New Law to Reduce the Effects and Impacts of COVID-19 on Employment

Posted in COVID-19 Corporate, M&A and securities

The Turkish Government continues to take additional measures in the wake of the pandemic. On April 17, 2020, parliament promulgated an omnibus law, which will impact, among others, the employment dynamics in Turkey.

Restriction on termination

As of April 17, 2020, employers are not able to terminate any employment relationship for three months. The only exception is employee’s unethical and/or bad faith behavior, which would entitle the employer to an immediate termination based on just grounds.

A termination made in violation of the new law will result in an administrative fine equal to the minimum monthly gross salary.

While the termination rights have been restricted, employers now have the discretion to furlough employees for a maximum period of three months as of April 17, 2020. Being furloughed does not give the employee the right to terminate the employment agreement based on just grounds.

The President of the Republic reserves the right to extend the above mentioned time frames up to six months.

Monetary support

Employees (i) who were furloughed and do not benefit from the short-term working allowance or (ii) whose employment agreements were terminated after March 15, 2020 and who cannot benefit from the unemployment allowance, will receive a daily allowance in the amount of 39.24 TL during the term of unpaid leave or unemployment for a period of three months referred to above (unless extended). In order to be eligible for this allowance, the employees must not receive old age pension. Except for the stamp tax, no deduction from the allowance can be made.

If an employee continues to work for the employer while he/she receives this allowance, the employer will have to pay an administrative fine in the amount of the minimum monthly gross salary of employee multiplied by the total number of months he/she has been working. Total allowance paid to the employee will also be collected from the employer together with its interest.

Short-term working

Short-term working allowance has become an extremely helpful instrument for employers during the pandemic. Turkish Employment Agency provides short-term working allowance upon application by an employer, if the employer decreases the working hours by one-thirds or ceases the business completely or partially for at least four weeks due to general financial, regional, sectoral or other compelling reasons. In order to facilitate the process, short-time working allowance applications will now be finalized based on the employer’s statement, in other words, there will no longer be an assessment on employer’s eligibility. In case an employer provides false information or documents, all payments made to the employee will be collected from the employer with its interest.

This amendment will be implemented retroactively as of February 29, 2020.

Other

Collective bargaining agreement execution, collective labor dispute resolution and strike and lockout periods are extended for three months as of April 17, 2020. The President of the Republic may extend the period for an additional three months.

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