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Sponsored briefing: Labour law issues in Covid-19 crisis

Upon confirmation of the spread of Covid-19 in Turkey with the declaration of the first case on 11 March 2020 and simultaneously with the World Health Organization’s declaration of COVID-19 as a global pandemic, government started to take certain measures including banning people above the age of 65 from going out; closing down certain workplaces. The measures are actively changing based on the evolution of the pandemic disease, yet, no complete lock down has been announced for many sectors but companies are encouraged to take their own measures during this period. This article mainly focuses on the impact of the Covid-19 pandemic on the employment relationship by presenting possible options provided under the Turkish labour legislation.

It is globally accepted that the Covid-19 pandemic is a force majeure event. However, force majeure provisions provided under the Labour Code (Law No 4857) (published in the Official Gazette dated 10 June 2003 and numbered 25134) (Labour Code) allow parties to terminate the employment relationship under limited circumstances.

Pursuant to Article 24/III of the Labour Code, regulating the just cause for termination of employment contracts by the employee, in case of a force majeure event ‘resulting in suspension of the works in the relevant workplace’ for more than a one-week period, the employee shall be entitled to terminate the employment agreement with immediate effect. Likewise, pursuant to Article 25/III of the Labour Code, regulating the just cause for termination of employment contracts by the employer, in case of a force majeure event ‘preventing the employee to perform its works’ in the relevant workplace for more than a one-week period, the employer shall be entitled to terminate the employment agreement with immediate effect.

In accordance with the above-mentioned provisions of the Labour Code, the employer or the employee may terminate the agreement relying on the force majeure event and in such a case the burden of proof of the reason for termination would be on the terminating party. For instance, if the workplace is closed due to a governmental authority decision for quarantining the workplace the employee will be entitled to terminate the employment agreement whereas if the employee cannot go to work because of the age ban applied to individuals, the employer would be entitled to terminate the agreement. However, considering the principle that the termination of employment contract should be the last resort and other possible options provided under the labour legislation in order to maintain the agreement, we are of the view that the courts may implement these termination options conservatively.

In any case, if one of the parties terminate the employment contract due to just cause of force majeure event as explained above, the employee shall be entitled to receive statutory severance compensation upon termination of employment. Furthermore, for the statutory suspension period of one week, the employer shall be obliged to pay half of the employee’s one week salary pursuant to Article 40 of the Labour Code.

If neither the employee nor the employer exercises their termination rights after the said one-week period in good faith, the suspension period shall be deemed to be extended until the agreement is terminated during the force majeure event by the party who is legally entitled to do so or until the force majeure event ceases to exist. In this case, during the suspension period, contractual obligations of the parties (ie paying the salary for the employer and performing the works for the employee) shall also be deemed to be suspended. Accordingly, the employee shall not be bound by performing his/her obligations whereas the employer shall not be entitled to request performance of works and/or terminate the agreement of the employee as long as the suspension period continues relying on the relevant force majeure event.

Given that the termination should be a last resort, there are other options provided under the labour legislation for those employees who wants to maintain their workforce during such Covid-19 crisis.

As a modern-day solution, businesses that are compatible for working remotely may benefit from working remotely provisions regulated under the Labour Code (Law No 4857) in which case the full salary of the employees shall be paid by the employers unless otherwise agreed or accepted by the employee. On the other hand, if the employer does not want to pay the salaries of the employees and does not want employees to work despite the business’ compatibility to working remotely, the employer should obtain the employees’ consent in accordance with the provisions of the Labour Code since such a suspension shall be deemed to be material adverse change in the working conditions of the employees. Otherwise, this may trigger statutory compensations envisaged under the Labour Code (Law No 4857).

Another alternative for those employers who want to maintain their workforce and suspend their operations for a certain period of time or decrease the working hours in the workplace due to Covid-19 is the Short-Working and Short-Working Allowance Regulation (published in the Official Gazette dated 30 April 2011 and numbered 27920), which has been carried into effect. Said regulation allows employers to suspend their operations or decrease their working hours without the necessity of obtaining employees’ consent and upon approval of the Turkish Employment Agency (ISKUR). For this purpose the employer is required to make an application to ISKUR for the suspension or material decrease of working hours at the relevant workplace by reason of Covid-19 and must present to the Work Inspectors that the workplace has been adversely affected by Covid-19. Provided that workplace is found eligible for benefiting from the short-time work provisions; only employees who are notified to ISKUR and eligible to receive such allowance can be granted with the allowance upon expiry of the one-week period provided under Article 24/III (during which the employer is liable for payment of half of the salary). Likewise, the employers’ obligation of payment of salary shall be suspended for the contemplated suspension period. During the said period of suspension of works or working in decreased working hours, employment contracts shall not be terminated by the employers for the reasons other than those stipulated under Article 25/II (actions of the employees against moral and good faith principles).

Those who must continue to operate their business should take specific health and safety measures in the relevant workplace in accordance with provisions of the Occupational Health and Safety Law (Law No 6331) (published in the Official Gazette dated 30 June 2012 and numbered 28339). For instance, employees shall be informed of the health situation, trained in respect of the Covid-19 disease, provided with masks and other required equipment. As such, those employers, amongst other precautions, should also consider decreasing the number of employees working in the same work environment. For this purpose, one possible option is to make employees use their annual paid leave days in bulks by issuing an internal annual paid leave schedule for the period starting from April until the end of October in accordance with Article 10 of the Annual Paid Leave Regulation (published in the Official Gazette dated 3 March 2004 and numbered 25931). In which case, where certain employees are using their annual paid leave days, certain employees will remain to work as scheduled.

Elif Tolunay
Corporate M&A Team
D +90 212 313 35 46