TERMINATION OF EMPLOYMENT RELATION BY MUTUAL TERMINATION AGREEMENT
As per the “freedom of contract” principle set forth in the Constitution of the Republic of Türkiye, employers and employees can terminate an employment contract by Mutual Termination Agreement (hereinafter referred to as “MTA”, in Turkish “İkale Sözleşmesi”) at any time.
MTAs are not expressly regulated under the Turkish Law; however, the Supreme Court in the case law recognizes its practice and determines the criteria for its validity.
The Supreme Court specifically emphasizes that the termination of employment relation by MTA is not a unilateral termination, it is bilateral. Therefore, offer and acceptance made by free will between the employer and the employee is a crucial point. In other words, the employer can only offer a mutual termination to the employee but cannot force the employee to accept it.
While offering a mutual termination, employer must act with good faith and clearly inform the employee of the scope and consequences of its offer.
The other main criteria that is required for a valid MTA is “appropriate benefit” criteria.
What should we understand from “appropriate benefit”?
Appropriate benefit is an additional benefit that should be provided by the employer to the employee in addition to the rights that the employee is already entitled to as per the Labor Code and the employment contract. The minimum appropriate benefit that is accepted by case law for a valid MTA is four months of gross salary of the employee. In other words, if the additional benefit package provided to the employee by the employer is less than four months of gross salary, the Supreme Court concludes that since an appropriate benefit has not been provided to the employee, the MTA signed can be accepted as invalid if the employee alleges so. Both the employee and the employer always have the right to argue a higher appropriate benefit than four months of gross salary.
When an MTA is signed, it is also important to advise the employee that he/she will not be entitled to unemployment allowance that is paid by the state. Therefore, we suggest inserting into the MTA a provision clearly stating that the employee is aware that he/she will not be entitled to unemployment allowance after termination.
Existence of a legally valid MTA is a good protection for the employer against reemployment cases (in Turkish “işe iade davası”) and the compensations arising thereof.
Our Law Firm remains at your disposal for any further clarifications you may need.
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