EXCEPTION GRANTED TO THE PROHIBITION ON EMPLOYMENT CONTRACTS AND SERVICE CONTRACTS IN FOREIGN CURRENCY OR INDEXED TO FOREIGN CURRENCY
The Presidential Decree No. 85 Amending the Decree No:32 Regarding the Protection of the Value of the Turkish Currency had come into force by being published in the Official Gazette dated 13 September 2018.
In our previous Newsletters, we had informed you about the amendments that had been made to the said Decree No.32 on the Protection of the Value and the communiqués that were published in the Official Gazette on 6 October 2018 and 16 November 2018.
Within all these above-mentioned legislation, as a principle, it is not allowed to enter into employment contracts and service contracts, where the price and other contractual payment obligations are agreed in foreign currency or indexed to foreign currency. However, there are some exceptions granted for this main principle.
One of these exceptions granted, is for the employment contracts and service contracts signed by (i) the entities acting as branches, agencies, representation offices, liaison offices of the persons residing abroad or (ii) by the companies owned 50 % or more by the real or legal persons residing or established abroad or (iii) by the companies carrying out their activities at free zones. When a contract falls within the scope of the exception, it is allowed to determine the value of the contract or other payment liabilities arising from the
contract in foreign currency or indexed to foreign currency.
As it has been explained in the 27th question of the “Frequently Asked Questions” published by the Ministry of Treasury and Finance on 27 February 2019, expression “owned 50 % or more” should be construed as meeting the condition to hold minimum 50 % of the shares or holding the privileged shares even though not having 50% or more of the shares directly or indirectly or disposing on the majority of the rights to vote based on the agreements concluded with other shareholders or having the co-control and/or the conrol of the company by holding the power of appointing or discharging the majority of the board members required for a decision.
Our Law Firm remains at your disposal for any further clarifications you may
need.