Doing Business in Türkiye: Labor law

Elements of employment

The regulated elements of employment are: employees, employers, wages, employment contracts and the workplace.

Employee obligations

Unless otherwise understood from the contract or circumstances, employees are personally liable for performing their work and no other person may perform the work for them. Employees must act with the utmost care and diligence and must obey and respect the employer’s legitimate instructions as long as such instructions are in compliance with the agreed scope of work.

Employees are under a duty of loyalty to the employer. The standard of the duty of loyalty varies depending on the nature of the work. However, based on jurisprudence, this generally means that employees should act for the benefit of the employer and avoid behavior that could harm the employer economically, commercially or professionally. The duty of loyalty also includes the obligation, during their term of employment, not to engage in any action that would be in competition with the employer’s business. This non-competition obligation does not survive the employee’s termination. If the employer wishes to extend this obligation and if the employee accepts, they may enter into a non-competition agreement that will be valid after the termination of employment and they may also agree on a penalty for breach of the non-competition clause. Such non-competition agreements are deemed valid only if they are reasonably necessary and contain certain limitations on term, geographical territory and scope of activity. It is important to note, however, that unless otherwise agreed, non-disclosure and confidentiality agreements protecting the rightful interests of the employer remain in effect after the termination of the employment relationship.

Employer obligations

An employer’s main obligation is to pay wages in full and on time.  An employment contract which does not contain the employer’s duty to pay wages is considered invalid. However, as an obligation corresponding to the employee’s duty of loyalty, an employer must also take care of the employee’s well-being. This has various aspects including social security, health and safety, union rights, personal and professional reputation, protection of and respect for personal privacy and secrecy and freedom of speech. An employer is also bound by equal treatment and non-discrimination obligations in terms of age, gender, maternity, language, race, skin color and disability, as well as in relation to political, philosophical or religious opinions and beliefs.

The Labor Law provides, depending on the duration of employment, for 14-26 days of annual paid vacation that must be granted to employees. Employers and employees may agree on a higher, but not a lower, number of paid vacation days.

Wages

Employers must pay wages on a regular basis in cash, not in kind. Unless the parties or the employment meet certain exemption criteria, an employee’s wage must be determined in Turkish Lira. Despite the provision in the Labor Law on payment in TL, it is accepted with Decree No. 32 that the employment agreements executed by the Turkish subsidiary, branch or liaison office of a foreign entity or which relate to work performed outside of Türkiye may, for example, be denominated in a foreign currency. Wages may be paid in installments. Employees and employers may also agree on premiums, bonus packages or other payment schemes. Such payments may be stipulated in employment contracts, collective labor agreements or be unilaterally granted by the employer.

Türkiye has a statutory minimum wage standard. The government determines the amount of the minimum wage and announces it at least once a year. 

Workplace

For the purposes of the Labor Law, the workplace may be anywhere the employer and employee agree upon. However, it is usually the employer’s registered place of business (for example, office, facility or factory). Employers are required to register workplaces with the Ministry of Labor at the date of opening and must notify the Ministry of Labor every time a new employee is hired. Transfer or closure of a workplace is also subject to notification to the Ministry of Labor.

If an employer continuously confers certain benefits on employees, even if not committed in writing, the practice becomes a “workplace practice” and becomes binding on the employer. Supreme Court of Appeals precedents define “continuously” as at least three times in a row. Such practice must also be of a consistent and general application, applying to all or at least to a definable group of employees. Bonuses, clothing, fuel allowances and accommodation are the most common examples of benefits that may become “workplace practice.”

Employment contracts

Employment contracts may be either for a definite period or an indefinite period. The general rule is that an employment contract is for an indefinite period. However, under certain special circumstances, employment contracts may be for a definite period. For instance, an employment contract may be limited to a definite period if the relevant work must be finished within a specific period of time or is undertaken for a specific project.

Employment contracts do not need to be in any special form unless otherwise stipulated in the Labor Law (for example, definite period contracts must be in writing). Employment contracts are exempt from stamp tax or any other charges and duties. If there is no written contract, the employer is required to submit a written document indicating the terms of employment including working hours, basic salary and any salary additions, periodicity of payments,  term of the contract (if definite) and any termination provisions to the employee within two months of employment.

Termination of employment

Definite period

Employment for a definite period is deemed automatically terminated at the end of the period.

Indefinite period

Both the employer and the employee may terminate an employment relationship with an indefinite period unilaterally at any time by serving notice in accordance with specific statutory notice periods. Parties may agree on longer notice periods. Any party failing to observe the notice periods is required to pay the amount of wage which would have accrued during this period.

In certain circumstances, the employer is obliged to pay severance upon termination of an employment contract. The employer must pay severance upon the termination of an employee who has been continuously employed for at least one year if: (i) the terminating party is the employer and the termination is not based on a just cause related to the employee’s unethical behaviors or actions against good faith or (ii) the terminating party is the employee, and the termination is based on any just cause listed in the Labor Law. Severance pay is also paid upon an employee’s death, when an employee terminates employment to commence compulsory military service, because of old-age, retirement or disability or when a female employee terminates employment within one year of marriage. Severance pay is calculated as 30 days for each full year of employment, calculated over the employee’s latest gross wage. 

In workplaces where more than 30 employees are employed, in a case in which the employer terminates the employment of an employee with more than six months seniority, there must be a valid reason such as a business necessity or the employee’s inability to meet the requirements of the job, as otherwise employees are accepted to be within the scope of the work security rules. In any case, termination must be the option of last resort. Failure to meet these conditions may result in the employee successfully suing for re-employment and other compensation.

Employees who do not meet the conditions of work security rules and whose employment contracts have been terminated unfairly may claim bad faith compensation even if they cannot claim reinstatement.

Termination of employment based on just cause

The Labor Law provides certain just causes both for the employer and the employee to terminate, with immediate effect, an employment contract. If a just cause exists, the terminating party does not need to observe notice periods in an indefinite term of employment or wait for the expiration of the definite term of employment.

Just causes for an employer include: illness severe enough to suspend work for certain duration, an employee’s unethical behavior or actions against good faith, the occurrence of a force majeure event which keeps the employee away from work for a week or more or the detention of an employee due to criminal enforcement.

Just causes for an employee include: work or workplace health and safety risks, an employer’s unethical behavior or actions against good faith and the occurrence of a force majeure event in the workplace which prevents the employee from working for at least a week.

Employers exercising their right of immediate termination for just cause must terminate the employment relationship within six business days of discovery of the just cause. There is a general one-year statute of limitation applicable to just cause which does not apply if the employee solicited pecuniary benefits by performing the action at fault.

Employees may challenge terminations before a mediator within one month of termination. The mandatory mediation procedure, introduced in 2017 for certain employment disputes, must be exhausted before initiating a lawsuit before labor courts. If the conflict cannot be resolved before the mediator, the employee may file a lawsuit before labor courts within two weeks as of the date of the final mediation report. The employer usually carries the burden of proof in labor suits.

Subcontracting

The Labor Law allows subcontracting of employees from other employers in cases of need at the workplace. Subcontracted work must be performed at the workplace of the employer. For more information on the impact of remote working on subcontracting, please see Section G of this chapter. The type of work that can be given to a subcontractor is strictly regulated. Work undertaken by a subcontractor can only be supplementary work or a specific part of primary work being performed at the workplace of the employer. An exception to this is primary work requiring special technical expertise. For instance, in an industrial manufacturing facility subcontracted employees may not be involved in the actual manufacturing work but may perform supplementary services such as cleaning, catering or security services. If a subcontracted employee becomes involved in the employer’s core business, the employer is required to treat the subcontracted employee in the same manner as it would treat an employee engaged in core businesses.

The employees of the subcontractor shall be solely assigned to the work undertaken from the employer. In other words, employees of subcontractor must work exclusively for the subcontractor. 

Both the employer and the subcontractor must notify the Ministry of Labor when a subcontracting relationship is established. If the subcontractor fails to pay any amount payable to the subcontracted employees for their labor, the employer may be held jointly and severally liable with the subcontractor for these amounts. 

Transfer of business by the employer

Any transfer of business that includes the transfer of the workplace and the employment relationships required to perform the work at such workplace is subject to the assumption of liability rule. According to the rule, the new employer assumes all liabilities against the employees since the beginning of their employment with the transferring employer. However, the transferring employer remains jointly liable with the new employer for two years after the date of the transfer for any debt, including debt owed to employees, in relation to the business.

Unions and collective bargaining agreements

Turkish law allows unions and employees are free to be union members. An employee’s union membership and related union activities may not be a ground for termination of a work agreement. Unions with more than a certain number of members become eligible to enter into collective bargaining agreements with employers on behalf of their members. In such cases, employers are obliged to enter into the collective bargaining agreement with the union upon the completion of a bargaining process.

Temporary employment

Under general principles, “employment” is defined as a permanent relationship that is established on a full-time basis for an indefinite term. Any other type of employment is exceptional and may be established only if certain requirements are met. In addition to definite period employment contracts (please refer to our section on “Employment Contracts” for details), the Labor Law allows for two circumstances where a temporary employment relationship may be established between an employee and an employer.

Group company exception

Temporary employment may be established within a group of companies. This form of temporary employment may be established for a maximum term of six months and may be extended twice, provided that the employee gives prior written consent each time.

Private Labor Agency (Özel İstihdam Büroları) exception

Since May 2016, the Labor Law allows, under a special permit to be obtained from Turkish Employment Agency, establishment of private labor agencies who hire employees to fulfill another employers’ short term workforce demands. The private labor agency and the employer must enter into a temporary workforce procurement agreement. The private labor agency’s employee would work for the employer under the terms of the workforce procurement agreement for a specified period of time. Employers may benefit from this private labor agency exception only under certain special circumstances, such as to cover for employees who exercise their right to parental part-time work, or for female employees who are on paid maternity leave, or for male employees who are fulfilling their mandatory military service obligation.

The private labor agency must be authorized by the Turkish Employment agency to provide temporary employment relationship services, otherwise both the private labor agency and the employer receiving the service may be subject to administrative fines.

Remote employment

The general rule under the Labor Law is that the employee performs the work in the employer’s workplace. However, the employer and employee may specifically designate a place outside of the employer’s workplace for the performance of work. Depending on the specifics of the work, an employee may, for example, perform the work from home or from any other place through the means of technology. A remote employment location may be established under a written contract which explicitly sets forth working conditions, including work definition, compensation amount and terms of payment, equipment to be provided by the employer/employee, manner, duration and location of the remote employment. Remotely working employees cannot be subject to different treatment than comparable non-remotely working employees. 

Additionally, the employer is required to inform remotely working employees about occupational health and safety measures as relate to the nature of the work being done and the location of the remote working.

Occupational Health and Safety

The Occupational Health and Safety Law was enacted in 2012 and gradually entered into force through July 1, 2016. Different types of workplaces, depending on the hazard level of the work and the number of employees, are subject to different types of regulation. Employers are required to take all necessary health and safety measures and precautions to provide their employees with appropriate working conditions.

All workplaces, depending on the type of work conducted, are categorized as either high, medium or low hazard work. Measures to be taken by the employer relating to the employment of work safety experts, workplace doctors, on-staff medical personnel (or obtaining services from shared health and safety units established to provide these services), providing periodic trainings, keeping workplace health and safety logs and periodic reporting vary depending on the hazard category of the work / workplace.

Employment of foreigners

The International Workforce Law, enacted in 2016, regulates the rights and obligations related to the international workforce. In Türkiye, foreigners may work freelance or under employment contracts after obtaining a work permit from the Ministry of Labor. Various bilateral and multilateral agreements to which Türkiye is a party allow the nationals of some countries to work in Türkiye without a work permit. The Ministry of Labor considers work permit applications based on a number of criteria, including the type of work to be performed and other factors such as general economic conditions in Türkiye affecting employment. Prior to the International Workforce Law’s entry into effect in August 2016, employers in Türkiye were required to employ five Turkish nationals for each foreigner employed (the so-called “1+5 rule”). Employers were also required to prioritize Turkish candidates for any job openings unless justification could be made for hiring a foreigner instead. However, in line with the International Workforce Law, the Ministry of Labor is expected to enact a new set of secondary legislation to regulate all matters with respect to work permits including the details of above-mentioned criteria. Thus, new criteria and/or requirements may abolish the 1+5 rule and/or the prioritization rule.

There are four types of work permits.

• Limited-term permit. Issued for a maximum of one year for specific work to be undertaken at a specific workplace with a specific employer. The term may be extended for another two years at the first extension application with the same employer. The term may be extended for up to another three years at each subsequent extension application following the first extension, again with the same employer. However, applications to work for a different employer are treated as if they were the first application.
• Unlimited-term permit. Issued to foreigners who: (i) have been living in Türkiye under a long-term residency permit, or (ii) have been legally working in Türkiye for at least eight years. As a general rule, an unlimited-term permit holder enjoys the same rights as a Turkish citizen but it does not grant the right to work in public service or the right to vote.
• Permit for independent work. Issued to foreigners who are experts of a learned profession or who are shareholders and registered executives of Turkish companies (i.e., manager of a limited liability company or member of the board of directors of joint stock companies who are shareholders of the company).
• Turquoise permit (Turkuaz Kart). Issued to foreigners whose presence in Türkiye adds value to the economy and employment due to their level of education, professional experience, contributions to science and technology and activities or investments in Türkiye. Turquoise permits are issued for an indefinite term with a three-year probationary period. Turquoise permits cover the spouse and children of the foreigner. Turquoise permit holders enjoy the same rights and benefits as unlimited-term permit holders.  

Foreigners with internationally recognized studies in the academic field, those who are prominent in science, industry and technology in a field that is considered strategic for Türkiye, or those who make or are expected to make a significant contribution to the national economy in terms of export, employment or investment capacity are considered as qualified foreigners in the Turquoise Card application. Foreigners must obtain a preliminary work permit from the relevant ministry prior to applying for a work permit from the Ministry of Labor.

Under certain exceptional circumstances foreigners may be granted one of the work permits listed above without being subject to the aforementioned time limitations. These exceptional circumstances include, but are not limited to, foreigners married to Turkish citizens who reside uninterruptedly in Türkiye with their spouses, European Union nationals, nationals of the Turkish Republic of Northern Cyprus, individuals who are of Turkish descent and individuals who are considered to be qualified employees or qualified investors.