Following the World Health Organization's pandemic declaration and the first Covid-19 case in Turkey on 11 March, the first and maybe the deepest impacts of the outbreak are beginning to be seen on employment relationships, and continue to be so. This Client Alert provides our assessments of both amendments, which are not so comprehensive, on labour law-related legislation and those matters that are often being discussed and creating confusion in practice in this unprecedented situation.

LAW NO. 7226 ON AMENDMENTS TO CERTAIN LAWS

In the amendments made under Law No. 7226 on Amendments to Certain Laws ("Law"), published in the (Repeated) Official Gazette no. 31080 dated 26 March 2020, some flexibility for employees and employers were introduced by way of temporary changes to regulations regarding short-time work and compensatory work.

Simplification of the requirements for benefitting from short-time work allowance

Within the scope of Law No. 4447 on Unemployment Insurance, it is provided that short-time work may be carried out for a maximum of 3 months in cases of either a temporary decrease of weekly working hours by at least one-third due to general economic, sectoral or regional crisis; or temporary cessation of activity in whole or in part for at least four weeks.

Payment of allowances in cases of short-time work due to force majeure events begins after the one-week period mentioned under articles 24/3 and 40 of Labour Law No. 4857 ("Labour Law"). As a rule, in order to be eligible for applying for short-time work allowance, employers must pay employees a half-salary during the first week starting from the occurrence of the force majeure event.

In the case of short-time work, employees who meet the conditions to qualify for unemployment insurance are paid short-time work allowance which is up to 60% of their average daily gross salary, calculated by taking into consideration the income subject to social security premiums over the last twelve months. In any case, this short-time work allowance cannot exceed 150% of  monthly gross minimum wage.

Although short-time work and short-time work allowance have existed as explained under the applicable legislation, it was a practice which employers did not apply often. Due to the measures and prohibitions related to the Covid-19 outbreak, many workplaces are being partially or fully closed. In order to benefit from the short-time work allowance, amendments made by the Law in response to the needs arising in almost every sector reduce the requirement for employment during the last 120 days to 60 days before the starting date of short-time work. Additionally, the requirement for unemployment insurance premium payment for at least 600 days within the last 3 years is reduced to 450 days.

The regulation extending the scope of employees who could benefit from short-time work applications due to the Covid-19 outbreak shall remain valid until 30 June 2020.

Among other conditions, in order to benefit from the allowance, during the short-time work period the employer is required not to dismiss any employee for any reason whatsoever, except in cases of violation of the rules of ethics and goodwill. Such requirement seems like a call to act in accordance with the principle of last resort in terms of terminations, and to apply the short-time work as an alternative to termination.

It is possible to submit applications to the Turkish Employment Agency directly by electronic means; the requests are expected to be responded within 60 days.

Extension of the duration of compensatory working

As per Article 64 of Turkish Labour Law; in cases of suspension of operations, declaration of vacation in the workplace or a significant decrease in ordinary working hours due to similar reasons or closure of workplace, the employer could request compensatory working within 2 months for unworked periods by complying with the maximum working hours per day.

As one of the amendments introduced within the scope of the Law directing employers who are in a difficult financial situation to implement alternative measures before termination, maximum compensatory working periods are increased from two to four months. Thus, employers will be able to apply compensatory working for a period of up to 4 months after the disappearance of such force majeure events.

IMPLEMENTATION OF REMOTE WORKING

Remote working practices have been regulated under Article 14 of the Labour Law since 2016 but have not been implemented frequently. These are now also among the leading measures taken by employers to combat the spread of Covid-19.

Under ordinary circumstances, an employment relationship should be established in writing with an employee who is employed on the basis of remote working. However, considering the risks and threats brought about by the Covid-19 outbreak, it is now possible to implement this change in working conditions. Employers can apply it as a necessary and temporary measure through an unilateral announcement. In this case, since the consent of the employee is not sought, there is no need to make an amendment to existing employment contracts or to obtain prior approval of the employee.

Many employers in the private sector had implemented remote work immediately after the pandemic declaration, pursuant to the Circular No. 2020/4 published in the (Repeated) Official Gazette No. 31076 on 22 March 2020. Public institutions and organisations have now similarly started to implement flexible working patterns on condition that there shall always be a minimum number of employees working in order to meet demand. Accordingly, in the current environment, many institutions and organisations are carrying out their activities based on the shift system.

For those private sector employees and employers who are not familiar with remote working practices, many questions, problems and arguments have been brought forward as regards performance of the work, supervision of working periods, calculation of overtime hours, implementation of work health and safety measures, and usage of annual paid leave during the remote working period.

ALTERNATIVE MEASURES TO BE TAKEN WHERE REMOTE WORKING IS IMPOSSIBLE

Although it is stated under the amendments made to the Article 14 of the Labour Law in 2016  regarding remote working that a regulation on its implementation will be issued in order to determine what work can be carried out remotely, this regulation has not yet been published. Therefore, assessing whether remote work is feasible should be made in consideration of the nature of the work.

For employees who cannot work remotely due to the very nature of their work, employers should act in compliance with the principle of last resort and if possible, implement first alternative measures such as part-time working, working in shifts, on-call working before any termination.

In practice, granting annual paid leave is preferred for these employees, especially for those who have a great number of accrued but unused annual paid leave, rather than the above-mentioned alternative working models.

In the scope of the Regulation on Annual Paid Leave, since the employer has the discretion and authority to determine the duration and time of annual leave and it is mandatory for the employees to use the annual leave within the subsequent year, it is considered as a reasonable and appropriate measure to ask employees, who are not able to work any other way, to use their annual paid leave despite the remote working model being applicable in the whole workplace during this period.

SUSPENSION OF EMPLOYMENT CONTRACT AND UNPAID LEAVE

In cases where the performance of the work becomes impossible due to Covid-19 and it cannot be possible to apply any of the flexible working models or grant annual paid leave, one of the remedies that can be applied before termination is to suspend the employment contract and thereby grant the employees unpaid leave.

To implement the suspension of employment contract/unpaid leave, the employees must be notified according to Article 22 of the Labour Law and their written approval should be obtained within six working days. According to the Court of Cassation, the suspension of an employment contract without obtaining explicit consent of the employees is considered an invalid termination of the employment contract by the employer. There may be a risk that termination be deemed invalid because of the failure to comply with the procedural requirements, and accordingly that re-employment cases initiated by the employees be ruled against the employer.

The suspension period of the employment contract can be determined by mutual agreement of the parties based on objective principles. However, this period should not reach a level where, according to rules of good faith, employees cannot be expected to continue their employment relationship. In any case, such period should be specifically determined. It is worth noting also that suspension of the employment contract should not be applied unless the reasons for suspension are not temporary.

TERMINATING THE EMPLOYMENT CONTRACT FOR COMPELLING REASONS

First of all, we would like to state that termination of the employment contract with valid reason, pursuant to Article 18 of the Labour Law, shall always be possible by the employer for economic reasons such as lower business volume and smaller client portfolio caused by the Covid-19 outbreak, restructuring, downsizing, closing of the workplace or enterprise.

Furthermore, regardless of the employer's decision, the changing circumstances and conditions associated with the Covid-19 outbreak may make impossible the performance of the work in the workplace or the employee's continuation of the work. In such cases, termination of the employment contract in accordance with articles 24/2 or 25/3 of the Labour Law may be deemed applicable if the aforementioned situation lasts more than one week.

It will therefore be necessary to assess whether the Covid-19 outbreak can be considered as a case of force majeure.

Several decisions of the Court of Cassation provide some insight on this issue:

“The reasons preventing the employee from working should occur in the environment of such employee. Reasons arising from the workplace and preventing the performance of the work are not covered by this article. For example, closure of a workplace does not constitute a force majeure.”

(9th Civil Chamber of the Court of Cassation, E.2016/9116, K.2019/16141 T.18.9.2019)

The Court of Cassation General Assembly of Civil Chambers clearly states that outbreaks having the qualification of compelling reason and giving rise to impossibility of performance shall be considered as force majeure under its decision no. E.2017/11-90, K.2018/1259, T.27.6.2018:

“Force majeure is an extraordinary event which occurs outside the workplace and operations of the individual responsible or debtor, which leads to an absolute and inevitable violation of a general norm of conduct or a debt, which cannot be predicted and resisted (Eren, F: Borçlar Hukuku Genel Hükümler, Ankara 2017, s.582). Natural disasters such as earthquakes, floods, fires, outbreaks are considered as force majeure.

As can be understood from the above explanation, there are a number of elements of force majeure. First of all, force majeure is a compelling event. This event can be a natural, social or legal event, or it can be a human-related event. This should be an event outside the workplace and operations of the wrongdoer. Because of the force majeure, the wrongdoer must have been in a breach of a norm of conduct or a contractual debt. Also, force majeure must have been the cause of a breach of such norm of conduct or debt and inevitably led to it. The concept of inevitability also covers the concept of irresistibility and unavoidability in terms of force majeure. Another element of force majeure is unpredictability”.

The Covid-19 outbreak can therefore be defined as force majeure. If there are a number of reasons that occur in the environment of the employees, such as mandatory quarantine applications, that prevent them from working, the employer shall be entitled to terminate the contracts based on just cause pursuant to Article 25/3 of the Labour Law. Similarly, if a workplace has decided to close as a result of administrative measures, and the performance of the work is impossible because of the above-mentioned reasons even though the employee is able to continue to work, then the employee, not the employer, shall have the right to terminate the contract based on just cause pursuant to the Article 24/3 of the Labour Law.

In both circumstances, the employer shall have to pay the employees in full their legal rights, including severance pay, due to the termination with just cause based on the reasons related to force majeure. The employer is obliged to pay a half salary during the first week, which is the employer waiting period, starting from the occurrence date of the force majeure as mentioned above. Termination may be carried out after one week depending on the nature of the circumstances and conditions; initiation of short-time work or suspension of the employment contract by obtaining the consent of the employee would be possible.

To sum up, the concept of force majeure is defined as an event/case requiring operations to stop during a period of time exceeding one week in the workplace. However, the idea that the force majeure arises in general due to an outbreak shall not give rise to the same effect directly on all employment contracts. At this point, it is deemed useful to make an assessment based on each specific workplace or sector, especially taking into account the measures applied by the government.

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In compliance with Turkish bar regulations, opinions relating to Turkish law matters that are included in this client alert have been issued by Özdirekcan Dündar Şenocak Avukatlık Ortaklığı, a Turkish law firm acting as correspondent firm of Gide Loyrette Nouel in Turkey.

This legal update is not intended to be and should not be construed as providing legal advice. The addressee is solely liable for any use of the information contained herein and the Law Firm shall not be held responsible for any damages, direct, indirect or otherwise, arising from the use of the information by the addressee.

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