under the Companies Act 2006 set out circumstances that trigger the automatic removal of a director, including that they are prohibited from being a director by law or a bankruptcy order is made against them. Some companies' articles of association also allow the directors to remove another director by majority vote, for example. The articles of a company should be reviewed for any such procedures if removal of a director is contemplated.
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.
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.
Removal as a director is immediate unless otherwise specified in the articles of association of the company.
For an ordinary termination explained above, the notice periods depend on the length of employment. Accordingly, please find below the relevant periods:
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.
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.
No involvement.
No involvement.
Not applicable.
No involvement.
A union will be involved in the dismissal of Managers if collective employment agreements have been entered into by employees’ unions and employers (or employers’ unions) which foresee the establishment of certain bodies (composed of the representatives of labour unions and the employers) (e.g. disciplinary boards) authorized to make advisory opinions on dismissals (although such collective labour agreements would usually apply to blue-collar employees only). While such advisory opinion is not directly binding on the employer, Turkish courts may still determine that a termination that goes against such opinion is invalid.
No.
Not necessary.
Not necessary.
Not applicable.
Not applicable.
No specific provisions are applicable to a collective redundancy concerning Managers. However, in determining whether a collective redundancy has occurred, the number of terminated Managers (if any) will also be taken into consideration.
Not applicable.
No special rules apply.
Please see above our explanation regarding extraordinary termination.
Damages may mainly be claimed:
The removal of the director is void.
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:
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
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.
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.
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.
The director may be entitled to a payment under the terms of any service contract (for example a payment in lieu of notice), or as an employee under statute (for example a statutory redundancy payment). Sections 215 to 222 of the Companies Act 2006 contains special rules relating to compensation given to a director for their loss of office. Such compensation requires shareholder approval, except for certain payments that are made in good faith such as payments made in discharge of a legal obligation, or to settle a claim arising from loss of office or termination of employment.
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 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.
Restrictive covenants may be included in any service agreement. However, they will be void for unlawful restraint of trade and therefore unenforceable unless they protect the legitimate business interests of the employer and go no further than necessary to provide that protection in terms of the activities covered, duration and geographical area.
The director may also be subject to post-termination restrictions contained in other agreements such as a shareholder agreement, or (depending on the reward structure) share plans such as LTIPs (Long Term Incentive Plans).
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 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.
Regulated and listed companies should also be mindful of any obligations they may have under their regulatory rules and/or the rules applicable to their market listing. These rules are likely to limit the terms on which such companies can reimburse a director in connection with their removal from office or employment and can also subject a company to reporting obligations.
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.
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