Termination of Employment Contract of an Employee Due to Financial Crisis
As you know, many employers are experiencing hesitations and are taking measures to avoid facing an unexpected situation due to the recent events, the depreciation of the Turkish Lira against the foreign currency and the volatile trend of the economy in our country and around the world. The employer’s termination of the employee’s employment contract based on the financial crisis is one of these measures. However, as will be explained below, this type of termination is often not valid for the employer and causes the employer to lose the reemployment lawsuit filed by the employee.
Is it possible to terminate employment contract of an employee due to financial crisis?
According to the Labor Law, an employer has the right to terminate an employment contract with indefinite term with a valid reason arising from the requirements of the enterprise, workplace, or business. However, this termination method is not easily accepted and the rights of an employee are well protected against the possibility of the employer abusing the termination.
This way of termination is not related to the personality of an employee; It is the termination of the employment contract due to the excess labour force arising as a result of the decline of workload in the workplace in question due to financial, competitive and productivity requirements and technological developments. In the Law’s preamble, examples of external reasons are provided; the impossibility of continuing the work in the workplace due to reasons such as the decrease in product and sales opportunities, decrease in demand and orders, energy shortage, financial crisis in the country, general stagnation in the market, loss of foreign market, shortage of raw materials.
However, it should be noted that the reasons for termination exemplified in the reasoning are considered as a last resort and may only be accepted after a serious investigation both in practice and in the jurisprudence of the Court of Cassation. The burden of proof that the termination is based on valid reasons will be on the employer in case an employee’s employment contract is terminated by the employer based on a valid reason arising from the requirements of the enterprise, workplace, or business. Therefore, the employer must prove both that he/she complied with the termination notification procedures and that the grounds for termination were valid. At this point, most employers fail to provide the necessary evidence and the termination is deemed invalid and the employee is reemployed. For this reason, the employer is expected to prove that the termination is objective and compulsory as a last resort.
What are the remedies that should be used by an employer before termination due to financial crisis?
Court of Cassation lists the examples of the remedies that should be used as a last resort before termination as follows:
Reducing shifts, making annual leaves available, allowing unpaid leave if necessary, requesting short-time working allowance by implementing short-time working practice, reducing overtime work and works during public holidays, etc. Whether an employer took these actions and whether the employer made the necessary effort have been subjected to detailed examination by the Court of Cassation in the lawsuits filed during the financial crisis in 2009, and an employer is expected to use the remedies listed above as example before the termination.