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Exercising Voluntary Mediation Process in Termination of Employment Contracts Under Covid-19 Pandemic Era in Turkey
Utilizing Voluntary Mediation in The Termination of Employment Contracts During The Covid-19
Intending to mitigate the negative impacts of the Covid-19 pandemic on social and economic life, Turkish authorities have put into force a series of measures on employment-related matters.
According to the amendments brought to the Turkish Labor Code Numbered 4857 on 17.04.2020, the concept of so-called “Termination Prohibition” has been incorporated, according to which it is forbidden to lay off the employee from work unless there exists an excellent cause to do so, within the meaning of the law. Said amendment is effective and in force until 17.11.2020, however taking into account the increased number of Covid-19 cases worldwide, it is likely that the expiry date will be extended.
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I. What is The Scope of “Termination Prohibition”?
Except for any of the scenarios provided below, the Employer is prohibited from unilateral termination of the employment contract in accordance with the recent amendment in the law. However, the employee is always free to submit their resignation immediately at its unfettered sole discretion.
- Occurrence of any event outlined in detail at Article 25/2 of the Turkish Labor Code Numbered 4857, basically regulating behaviours of Employees which are against moral values and good faith,
- Expiration of the term at employment and service contracts of the definitive period,
- Closure of business place and suspension of activities.
Put it another way, in the absence of any of the previous exceptions, and the Employer is not entitled to terminate the employment contract; otherwise, it shall be subject to an administrative fine.
After termination of the employment relationship without good cause, if the employee files a lawsuit at Labor Court for reinstatement to work and vindicates at the court proceeding, the Employer who wrongfully terminates despite the “Termination Prohibition” is also assuming the risk of compensation payment up to 12 months of employee’s salary, along with court expenses to be incurred.
To avoid any legal hassle and mitigate the risk, if the Employer is not quite sure and suspicious of the existence of good causes for termination, instead of straight termination and directly assuming the risk of being subject to penalty, fines and other associated expenses, the Employer might opt for conducting a voluntary and quick mediation process, if the employee also agrees to.
The advantage of the voluntary mediation process is that;
i) it is a fast alternative dispute resolution conducted out of court mechanism, and,
ii) once both parties execute the minutes of the mediation meeting, it is deemed as a court verdict.
However, suppose the Employer is pretty sure of the existence of good cause to lay the employee off. In that case, none of the foregoing restrictions applies, and the Employer might terminate the employment contract any time at its own will.
II. What is The Mediation Process in Termination of Employment Contracts?
Pursuant to Article 18 of Mediation in Civil Conflicts Law Numbered 6325, a settlement agreement executed by and between Parties, their respective lawyers and the Mediator is deemed as a Court rendered a verdict, which means for the disputes resolved under the auspices of the Mediator, Parties waive their respective rights to bring the dispute before the court.
In practice, it is quite common for the Parties to the employment contracts who manifest their intention to terminate the relationship, bring their matter before the Mediator, instead of long-lasting and relatively unpredictable court proceedings. Accordingly, any termination made with a mediator’s involvement seems not to be subject to limitations and sanctions of the concept of “Termination Prohibition.”
However, termination with a mediator’s involvement does not remove the risk entirely, especially during the Covid-19 Pandemic Era. Social Security Institution of Turkey has not assigned a specific “Termination Code” yet for the termination through the mediation process. For such terminations, Code “22-Other Reasons” is ticked up for such terminations.
The matter is that “22-Other Reasons” is within the realm of “Termination Prohibition,” and by ticking up that option, the Employer might be subject to an administrative fine, cancellation of incentives and risk losing short-time working allowance.
Despite all the said downsides, voluntary mediation is widely used in cases where the Parties mutually agree not to continue with the employment relationship and seek legal certainty for their settlement.
Termination of employment contract through mediation process does not seem in defiance of “Termination Prohibition” at first glance; however, the termination type to be marked at the system maintained by Social Security Institution falls somehow under “Termination Prohibition.”
As a solution going forward, we believe a separate termination type/code might be assigned for this unique mediation involved termination to avoid any misinterpretation and hesitation in practice. Compared to mutual termination agreement, termination with mediation mechanism is a much more reliable option because it is specifically regulated under Mediation in Civil Conflicts Law and in binding nature for the Parties involved, like Court decisions.
It settles the matter once and for all. In mutual termination agreements, there is always a chance that the employee might bring the matter before the court for reinstatement to work or seek additional compensation purposes, no matter how good the conditions of the termination agreement is.