EFFECTS OF CORONA VIRUS ON EMPLOYMENT CONTRACTS (MAY 2020)

Within the scope of the measures taken due to the COVID-19 pandemic, according to the Law on Reducing the Effects of the Novel Coronavirus (COVID-19) Pandemic on Economic and Social Life and the Law on the Amendment of Certain Laws No. 7244 published in the Official Gazette No. 31102 and dated April 17, 2020 (“Omnibus Bill”).  

Within the scope of the Omnibus Bill, it was aimed to alleviate the negative economic impacts caused by the COVID-19 pandemic on companies and individuals through amendments  in various laws, especially labor law regulations.  

The novelties and regulations brought by the Omnibus Bill are as follows  

Prohibition Of Termination

For three months’ period starting from April 17, 2020 until July 17, 2020, regardless of whether or not it is covered by the Labor Law, any kinds of employment or service agreements (i.e. labor service) cannot be terminated by the employer except for terminations arising from the employee’s behavior contrary to the rules of ethics and goodwill and similar cases in paragraph (II) of the first paragraph of Article 25 of the Labor Law and the respective provisions of other laws. Such period of termination prohibition can be extended by the President up to maximum six months’ period.  

In the 3-month period mentioned above, the employer can leave the employee completely or partially on unpaid leave. In this context, leaving the unpaid leave does not give the employee the right to terminate the contract based on the valid reason.

Within the scope of the Law, if the employer or employer representative terminates the employment agreement of the employees contrary to the mentioned prohibition of termination, the employer and employer representative will be imposed an administrative fine equal to the minimum monthly gross salary valid on the termination date per employee.

Unpaid Leave Practices

the employer can completely or partially send the employee on unpaid leave for a maximum period of three months after April 17, 2020. The unpaid leave does not entitle thee employee to terminate their employment agreement based on just cause.

If an employer obliges their furloughed employees to continue working, the employer will incur an administrative fine equal to the gross minimum wage per employee for each month the breach occurred. Further, the cash contribution made for each unpaid furlough will be collected from the employer together with the legal interest that has accrued as of the payment date.

Furloughed employees who are not eligible for the State allowance offered for reduced working hours and who do not benefit from pension payments from any social security institution, are entitled to a cash contribution of TRY 39.24 per day during the unpaid furlough period in line with Temporary Article 24 introduced in the Unemployment Insurance Law (the “Unemployment Insurance Law”) numbered 4447. The Omnibus Law also allows employees whose employment agreements were terminated after 15 March 2020 in line with Article 51 of the Unemployment Insurance Law that do not benefit from unemployment allowance or a pension payment from any social security institution to also benefit from the aforementioned cash contribution.  

The President has been empowered to extend the periods of unpaid leave for up to a total of six months.

Short-Term Working Allowance Applications  

Short-term working allowances will be made in accordance with the employers’ declaration, without waiting for the completion of the eligibility assessment for the short-term working applications for compelling reasons arising from COVID-19 made by the employer. In this context, it has been regulated that the eligibility determinations regarding the employer's applications regarding short-time work allowance are not subject to the 60-day period specified in the Unemployment Insurance Law No. 4447.

In the event that an employer provides false information or documentation, the excess payments made by the State will be collected from the employer together with legal interest.

These amendments to short-term working applications came into effect retroactively on February 29, 2020.

It is obvious that COVID-19 has substantially affected the Turkish employment practice. For this reason, we recommend employers to monitor all developments as the COVID-19 pandemic progresses.