TERMINATION OF THE EMPLOYMENT CONTRACT BY MUTUAL AGREEMENT

Mutual Termination Agreement (“MTA”) is not expressly regulated under Turkish Labor Law, however, is based on Article 26 of the Turkish Code of Obligations titled “Freedom of Contract” and recognized by Supreme Court decisions.

MTAs envisage an economic benefit for the employee by the employer in return of which the employee refrains from his/her legal rights and discharges the employer.

In this respect it is accepted that;

1. if the MTA offer comes from the employee, the employer should solely pay (i) last salary and other entitled salary rights of the employee such as payment of unused vacation, bonus etc. and (ii) seniority and notice indemnities for a valid MTA. No additional MTA payment is necessary, as long as the MTA/ termination request comes from the employee.

   In such case, unlike other MTA procedures whereby the main termination intent arrives from the employer, the MTA is signed based on employee’s resignation will.

2. On the other hand, if the MTA offer comes from the employer, the employer should pay all salary rights, legal indemnities (seniority and notice indemnities), as well as an additional payment /benefit that should not be lower than 4 –  month gross salary of the employee (as this is the minimum advised limit for a valid MTA as per the decisions of Turkish Supreme Court) to be finally determined referring to (i) the employee’s seniority and (ii) the potential risk of a re-employment lawsuit for the employer, that would be the case following a unilateral termination by the employer. It should be noted that this additional amount should be the minimum and the parties may always come to an agreement on a higher amount.

As can be reasonably understood, one of the main principal conditions for the establishment of a legally valid mutual termination agreement is that both parties should come to a common understanding on termination of the employment contract and specifically, the employee should have a reasonable benefit (this is why an additional payment/ benefit is required)  while accepting this mutual termination offer, if it comes from the employer. Also, the employee’s free will for consideration of mutual termination offer should not be prejudiced.

Please find below one example decision of Turkish Supreme Court focusing on the importance of the employee’s free will and the attitudes that an employer should refrain from while offering a mutual termination to the employee:

“Although the court decided to reject the case on the grounds that there was a mutual termination agreement between the parties, since it has been understood that; while the plaintiff was working during working hours, he was taken to the meeting room by the

employer’s representative and the employment contract of him was terminated by forcing him to sign the mutual termination agreement, that the plaintiff was not given the opportunity to read, consider and evaluate the contract, that due to the fact that the security supervisor being taken to the meeting room as well, a moral pressure was created on the employee, that the plaintiff employee’s will has been violated in this way by the defendant employer and the mutual termination agreement was invalid due to the violation of the will of the plaintiff.” (9. HD., E. 2016/4430 K. 2016/8553 T. 6.4.2016)

So, providing the employee with at least two-three days to negotiate/ evaluate the conditions of the MTA, even with his/ her lawyer, if finds it necessary would be appropriate.

Even if  an MTA is signed, the employee can still initiate a lawsuit against the former employer. Nevertheless, in the event that the court determines that the MTA has been executed in accordance with the required legal conditions envisaged by the decisions of Turkish Supreme Court and that the agreed payments have been duly made by the employer, the lawsuits for re-employment or labor receivables claims that can be initiated by the employee will most probably be rejected by the court in favor of the employer.

Our Law Firm remains at your disposal for any further clarifications you may need.

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