Labour Law - Turkey

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Turkey has a very European Labour Law system and is member of the ILO (International Labour Organization) and signatory of most of the ILO treaties. Consequently having a very international Labour Law system there is no any special mention or caution or legal advice that we would recommend to new investors except that all foreign investors like local Employers must have a legal adviser and the Employer must consult the adviser before taking any action.

The Labour contracts first are regulated in general terms by the Code Obligations dated 1926 and in addition to that there is
a. - a Labour Law NO. 4857 (LL) renewed on May 22, 2003,
b. - a Maritime Labour Law,
c. - a Labour Law for those working in the Press, and
d. - a new Labour Law for the Civil Aviation is under preparation.
e. - Law NO. 4817, Law regarding the Work Permit for Foreigners, regulates the working permits and working conditions of foreigners who wants to work in Turkey.

1. EMPLOYMENT CONTRACTS.
a. Classes.
According the Labour Law there is different classes of Employments Contracts.

1) In principle, Labour Contracts may be done for a certain period of time which is named “Timely Contracts” or they may be with no any time period and those are named “Timeless Contracts”.
2) Labour Contracts may be done as “Continuous Contracts” or if they are for a transitory period which means that they are for a shorter period than 30 days, then they are named “Transitory Contracts”.
3) Labour Contracts may be done for full time working duration or part time and in seasonal fields there is the also the possibility to make “Seasonal Contracts” too.
4) A different type of contract is the contracts “on calling base”. In those contracts except otherwise agreed the employee is called for the job when he or her is needed.
5) It is possible to make “Group Contracts” with a group of employees or if the majority is member of a Union, then we have the possibility to make Collective Bargaining Agreements.

b. Cost of dismissal and wrongful dismissal.
The Employer may terminate the Labour Contract with no any cost or indemnity, if the termination is based on one of the “Rightful Reasons” specifically mentioned in the Labour Law, which are like the employee does not respects his or her duties, does not come regularly to the job or causes a big damage to the Employer, etc

Even in case of dismissal with “Rightful Reason” the Employer although there is no any indemnity to be paid, has to pay all other accrued receivables like non paid wages, non used yearly leaves, non paid over times etc.

Even if there is no any “Rightful Reason” the employer may terminate the timeless Labor Contract at any moment, provided it has a “Justified Reason” to terminate the contract, and provided it respects the notification period. In this case the Employer has to pay the “Seniority Indemnity” which is one month salary for each year of service, not to exceed a certain limit which is determined each year by the Budget Law. (1.649 NTL around of 1000 Euros for the first 6 months of 2005)

The notification period to terminate a Labour Contract is 2 or 4 or 6 or 8 week according his or her seniority in the Office or with the Employer. If the Employer does not want to wait 2-4-6-8 week for the termination and wishes to terminate immediately the contract, it has the possibility to do it by paying at the moment the salary in connection to those 2 or 4 or 6 or 8 weeks as “Notification Indemnity” and in this case may ask the Employee to leave at the moment.

In case of dismissal with “Justified Reason” the Employer in addition to the above mentioned indemnities has to pay all other accrued receivables like non paid wages, none used yearly leaves, none paid over times etc.

If the dismissal is not based on a “Justified Reason”, and provided other requirements mentioned in the Law are met, on the request of the Employee, the Labour Judge, may ask the Employer to re-employ the dismissed Employee, in which case the Employer is obliged to re-employ the Employee within 1 month. The Employer who does not respect the re-employment order and do not re-employ the dismissed Employee may be condemned to an indemnity of 4 to 8 months salary.

Here we have to add that, in general the Employee has no any indemnity right if he or she terminates the Labour Contract with the exception that if the Employee terminates the Labour Contract due to “Rightful Reason” enumerated in the Law or for military service or for retirement or women terminates its contract within 2 year from marriage they have right to the “Seniority Indemnity” mentioned above.

c. - Employment Contracts for Directors
According the Turkish Labour Law, there is no any difference between the Labour Contract of a worker or an employee or a general manager. All are Labour Contracts and the parties are named as “the worker” and the “Employer”. Consequently there is no any difference between the different types of employees

2. EMPLOYEES REPRESENTATIVES AND UNION REPRESENTATION.
In Turkey Unions are organized in all field of Labour, (28 different field mentioned in the Sec. 60 of the Law of the Unions) and they are protected by the law and are strong enough to protect the Employees rights and may invite the Employer for a Collective Bargain Agreement and if the necessary conditions are fulfilled they may decide for a strike and in such a case the Employer has the right of decide for Lock-out.

b. When a Labour Union representation becomes binding?
A Union must represent at least 10 % of the Employees of that sector working in Turkey, and in addition they must have the majority among the Employees working that or those premises. In order to invite the Employer for negotiation the Union has to apply to the Ministry of Labour and Social Security proves that the above conditions are fulfilled and obtain the necessary authorization.

c. Rights and Privileges of a Labour Union Representation inside a Company.
The Unions have the right and duty to follow up and preserve the rights of the employees, to take care of the working conditions and to try to resolve the problems between the Employer and the Employees in an amicable way and to negotiate and sign the Collective Bargaining Agreement.

In each working place where a Union is authorized there must be one or more Employee representatives appointed by the Union. The number of the representatives is determined by the Law and depends on the number of the Employees working in that premises.

The representatives and head representatives of the employees have the power, right and duty to hear and transmit to the Employer the demands and complains of the Employees, to follow up the interests of the Employees and to create a harmonious and peaceful working atmosphere. Their employment contracts can not be terminated without any “Rightful Reason”.

3. COLLECTIVE BARGAINING AGREEMENTS. OTHER AGREEMENTS
(National, regional, provincial or company level…)
a. Classes.
The Collective Bargain Agreements can be on “Employment Place” level or if the company has many working places, and provided the Union has the majority in all or in some of the premises then it can be done on “Enterprise” level.

b. Are Collective Bargaining Agreements binding for the Labour Contracts?
Collective Bargain Agreements are binding for the parties and over all individual contracts. Provided however that the additional conditions of the individual contracts in the benefit of the Employee continues to be applicable for that individual Employee…

4. WAGES AND OTHER TYPES OF COMPENSATION
(Wages, Social Security contributions, remuneration in kind, insurance policies, pension Plans…)
a. Classes of wages
According the Labour Law the Employer has to pay a monthly salary not less than the “Minimum Salary” amount accepted by a special commission. The “Minimum Salary” Commission meets twice a year with the participation of the Confederation of Employer’s Union, Confederation of the Employee’s Union and representatives of the Government.

Salaries can not be under the minimum salary but there is no any ceiling for payments and yearly or monthly wages are determined between the parties with free will.

No any discrimination can be done in respect of sex, religion, confession race etc. Provided however different payments, like payment for each item, etc, may be accepted in special cases.

In addition to that some additional payments, like bonus, premium, allowance for education of the kids, for marriage, etc, can be maid.

b. Minimum salary in 2006.
The minimum salary for the first 6 month of 2006 is gross 531.00 NTL equivalents around of 350. - EURO per month.

c. Cost of Over time Hours.
The weekly working hours are 45 hours per week and working days are 6 days a week. Normally Sunday is Weekend Holyday, but in premises which needs to work 7 days a week like restaurants or hotels one day off must be given within the week days.

In case of over time done after 45 hours per week, the over time has to be paid with 50 % of increase, and if there is a working activity on religious or national holidays and week-ends it has to be paid with 100 % of increase. Those amounts may be increased with some Collective Bargaining Agreements.

5. EMPLOYMENT REGULATIONS.
As said above the Labour contracts first are regulated in general terms by the Code Obligations dated 1926 and in addition to that there is
a. - a Labour Law NO. 4857 (LL) renewed on May 22, 2003,
b. - a Maritime Labour Law,
c. - a Labour Law for those working in the Press, and
d. - a Labour Law for the Civil Aviation (is under preparation)
e. - Law NO. 4817, Law regarding the Work Permit for Foreigners, regulates the working permits and working conditions of foreigners who wants to work in Turkey.
f. - Law about the Unions
g. - Law regarding the Strike and Lock-Outs

6 .SOCIAL SECURITY.
a. Contributions forms (terms and procedures).
All Employees must be declared to the Social Security before starting to work and the Employer and the Employee have to pay the necessary premium for Maternity, Invalidity, Illness, Accident and Retirement. The accident premium changes according the risk of the activity, the lowest rates are as follows.

b. Social Security Cost for the Company.
The cost of the social security premium Employer share is 19, 5 %.

c. Social Security Cost for the Worker.
The cost of the social security premium employee share is 14 %.

7 .HEALTH AND SAFETY.
a. Essential duties for the Company.
The Employer is obliged to take all necessary safety majors to prevent any illness and any accident in the working premises, and in working places having more than 50 Employees is obliged to keep an “Enterprise Doctor” for necessary health support.

b. Main Regulations on this.
There is a very detailed regulation regarding the safety majors that the Employer has to take in the premises, and the appointment, rights and obligations of the Enterprise Doctor.

8 .CONTRACTING AND OUTSOURCING OF WORK OF SERVICE.
a. Any consideration about this?
Although some services may be out source, the essential activity of the Enterprise can not be out sourced and the main Employer remains always co-obliged versus the Employees as “Main-Employer

Nedim Karako & Partners