Employment contracts regulated under Turkish labour law.
Employment in Turkey is governed by the Turkish Labour Code No. 4857 (“TLC”) which applies to all employers, employees and workplaces regardless of their activities except those designated in the TLC.
Requirements regarding the form of the employment contracts.
According to the TLC, employment contracts are not subject to any kind of form requirement unless stated otherwise. The TLC sets forth that there is no form requirement for concluding an employment contract, which means an employment contract can even be concluded verbally without signing any written contract. However, the TLC requires the employment contracts for a given period of one year and over to be concluded in written form. It should be also noted that such documents are exempt from stamp duty and any other kind of dues and charges.
Social security system in Turkey.
Social security system of Turkey requires all workers and functionaries (apart from some exceptional regulations and the exceptions in terms of officers) all employees to be insured in accordance with Social Security and General Health Insurance Law No. 5510. Social security rights and obligations start as of the date of the starting of work rather than the date of the employment. Social security system in Turkey covers pensions, industrial accidents, occupational diseases, illness, maternity, disablement and death.
Companies are obliged to be registered with the local labour office as an employer and then register each employee of the company with the local social security office. Each employee subsequently hired must be registered within one month as of the date of his/her engagement. Social insurance premiums are calculated on the basis of the monthly wages and are paid jointly by the worker and the employer in different ratios depending on the status of the employee. However, foreigners who make social security contributions in their home countries are not obliged to pay the social security premiums in Turkey in cases where there is a reciprocal agreement between their home country and Turkey.
Work permits and/or residency permits.
Applications for work permits can be made inside or also outside of Turkey. As for the applications from outside of Turkey, the foreign employee requesting to obtain work permit in Turkey has to apply to the Turkish consulate/embassy in his/her country of residence. Within ten (10) days following such application, the employer shall make an online application for work permit and work visa for the foreign employee and submit the relevant documents to the Ministry of Labour and Social Security, either in person or via mail. On the other hand, foreigners who have valid residence permits (a minimum validity of 6 months is required) are entitled to make a direct online application to obtain work permit, therefore they are are not required to submit an application to the Turkish consulates. However, the documents required for the application must be submitted to the Ministry of Labor and Social Security, either in person or via mail, within a maximum of six business days after the online application. The results of the work permit applications are received within one month, once the documents are submitted to the Ministry of Labour and Social Security. Therefore, the overall process, including completion of the required work permit application documents and the application may take up to 2 months.
A foreign employee who is covered under the compulsory social security system of his/ her home country which has a social security agreement in force with Turkey, or is a party to the European Convention on Social Security, will not be subject to social security deductions in Turkey in case they provide the official documents that they are insured in their home country. In cases where the foreign employee is from a country, which does not have a social security agreement with Turkey, there may still be a 3-month exemption if certain documentation requirements are satisfied. However, if the employee is not subject to foreign social security, full contributions are imposed.
Rules for termination of employment?
In accordance with the TLC, there will be no further financial responsibilities that fall on the parties when the employment contracts for a definite period of time terminate on the date stipulated in the contract. However, in cases where the permanent employment contracts for an indefinite period of time are terminated by the employer, the employee may be entitled to a number of rights depending on the causes the termination is based on.
According to the TLC, an employer may terminate an employee’s employment contract based on a “just cause” or a “valid cause”.
In case of a just cause (i.e unexcused absence of an employee, criminal conduct by an employee, harassment or defamation of the employer), the termination procedure and conditions are relatively more relaxed since these termination reasons are deemed as more serious than a “valid cause. Therefore, in such a case, an employee may terminate the agreement without prior notice and with immediate effect without having to pay any compensation.
On the other hand, in case of a valid cause, an employer may terminate an employment agreement due to (i) employee’s incompetence, (ii) employee’s misbehavior or misperformance or (iii) conditions of business, workplace or enterprise only if (i) an employee has an employment agreement for an indefinite period, (ii) an employee is working for the employer for more than six months, and (iii) the work place has thirty or more employees.
Under Turkish Law the employer is obliged to pay the following amounts to the employee in case of a termination of the employment agreement:
- Notice pay (under Turkish law, an employer has to make a prior notice to the employee if such termination relies on valid cause. Therefore, it is payable in case the employer chooses not to resume employment of the employee until the end of the notice period.)
- Severance pay
- Unused vacation pay
- Overtime pay (if it is not included within the salary itself and if applicable)
- Annual corporate bonus
- Miscellaneous pays derived from the employment agreement and law (if applicable)