LAW AMENDING CERTAIN LAWS AND AIMED AT REDUCING THE EFFECTS OF COVID-19 ON SOCIAL AND FINANCIAL LIFE
The Law Amending Certain Laws and Aimed at Reducing the Effects of Covid- 19 on Social and Financial Life (in Turkish “Yeni Koronavırüs (Covıd-19) Salgınının Ekonomik Ve Sosyal Hayata Etkilerinin Azaltılması Hakkında Kanun ile Bazı Kanunlarda Değişiklik Yapılmasına Dair Kanun”, hereinafter referred to as the “Law”) No. 7244 has been adopted on 16 April 2020 and entered into force on 17 April 2020 with its publication in the Official Journal, except for its article 8 as explained here below.
The Law introduces regulations in numerous areas of law, including short-time work allowance for employers and employees, employment contracts, general assemblies of the stock corporations and dividend distribution aiming at minimizing the adverse effects caused by the Covid-19 outbreak on the economy of our country and the well- being of its citizens. Among those; we bring forth to your attention some of the amendments regarding:
1. Employment Law
In accordance with Article 9 of the Law, Provisional Article 10 is added to Labor Law No.4857 and it has been determined that no employment or service contract can be terminated by the employer for 3 (three) months as from the effective date of the Article 9, except for the reasons related to non-conformity with ethics and good faith stipulated by Article 25.1.II of the Labor Law and in other Laws. Hence, the employer may place the employee on partial or total non-paid leave during the said 3 month-period and such unpaid leave does not grant the employees the right to terminate their employment contract based on valid reason (and request from the employer their seniority indemnities).
For every employee whose contract of employment has been terminated in violation of the above, an administrative fine in the amount of the gross monthly minimum wage valid on the date of termination shall be enforced to the employer or to the representative of the employer.
Kindly note that the President of the Turkish Republic is entitled to extend the said the aforementioned 3 month-periods mentioned up to 6 (six) months.
Besides, as per the Article 7 of the Law related to the adoption of a temporary article 24 to the Unemployment Code no. 4447, the employees put on unpaid leave by their employers and who cannot benefit from short-time allowance during such non-paid leave, and those who have had their employment contracts terminated after 15 March 2020 and who cannot receive unemployment benefits, shall receive a daily financial support amounting to TRY 39.24 from the Unemployment Insurance Fund for the duration of their non-paid leave or unemployment given that they do not receive a monthly retirement pension from the social security institution and in a manner not to exceed the term related to the prohibition of termination of employment contracts stated here above. No deduction can be made from such daily financial cash support except for stamp tax. In case it will be determined by the Authority that the employee benefiting from the aforementioned daily financial cash support is actually working for the employer, the employer shall be charged with an administrative fine amounting to monthly gross minimum wage per employee and per each month that the employee has been worked by the employer, and the paid out financial cash support shall be collected from the employer with legal interest as from the date of its payment.
Those employees benefiting from the cash support within the aforementioned scope but are not holders of general health insurance or are not under the responsibility of a person with general health insurance, shall be deemed holders of general health insurance, and their premiums related thereto shall be covered by the Unemployment Insurance Fund.
On the other hand, as per the article 8 of the Law, with regard to short-time work applications made by the employer arising from force-majeure circumstances due to Covid-19 outbreak, short-time work payments shall be made subsequent to a declaration from the employer without waiting for the determination of suitability. Excessive or unfounded payments made as a result of misinformation and false documentation by the employer shall be collected from the employer with their legal interests. Kindly note that this article shall be applicable to be effective as of 29 February 2020.
- Corporate Law
As per Article 12 of the Law, Provisional Article 13 has been added to Turkish Commercial Code No. 6102 setting forth that;
- until the date of 30 September 2020, the dividend distribution that may be made by the companies is limited to the 25% of their net profit for the year 2019,
- annual profits for previous years and free reserve funds may not be subject to distribution,
- the board of directors may not be authorized by the general assembly for the distribution of dividend advances.
Kindly note that the President of Turkish Republic is entitled to extend the aforementioned term for three months and reduce it.
Besides, in case a decision has already been adopted by the general assembly of shareholder as to the distribution of dividends for the financial year of 2019 but related payments have not yet been made to the shareholders either totally or partially, the payments related to the portion exceeding 25% of the net profit for the year 2019 shall be postponed until the end of the period stated here above, i.e. until the date of 30 September 2020.
Finally, the related article states that the Ministry of Commerce is entitled to determine the exceptions about the scope of this article for some stock corporations and to determine the procedures and principles about the practice by receiving the views of the Ministry of Treasury and Finance.
3. Enforcement of the Law
As mentioned here above, the Article 8 of the Law shall enter into force on the date of its publication, to be enforced as from the date of 29 February 2020.
All other Articles of the Law mentioned in this Newsletter shall enter into force on the date of publication of this Law, i.e. 17 April 2020.
Our Law Firm remains at your disposal for any further clarifications you may need about the subject matter.