Coronavirus and Employment Law Series – 3: Termination of the Employment Contract by the Employee or the Employer due to Changed Circumstances

Coronavirus (Covid-⁠19) was declared a “pandemic” by the World Health Organization (WHO) on March 11, 2020; spreading rapidly in Türkiye and around the world, the disease has significantly affected both daily and economic life. The WHO announced that, as of March 13, 2020, the epicenter of this disease, which spread to the world from the city of Wuhan in the People’s Republic of China, was Europe. As is known, almost 50% of Türkiye’s exports go to European Union countries. In addition to production being adversely affected by the measures taken and by “voluntary quarantine” practices, the markets into which production is channeled have also been put in a difficult position. It is clear that all these processes will also have certain legal consequences for businesses.

In this article, the legal issues that may arise for employees and employers due to the “outbreak” will be assessed in a question-and-answer format under the heading “Termination of the Employment Contract by the Employee or the Employer due to Changed Circumstances”. Finally, it should be noted that the employee or the employer may terminate the employment contract for a wide variety of reasons, and the subject will be assessed only on the basis of certain reasons that we consider important. In the article, some of the grounds for termination will be discussed from the employee’s perspective, some from the employer’s perspective and some from the perspective of both parties. We present the third part of the article series below for your benefit.

The law that entered into force on April 17, 2020 provides that no employment or service contract of any kind, whether or not it falls within the scope of the Labor Law, may be terminated by the employer for a period of 3 months. Cases of conduct contrary to the rules of morality and good faith, and similar cases, have been excluded from the scope of this provision. The new statutory provision is temporary and exceptional in nature and is examined under a separate heading at the end of the article.

1. Can an EMPLOYEE who does not want to switch to short-time working terminate the employment contract for just cause?

A request for short-time working is a material change that alters the main obligations under the contract. Where there is a material change, the employee’s consent is required. However, since short-time working is an exceptional situation, the employee’s consent is not required, but a valid reason must exist. If the request for short-time working is found appropriate and approved by the Turkish Employment Agency (İŞKUR) and/or the Ministry, the existence of a valid reason will be accepted.

In a judgment dated July 8, 2013, the 9th Civil Chamber of the Court of Cassation (Yargıtay) held, stating “…The switch to the short-time working system arises from the law, and since the conditions for a material change in working conditions regulated in Article 22 of the Labor Law were not met, the claim for severance pay should have been dismissed; accepting it on an inappropriate ground was erroneous and required reversal..” (Court of Cassation, 9th Civil Chamber, 08.07.2013, Docket No. 2011/26182, Decision No. 2013/20765), that there was no material change in working conditions and that the employee’s termination of the employment contract would be a termination without just cause.

2. Can the EMPLOYER place an employee on unpaid leave because of the coronavirus without obtaining the employee’s consent? Can the employment contract of an employee who does not consent to unpaid leave be terminated for a valid reason?

When an employee is placed on unpaid leave, the rule is that the employee’s consent must be obtained. “Since it is understood that the plaintiff did not agree to be placed on unpaid leave, the plaintiff’s termination was for just cause; therefore, while the plaintiff’s claim for severance pay should have been accepted, its dismissal is erroneous.” (Court of Cassation, 7th Civil Chamber, Docket No. 2015/10126, Decision No. 2015/8331, 11.5.2015) Nevertheless, if it is proven that unpaid leave was introduced in order to overcome economic difficulties and thereby to maintain the employment relationship, this aspect constitutes a valid reason for terminating the employment contract of an employee who does not accept the unpaid leave. However, it should not be forgotten that terminating the employment contract is a last resort.

"If the defendant employer company falls into financial difficulty due to an economic crisis, it may resort to unpaid leave in order to overcome this difficulty. The employee is under no obligation to accept unpaid leave. However, if it is proven that unpaid leave was introduced genuinely in order to overcome economic difficulties and thereby to maintain the employment relationship, this aspect constitutes a valid reason for terminating the employment contract of an employee who does not accept the unpaid leave." (Court of Cassation, 22nd Civil Chamber, Docket No. 2011/3323, Decision No. 2011/4275, 14.11.2011)

3. Can the EMPLOYER terminate the employment contract because of the economic difficulties caused by the coronavirus?

In our employment law, the principle that termination is a last resort is one of the fundamental principles on which the resolution of disputes is based. If, despite having fulfilled all its obligations before termination, such as applying for the short-time working allowance, introducing unpaid leave, eliminating overtime and implementing cost-saving measures, etc., the employer is nevertheless compelled to terminate the employment contract, it may be accepted that termination was resorted to as a last resort.

“That being the case, while a report should have been obtained from a panel of court-appointed experts composed of specialists in the workplace’s activities, after examining the workplace records and, where necessary, conducting an on-site inspection, on whether the claim that surplus staff arose at the workplace because of a decrease in mineral reserves is true, whether new employees with the same qualifications as the plaintiff were hired at the workplace before and after the termination date, whether the plaintiff had the opportunity to work in other units belonging to the defendant employer, whether the plaintiff was offered a job to that end, whether there was overtime work, whether flexible working was applied, whether an application was made for the short-time working allowance and whether cost-saving measures were implemented, and a decision should have been rendered according to the outcome, it is erroneous to render judgment as written on the basis of an incomplete examination.” (Court of Cassation, 22nd Civil Chamber, Docket No. 2013/24369, Decision No. 2013/28661, 10.12.2013)

Another important point that should be mentioned here is that terminating the employment contract for valid reasons on economic grounds is possible only if the economic grounds giving rise to the termination are permanent.

"It was observed that the expert examination carried out in this context did not determine whether the economic reasons were permanent(...)What needs to be done is to determine, through court-appointed experts, whether the economic crisis and the incurring of losses, in short, the economic reasons that caused the termination, are permanent, to establish, together with the other evidence, whether the termination was a last resort, and to render a decision according to the resulting outcome." The judgment was reversed on these grounds." (Court of Cassation, 22nd Civil Chamber, Docket No. 2012/6874, Decision No. 2012/11622, 29.5.2012)

4. Is termination of the employment contract for just cause possible for EMPLOYERS whose workplaces have been closed, or who have had to close their workplaces, because of the coronavirus outbreak, and for EMPLOYEES working at these workplaces?

As stated above, epidemic diseases are regarded as compelling reasons. Art. 24/III of Labor Law No. 4857 (İK) regulates the immediate termination of the employment contract for just cause based on compelling reasons for the employee, and Art. 25/III does so for the employer.

“Article 24/III If compelling reasons arise that require work to stop for more than one week at the workplace where the employee works.”

“Article 25/III The occurrence of a compelling reason that prevents the employee from working at the workplace for more than one week

As can be understood from these provisions, two conditions must be met for termination for a compelling reason:

- The occurrence of a compelling reason,

- The compelling reason that has occurred lasting longer than one week

Where termination under these articles is at issue, a waiting period of one week is provided for. During that one week, the employer pays the employee half wages. This pay also includes the pay for the weekly rest day, which is deemed to have been worked.

“Article 40 - An employee who cannot work or is not made to work because of the compelling reasons set out in subparagraphs (III) of Articles 24 and 25 shall be paid half wages for each day, up to one week, during this waiting period.”

Another point to note here is the curfew imposed on weekends. Assuming that the employee normally works on weekends, the weekend curfew will also be regarded as falling within the scope of compelling reasons, and the employee will be entitled to half wages. At the end of the one-week suspension period, it will be possible to terminate the employment contract. If the compelling reason ends, work should continue.

Generally speaking, the coronavirus outbreak will be accepted as a compelling reason. “However, situations such as the interruption of transport due to natural events such as floods, snow and earthquakes, or the imposition of quarantine due to an epidemic disease, are compelling reasons.” (Court of Cassation, 9th Civil Chamber, Docket No. 2016/12974, Decision No. 2018/20402, 13.11.2018) The Court of Cassation has, however, distinguished between compelling reasons arising in the employee’s sphere and those arising at the workplace. One point to note here is that every case is unique and must be assessed on its own terms.

5. At businesses whose activities have been halted by the state, will the EMPLOYER be able to carry out an “immediate termination for just cause based on a compelling reason” of the employment contract?

For a compelling reason to be a ground for termination for just cause by the employer, the compelling reason that has occurred must prevent the employee from working at the workplace. Because of the coronavirus, many businesses have been closed without any time limit by precautionary decisions taken by the state. There is also no information as to when these businesses will reopen.

In its decisions, the Court of Cassation has required, for the termination of the employment contract by the employer for a compelling reason, that the compelling reason arise not at the workplace but only in the employee’s sphere. From this perspective, the closure of the workplace will not be accepted as a compelling reason arising in the employee’s sphere.

“Subparagraph (III) of Article 25 of Labor Law No. 4857 provides that the employer has a right of immediate termination if a compelling reason arises that prevents the employee from working at the workplace for more than one week. The reasons preventing the employee from working must arise in the employee’s sphere. Reasons that arise from the workplace and prevent work do not fall within the scope of this article. For example, the closure of the workplace is not regarded as a compelling reason (Court of Cassation, 9th Civil Chamber, 25.4.2008, Docket No. 2007/16205, Decision No. 2008/10253) (...) Compelling reasons arising from the workplace, on the other hand, do not fall within the scope of the said article, but are reasons that give the employee a right of immediate termination, as regulated in Article 24/III of the same Law.” (Court of Cassation, 9th Civil Chamber, Docket No. 2016/26112, Decision No. 2019/8165, 9.4.2019)

6. At businesses whose activities have been halted by the state, will the EMPLOYEE be able to carry out an “immediate termination for just cause based on a compelling reason” of the employment contract?

As explained above, the employer may terminate the employment contract for just cause based on compelling reasons only if the compelling reason occurs in the employee’s sphere. The employee, however, has been granted the right to terminate the employment contract for reasons arising from the workplace. What should be understood from this is that the state’s closure of certain workplaces as part of the measures it has taken does not give the employer a right to terminate the employment contract, whereas it does give the employee a right to terminate.

“Subparagraph (III) of Article 25 of Labor Law No. 4857 provides that the employer has a right of immediate termination if a compelling reason arises that prevents the employee from working at the workplace for more than one week.(...) Compelling reasons arising from the workplace, on the other hand, do not fall within the scope of the said article, but are reasons that give the employee a right of immediate termination, as regulated in Article 24/III of the same Law.“ (Court of Cassation of the Republic of Türkiye, 9th Civil Chamber, Docket No. 2016/6740, Decision No. 2019/14563, 1.7.2019)

7. Does the employer’s halting of activities at the workplace because it cannot obtain raw materials give the EMPLOYEE a right to terminate the employment contract immediately for a compelling reason?

It is a fact that, because Türkiye has closed its border gates, workplaces are having difficulty obtaining raw materials from abroad. If legal reasons such as import and raw material bans lead to the suspension of the employment contract, the employee may terminate the employment contract for compelling reasons.

“At the workplace, work was stopped for more than one week for a compelling reason based on the lack of raw materials. In this case, under Article 16/III of the Labor Law (now Labor Law Art. 24/III), a right to terminate the employment contract without notice arose for the plaintiff employee, and the plaintiff demonstrated this intention by finding a job elsewhere... under Article l4 of the... law, the plaintiff is entitled to receive severance pay.” (Court of Cassation, 9th Civil Chamber, 7.7.1978, Docket No. 1778/1905)

The employer’s inability to obtain raw materials arises not from the employee but from the workplace. The employer’s inability to obtain raw materials does not give the employer a right of immediate termination for just cause.

8. If a curfew is declared, can the EMPLOYER terminate the employment contract immediately for just cause?

As we explained above, a curfew gives the employer the right to terminate the employment contract immediately for just cause. However, the curfew must last for more than one week.

“The termination notice dated January 13, 2016, delivered to the plaintiff by hand, states that the plaintiff’s employment contract was terminated under Article 25/3 of Labor Law No. 4857 because the plaintiff was in fact unable to perform his or her duties due to the increasing terrorist incidents and the curfew declared. In its statement of defense, the defendant also stated that the plaintiff’s contract was terminated for just cause because of the curfew declared and because this curfew lasted for more than one week, as required by the Law. The events that caused the termination of the plaintiff’s contract are the increasing terrorist incidents and the declaration of the curfew. There is no error in accepting that these reasons are compelling reasons." (Court of Cassation, 22nd Civil Chamber, Docket No. 2017/33335, Decision No. 2017/11772, 22.5.2017)

9. Where the workplace has not been closed by the state, can the employment contracts of employees banned from going out because of age or chronic illness be terminated immediately for just cause by the EMPLOYER on the basis of a compelling reason?

As explained above, if the workplace’s activities are halted by the state, the employer will not be able to terminate the employment contract for just cause on the basis of a compelling reason, whereas the employee will be able to terminate the employment contract for just cause under İK Art. 24/III if work at the workplace stops for more than 1 week because of a compelling reason.

If the workplace has not been closed by the state but the employee cannot go to the workplace because of a curfew (e.g. someone over 65 years of age or with a chronic illness), will the employer have a right to terminate the employment contract for just cause? At first glance, it may be accepted that the reasons preventing the employee from working arise in the employee’s sphere and that, for this reason, the employer may terminate the employment contract immediately for just cause on the basis of a compelling reason (İK Art. 25/3). This is the prevailing view.

“The plaintiff’s entering prison for the execution of a prison sentence is a compelling reason that prevents the employee from working at the workplace for more than one week. In this case, the employer’s termination is based on just cause under Article 25/III of Law No. 4857.” (Court of Cassation, 22nd Civil Chamber, Docket No. 2016/27680, Decision No. 2020/625, 20.1.2020)

Our view contrary to the prevailing view: These persons who are banned from going out are unable to perform their obligation to work under their employment contracts because of an administrative decision taken by the state that does not stem from their own fault. What is at issue here is not a curfew affecting all employees, employers and workplaces, but a special curfew affecting only some employees. Proceeding from the principles of employee protection and of termination as a last resort, it is likely that there will be situations that may be shaped case by case through decisions of the Court of Cassation. For example:

If it is accepted that the inability to perform the work is due to illness: The absence from work of persons with a medical report and sick leave certificate obtained because of their illness is subject to a special provision in Article 25 of the Labor Law under the heading “health reasons”. These days, it is possible to obtain long-term, uninterrupted medical reports. In this case, we believe that only termination on health grounds will be at issue, and that termination of the employment contract by the employer for just cause will come into question at the end of six weeks of absence in addition to the notice periods. This special situation will be discussed below under a separate heading. In addition, it is also possible here to take into account the principle that, in employment law, termination should be a last resort (ultima ratio). The rule is that the employment contract should be kept alive. If remote working is possible for the employee, resorting to this option; if this is not possible, applying compensatory work; and where this is not possible either, placing the employee on unpaid leave will be consistent with the practice of termination as a last resort.

For persons over the age of 65 who are subject to the curfew, too, the principle that termination is a last resort may be taken into account as explained above.

10. Because of the current outbreak, can the EMPLOYEE terminate the contract at a workplace that has not closed?

If the employee terminates the employment contract for a compelling reason, the employee becomes entitled to severance pay. The Court of Cassation did not regard as just cause the termination of the employment contract by a person who wanted to be with his or her family because of an earthquake, even though the workplace was available. The employment contract of an employee who does not want to leave home in connection with the coronavirus may likewise be terminated by the employer for just cause. If the workplace is open, it cannot be said that the epidemic affects the employee’s obligation to work.

“The plaintiff, who worked at the defendant’s workplace in Istanbul, terminated the service contract on November 30, 1999, on the ground that the plaintiff’s sick father and family, whose house had been damaged in the August 17, 1999 earthquake and who were living in a tent, needed the plaintiff, and claimed severance pay. The court assessed this termination as a "compelling reason preventing the employee from working for more than one week" under Article 17/III of Labor Law No. 1475, which regulates the employer’s right to terminate without notice, and awarded severance pay. Since the compelling reason accepted did not arise at the workplace and there was no termination by the employer for this reason, interpreting the plaintiff employee’s termination in this way is erroneous, and the claim for severance pay must be dismissed.” (Court of Cassation, 9th Civil Chamber, Docket No. 2001/4118, Decision No. 2001/7559, 01.05.2001).

11. Can an EMPLOYEE who contracts the coronavirus disease terminate the employment contract for just cause?

In some cases, the employee may terminate the employment contract for just cause without waiting for the notice period. Contagious disease is also considered within this scope. However, under our law, not every contagious disease (colds, flu, etc.) gives the employee a right to terminate for just cause. The contagious disease that the employee has contracted must not be short-lived and must be a disease that others find repulsive and frightening.

Since the coronavirus disease is a new disease, no definite information is available on treatment periods. Considering that there are also various views that, at the end of the treatment period, the disease follows a fluctuating course, sometimes appearing positive and sometimes negative, it may be necessary to accept that it is not a short-lived disease. However, this issue will be shaped over time by the decisions the Court of Cassation renders in each specific case. If, on the other hand, it is accepted that the disease can be treated within a short time, it must be accepted that the employee cannot terminate the employment contract for just cause.

“Accordingly, the illness that gives the employee a right to terminate for just cause must be a contagious or psychological illness that is repulsive and off-putting to co-workers or to the persons to whom the employee provides services and that poses a danger to their health and lives” (Assoc. Prof. Dr. Cevdet İlhan Günay - İş Hukuku, Ankara 2003, p. 486 et seq.)"

“It must be emphasized that the contagious disease referred to here must not be one of the simple, easily treated, short-lived illnesses such as colds, flu and the like. It must be, for example, a major epidemic disease or an easily transmissible disease such as lepra (leprosy) or viral hepatitis” (Prof. Dr. Kenan Tunçomağ, Prof. Dr. Tankut Centel, İş Hukukunun Esasları, 2nd ed., Istanbul 1999, pp. 193, 213).

“..It has been reported that hepatitis is a serious disease that may be mild in some people and so severe as to be fatal in others, that the patient feels tired to the point of exhaustion, that there is no definitive cure, that the patient is advised to rest, that it is a disease transmitted very quickly and easily, that the disease can be transmitted even by a drop of blood or saliva coming into contact with a crack in the skin or an open wound, that the hepatitis B virus is the most common known carcinogen (cause of cancer) after cigarettes, and that, for these reasons, because of this disease, which is capable of creating such a serious and life-threatening risk, the employee has the right to terminate the employment contract for just cause under Article 24 of the Labor Law.” (Assembly of Civil Chambers of the Court of Cassation, Docket No. 2008/9-133, Decision No. 2008/126, 13.2.2008)

12. Can the EMPLOYER terminate the employment contract of a sick employee for just cause because of the coronavirus outbreak?

Where the coronavirus is transmitted to the employee, termination of the employment contract by the employer for just cause on the health grounds regulated in Article 25/I-b will come into question.

“Article 25 - I- Health reasons:

b) If the Health Board determines that the illness the employee has contracted is incurable and that it is inadvisable for the employee to work at the workplace.

Other than the reasons listed in subparagraph (a), in cases such as the employee’s illness, accident, childbirth and pregnancy, the employer’s right to terminate the employment contract without notice arises after the said circumstances have exceeded by six weeks the notice periods in Article 17 applicable according to the employee’s length of service at the workplace. In cases of childbirth and pregnancy, this period begins at the end of the period in Article 74. However, no wages accrue for the periods during which the employee cannot go to work because the employment contract is suspended.”

Under subparagraph (I) of paragraph 1 of Article 25 of the Labor Law, the text of which is set out above, the conditions that the illness be incurable and that the Health Board determine that it is inadvisable for the employee to work at the workplace are required together. However, our knowledge about the coronavirus is that the mortality rate is low and the recovery rate is high. For this reason, it can be said that only the second paragraph of subparagraph (b) will apply. This provision will be applied separately for each employee. This is because the notice periods vary according to how long the employee has worked at the workplace.

The following notice periods are provided for employment contracts:

- 2 weeks for an employee whose contract has lasted less than 6 months,

- 4 weeks for an employee whose contract has lasted from 6 months to 1.5 years,

- 6 weeks for an employee whose contract has lasted from 1.5 years to 3 years,

- and 8 weeks for those whose contract has lasted more than 3 years.

For the employment contract to be terminable, there must be 6 weeks of absence in addition to the notice periods stated above. However, since there is not yet clear information about the damage caused by the coronavirus disease and its treatment periods, whether the coronavirus can be assessed within the scope of this article will be shaped by the decisions the Court of Cassation renders in each specific case.

13. Does the employer’s failure to comply with occupational health and safety measures give the EMPLOYEE a right to terminate the employment contract for just cause?

Article 13 of the Occupational Health and Safety Law regulates the circumstances in which the employee may refrain from working.

“Article 13/4: Employees working under an employment contract may, where the necessary measures have not been taken despite their request, terminate their employment contracts in accordance with the provisions of the law to which they are subject. Public personnel working under a collective agreement or a collective labor agreement shall be deemed to have actually worked during the period in which they do not work pursuant to this article.”

What is important here is that, taking into account how easily the outbreak spreads, the measures that each workplace must take will differ. The employer must comply with the measures to be taken in connection with the coronavirus published by the Ministry of Family, Labor and Social Security, and must take the measures required by science and technology. Otherwise, the employee will be able to terminate the employment contract for just cause.

“In protecting the physical and mental health of employees, what matters is not whether, within the bounds of equity, employers can be asked to take occupational safety measures, but whether reason, knowledge, science and technology deem the measures necessary. Accordingly, employers cannot refrain from taking the measures imposed on them by the legislation on grounds such as -that they would not be necessary if the employees are experienced or work carefully.” (Court of Cassation, 21st Civil Chamber, Docket No. 2015/7255, Decision No. 2016/295, 19.1.2016)

WHAT ARE THE EFFECTS, IN THE CONTEXT OF THE CORONAVIRUS, OF THE EMPLOYER BEING UNABLE FOR 3 MONTHS TO TERMINATE THE EMPLOYMENT CONTRACT OTHER THAN IN CASES OF CONDUCT CONTRARY TO THE RULES OF MORALITY AND GOOD FAITH AND SIMILAR REASONS?

Under the law that entered into force upon its publication in the Official Gazette on April 17, 2020, the employer will not be able, for 3 months, to terminate the employment contract other than in cases of conduct contrary to the rules of morality and good faith and for similar reasons. In addition, under that law, the employer will be able to place the employee on unpaid leave for 3 months.

As explained earlier, under normal circumstances the employee’s written consent to unpaid leave is required. However, under the provision in question, the employer will not need to obtain the employee’s consent. Furthermore, the employee will not be able to terminate the employment contract for just cause on the ground that the employer has placed him or her on unpaid leave during this period.

During this period, the employer may terminate the employment contract in cases of conduct contrary to the rules of morality and good faith and for similar reasons set out in subparagraph (II) of the first paragraph of Article 25 of the Labor Law and in the relevant provisions of other laws. Examples of such cases include the employee uttering words or engaging in conduct that offends the honor and dignity of the employer or of a member of the employer’s family, or making unfounded denunciations and accusations against the employer that damage the employer’s honor and reputation; the employee failing to come to work, without the employer’s permission or without a just cause, for two consecutive working days, or twice within one month on the working day following a holiday, or for three working days within one month; and the employee persisting in not performing the duties he or she is obliged to perform despite being reminded of them.

The provision addresses only the employer; the employee’s right to terminate the employment contract for the various reasons we explained above (closure of the workplace, contracting the coronavirus disease, the employer stopping work because it cannot obtain raw materials, the declaration of a curfew, etc.) is reserved.

Unpaid leave refers to the period during which the employment contract is suspended and the mutual obligations, such as the employee’s obligation to work and the employer’s obligation to pay wages, are not performed. Since the employment contract is suspended during this period, the employer has no obligation to pay the employee’s insurance premiums.

This extraordinary situation will also give rise to many legal disputes. Throughout all these processes, it will be in the parties’ interest to obtain legal support from a lawyer in order to avoid any loss of rights.

Att. Ömer Çebi

Trainee Att. Batuhan Özata

This article is a general assessment prepared in accordance with the legislation in force on its date of publication; it does not constitute a legal opinion. This English text is a translation of the Turkish original; in case of any discrepancy, the Turkish version prevails.