Government support for business and workers in Turkey

Public funding, namely, short-term work allowance is available in Turkiye to this effect. Currently, this allowance is set to be in effect for three (3) months and would end by 30 June 2020. However, an extension by another three (3) months is possible via a presidential decree.

Furthermore, employers are prohibited from terminating employment contracts in the next three (3) months starting from 17 April 2020, except in cases of non-compliance with moral and goodwill principles (e.g. grave breaches of company policies, harassment). However, employers can unilaterally send employees on unpaid leave during this period (i.e. for a period no longer than three (3) months). During such unpaid leave, employees will not be entitled to terminate their employment contracts with due cause or to seek their receivables (e.g. severance and notice pay) from the employer. The said three-month (3) periods may be extended by a further three months (3) via a presidential decree.

The short-term work allowance covers 60% of the gross salary of the employees in question. However, this is capped at 1.5 times the minimum gross wage in Turkiye, which is currently TRY 2,943.00 (approx. Euro 388.15). Accordingly, the maximum amount payable to an employee as the short-term allowance would equal approx. TRY 4,415 (approx. Euro 582.30) even if the 60% of the said employee's gross salary is in excess of this amount.

Additionally, for employees sent on unpaid leave, a daily wage support amounting to TRY 39.24 (approx. EUR 5.17) will be paid from the unemployment insurance fund for up to three (3) months to employees who:

1. have an employment contract as of 17 April 2020 and who are ineligible to receive an old age pension from any social security institution; and
2. are sent on unpaid leave by their employers; or
3. are ineligible to benefit from the short-term work allowance even though short-term work has started in the workplace; or
4. employees whose employment contracts have been terminated after 15 March 2020 and who cannot benefit from unemployment pay.

For an employee to benefit from the short-term work allowance, two (2) sets of criteria, applicable respectively, to the relevant employer and the employee, must be met.

The following are the criteria that must be met by the employer:

• The working hours in the workplace of the employer must have been decreased by one-third of the ordinary working hours; or
• The operations of a workplace must have been wholly or partially suspended for at least a 4-week period due to a general economic, sectoral, or regional crisis or a force majeure event.

If the employer is facing these problems, then it can apply for this allowance on behalf of certain employees who are eligible for this funding.

In addition to the above, the employees must meet the criteria below to benefit from a short-term work allowance;

• The employee in question must have worked for a minimum of sixty (60) days prior to the beginning of the short-term working period with registration to the social security institution, without any interruption; and
• At least four hundred and fifty (450) days of unemployment insurance premium must have been paid on behalf of such employee in the last three (3) years.

Where both sets of conditions above are met, in principle, the 60% of the gross salary of the employees would be paid to the employees by the public unemployment fund for three (3) months.

With respect to the daily wage support, this will be applicable to all employees who have been sent on unpaid leave by their employers and who meet the criteria provided above.

The application for the short-work funding should be made to the Turkish Employment Agency (İŞKUR) (“Agency”). The application is made via e-mail to the relevant e-mail addresses designated by the Agency. The e-mail must include two (2) standard documents published by the Agency (i.e. the Short-Term Work Application Form and the List of Employees to Benefit From the Short-Term Work Allowance) as well as all supporting documentation evidencing that working times have been reduced/work has been suspended or that these measures will have to be implemented in the near future.

Facts/documents evidencing order cancellations, inability to receive materials from customs, number of infected employees, failure to receive due payments from third parties, decreasing sales or production, among others, could all be used as supporting evidence in this application.

Ordinarily, each application would be subject to an evaluation by the Agency, based on the documentation provided as indicated above, which could take up to sixty (60) days. However, in order to expedite this process, a change in the relevant legislation has been implemented and accordingly, the short-term allowance will be granted based on the declarations of the employers. However, any excessive and improper payments made to employers' providing incorrect information or documents will be consequently collected from the employers along with legal interest.

With respect to daily wage support applicable to employees sent on unpaid leave, the application for this benefit must be made to the Turkish Social Security Institution. Please see our responses above for the criteria applicable to benefit from this support scheme.

Last, please note that a monetary fine will be imposed on employers who send employees on unpaid leave and accordingly the employees benefit from wage support, but the employer continues to have such employees perform work for them. The fine will be in the amount of the monthly gross minimum wage (currently, TRY 2,943) applicable on the day such work is performed and separately for every employee and every month that those employees have worked.

A few issues continue to be debated with respect to continuing to benefit from this allowance during its term. Namely, it is still subject to clarification from the Agency whether an employer may continue to partially pay the salary of the employee when the said employee is also receiving his/her salary.

In addition, the payments by the Agency are expected to be made retrospectively, starting from the date of application once the allowance is approved. However, until such approval, the employer may not stop paying the employees' salaries. As such, it will also need to be clarified how these payments by the Agency will be treated, if the employer has also made salary payments to its employees for the same period (e.g. the payments would be made to the employer and not to the employee or that the beginning date of this funding would be changed). Other than those already indicated, there are no other criteria to benefit from the daily wage support.

Currently, there is a general restriction on termination of employment by employers in effect in Turkiye. Therefore, regardless of whether employees benefit from short-term funding, employees may only be terminated due to cause, as explained above and failure to observe this principle will result in monetary penalties for the employers. However, employers can send employees unilaterally on unpaid leave. For detailed information about this, please see our responses above.