Effects of the Covid-19 outbreak on the employer-employee relationship and its assessment under labour law
On account of the new Coronavirus (Covid-19) outbreak, a number of measures have been adopted by the Presidency, the legislature and the administrative authorities with the aim of enabling employees and employers to come through this period with the least possible detriment. Within this framework, certain rights and obligations have been suspended, abolished or relaxed. In this study, the effects of the measures and decisions taken upon labour law have been assessed.
I. Innovations Introduced and Amendments Made by Law No. 7244 on the Mitigation of the Effects of the New Coronavirus (Covid-19) Outbreak on Economic and Social Life and Amending Certain Laws
1. Regardless of whether they fall within the scope of Labour Law No. 4857, employment/service contracts of every kind may not be terminated by the employer for a period of three months as from 17 April 2020. The said period may be extended by the President for up to six months.
However, the employer’s right of termination is reserved in cases of conduct not complying with the rules of morality and good faith regulated in the law to which the employee is subject, and in similar cases.
In Article 25, first paragraph, subparagraph (II) of the Labour Law, the cases of conduct not complying with the rules of morality and good faith and the like are listed as follows:
• Where the employee misleads the employer by asserting that he possesses the qualifications or conditions required in respect of one of the essential points of the employment contract at the time the contract was concluded although he does not in fact possess them, or by giving information or making statements that are not in conformity with the truth.• Where the employee utters words or engages in conduct offensive to the honour and reputation of the employer or of one of the members of the employer’s family, or makes unfounded denunciations and imputations against the employer that are injurious to his honour and dignity.• Where the employee sexually harasses another employee of the employer.• Where the employee molests the employer, one of the members of his family or another employee of the employer, or comes to the workplace drunk or having taken narcotic substances, or uses such substances at the workplace.• Where the employee engages in conduct incompatible with honesty and loyalty, such as abusing the employer’s trust, committing theft or disclosing the employer’s trade secrets.• Where the employee commits, at the workplace, an offence punishable by more than seven days’ imprisonment where the sentence is not suspended.Where the employee, without obtaining leave from the employer or without relying on a justified ground, fails to attend work for two consecutive working days, or twice within one month on the working day following any holiday, or for three working days in one month.• Where the employee persists in failing to perform the duties he is obliged to perform, although these have been called to his attention.• Where the employee, through his own volition or negligence, endangers the safety of the work, or causes damage to or loss of machinery, installations or other goods and materials that belong to the workplace or that do not belong to it but are in his custody, to such an extent that he cannot make good the loss out of the amount of thirty days’ wages.
In this situation, while it is possible for the employer to exercise its right of termination for just cause in respect of the cases listed above, it is prohibited from exercising the right of termination for just cause falling outside these cases (that is to say, the right of termination based on health grounds and on compelling reasons) and the right of termination with notice set out in Article 17 of the Labour Law. It is provided that an administrative fine in the amount of the monthly gross minimum wage applicable on the date on which the act was committed shall be imposed on the employer or the employer’s representative who terminates an employment contract contrary to this prohibition, for each employee whose contract has been terminated.
Notwithstanding this statutory provision, where the employment contract is terminated by the employer during this period on a ground other than Article 25/II, or where it is established that a ground for termination relied upon by the employer under Article 25/II does not in fact reflect the truth, in our opinion the employer effecting the termination will be exposed both to the legal consequences of an invalid termination and to the administrative fine. Indeed, considering that the will of the legislator here is directed towards ensuring the preservation of the continuity of the employment relationship and preventing the dismissal of employees, the administrative fine regulated in this article must be characterised as a penalty introduced in addition to the employer’s civil liability.
The scope of application of the provision has not been confined solely to employment relationships falling within the scope of the Labour Law; this prohibition on termination has also been rendered applicable to workplaces and employment relationships falling within the scope of the Turkish Code of Obligations, the Press Labour Law and the Maritime Labour Law.
It should be stated that this statutory provision prohibits the termination of the employment contract by the employer alone and only outside the cases of just cause set out in Article 25/II. Accordingly, it is possible for employment contracts to be terminated by employees for just cause pursuant to Article 24/I-II-III of the Labour Law, or by way of termination with notice under Article 17 of the Labour Law. Indeed, during this period there is no legal impediment whatsoever to the employment relationship being brought to an end by a mutual rescission agreement (ikale) complying with the limitations laid down by the Court of Cassation. Employees will merely be unable to terminate their employment contracts for just cause on account of the unpaid leave practice afforded to employers under this law and explained in greater detail below. Indeed, Law No. 7244 has expressly stated that the placing of employees on unpaid leave by the employer within this three-month period shall not be deemed a just cause from the standpoint of the employee.
2. However, this Law No. 7244 affords employers the possibility of placing the employee on unpaid leave, wholly or partially, for a period not exceeding three months as from 17 April 2020. In this case, the employee placed on unpaid leave has no right to terminate the employment contract on the basis of just cause.
Prior to Law No. 7244, whereas under our Turkish labour law it was as a rule not possible for the employer to place the employee on unpaid leave unilaterally, Provisional Article 10, added to Labour Law No. 4857 by Law No. 7244, affords the employer the right to place the employee on unpaid leave unilaterally, limited to a period of only 3 months commencing on 17 April 2020. As is the case with the restrictions on the termination of employment contracts by employers, the President is likewise empowered to extend the said three-month period up to six months.
It may be said from the wording of the article in question that the existence of any objective ground is not required in order for recourse to be had to the unpaid leave practice, and that the employer may place its employees on unpaid leave during the 3-month period of the prohibition on termination without any ground being in question. However, it must be accepted that the power to place employees on unpaid leave must be exercised by the employer in accordance with the rule of good faith. Where no operational necessity is in question, employers’ recourse to the unpaid leave practice in order to punish their employees or to compel them to leave their employment, or their acting contrary to the obligation of equal treatment, may not be accepted by the courts as a lawful act.
The employer has no obligation to pay wages to the employee throughout the period the employee spends on unpaid leave. Since the employee does not work and, accordingly, no payment of wages is in question, there can likewise be no question of “earnings subject to premium” within the meaning of Law No. 5510 during the unpaid leave period. For this reason, the employer will make a missing-day notification to the Social Security Institution (SGK) for the days spent on unpaid leave, and for those days there will be no notification of insured days and no accrual of premiums. As a rule, the employee’s employment contract is suspended throughout the unpaid leave. For this reason, the periods during which the employee is on unpaid leave are not taken into account in respect of employee entitlements calculated on the basis of length of service, such as severance pay, annual leave and notice pay.
Pursuant to Provisional Article 10 of the Labour Law, an employee who is placed on unpaid leave by the employer and who cannot benefit from short-time working allowance shall be granted, on condition that he does not receive an old-age pension from any social security institution and for a period not exceeding the 3-month period during which termination may not be effected as regulated in the Labour Law, cash wage support of 39.24 Turkish lira per day from the Unemployment Insurance Fund for each day spent on unpaid leave within this period; and during these periods, by virtue of Provisional Article 24 added to Unemployment Insurance Law No. 4447, such employees are deemed to be insured under the general health insurance scheme and their general health insurance premiums are met from the Unemployment Insurance Fund.
Where it is established that an employee who has been placed on unpaid leave by the employer and who benefits from cash wage support is in fact being employed by his employer, an administrative fine in the amount of the gross minimum wage applicable on the date on which the act was committed shall be imposed on the employer, separately for each employee so employed and for each month during which he was employed, and the cash wage support paid shall be collected from the employer together with the statutory interest to accrue as from the date of payment.
3. Employees whose employment contracts have been terminated after 15 March 2020 within the scope of Article 51 of Unemployment Insurance Law No. 4447 and who cannot benefit from unemployment allowance shall be granted cash wage support of 39.24 Turkish lira per day from the Unemployment Insurance Fund, for as long as they remain unemployed and not exceeding the period during which termination may not be effected set out in Provisional Article 10 of Labour Law No. 4857.
This cash wage support applies to the following employees:1) Employees who, although having an employment contract on the date of entry into force of this article, have been placed on unpaid leave by the employer pursuant to Provisional Article 10 of Law No. 4857 and cannot benefit from short-time working allowance2) Employees whose employment contracts have been terminated after 15/3/2020 within the scope of Article 51 and who cannot benefit from unemployment allowance under the other provisions of the Unemployment Insurance Law.
However, in order for the employee to be entitled to the said cash wage support, he must not be receiving an old-age pension from any social security institution.
At this point it should be stated that employees who are employed by way of payment of the Social Security Support Premium will both fall outside the scope of short-time working and be unable to benefit from the cash wage support practice regulated in this article.
II. The Employer’s Transition to Short-Time Working
Short-time working is a practice which, where the working time applied at the workplace is temporarily reduced by at least one third, in the whole or in a part of the workplace, on account of a general economic, sectoral or regional crisis or of compelling reasons, or where activity is wholly or partially suspended for at least four weeks without the condition of continuity being required, provides income support to insured persons for the period during which they cannot work, for a period not exceeding three months (which may be extended to 6 months by decision of the President). Compelling reasons are periodic situations arising from external effects which do not stem from the employer’s own management and administration, which cannot be foreseen and which, as a consequence, cannot be averted, and which result in the temporary reduction of working time or in the total or partial suspension of activity, or situations such as earthquake, fire, flood, landslide, epidemic disease or mobilisation.
In order for short-time working to be applied at the workplace, it was necessary for the employer to make an application to the Turkish Employment Agency (İŞKUR) to the effect that working time at the workplace had significantly decreased or had ceased on account of a general economic, sectoral or regional crisis or of compelling reasons, and, until the date of entry into force of Law No. 7244, for it to be established, as a result of the eligibility assessment carried out by the Labour Inspectors, that the workplace was affected by such circumstances. By Law No. 7244 on the Mitigation of the Effects of the New Coronavirus (Covid-19) Outbreak on Economic and Social Life and Amending Certain Laws, Provisional Article 25 was added to Unemployment Insurance Law No. 4447, providing that, in respect of short-time working applications made by employers on the ground of compelling reasons owing to the new coronavirus (Covid-19), short-time working payment shall be effected in line with the declarations of the employers, without awaiting the completion of the eligibility assessment. This provision entered into force so as to be applied as from 29 February 2020. However, excessive and undue payments made on account of the employer’s provision of incorrect information and documents shall be collected from the employer together with statutory interest.
III. Completion, by Means of Compensatory Work, of the Periods during which the Employee Worked Less or Did Not Work, upon the Elimination of the Compelling Reason
Where, on account of the new coronavirus (covid-19) outbreak, work has stopped, the workplace has been closed, work has been performed significantly below normal working hours at the workplace or the workplace has been entirely closed, or leave has been granted to the employee at his own request, the employer may have compensatory work performed within four months in respect of the periods not worked. What must be borne in mind here from the standpoint of labour law is that compensatory work must be announced by the employer. This announcement is sufficient for compensatory work, and the consent of the employee is not required. Compensatory work may not exceed three hours a day, on condition that the maximum daily working time (11 hours) is not exceeded. Compensatory work may not be carried out on holidays. Compensatory work is not deemed to be overtime work or work at extra hours. However, it must not be forgotten that the employee must have been paid his wages for the period during which he did not work. It is not possible to have compensatory work performed in respect of periods during which the employer’s obligation to pay wages to the employee is suspended, such as unpaid leave or short-time working.
IV. Provisions Concerning Remote Work
Remote work is defined in Article 14 of Labour Law No. 4857 as “an employment relationship established in writing and based on the principle that the employee performs his obligation to work at home or outside the workplace by means of technological communication tools, within the scope of the work organisation created by the employer”.
Accordingly, employers may move to a practice of working from home on account of the coronavirus (Covid-19). However, in order to forestall the various disputes that may arise in the future, since the transition of an employee working at the workplace to working from home constitutes a change in the conditions of work, it is considered necessary for a written agreement to be signed with the employee within the framework of the aforementioned Article 14 of the Labour Law. Within this agreement, the employee’s place of work, working conditions and working hours must be clarified and set out.
In the case of remote work, since the employee himself determines the working time and the distribution of that time, and since the daily and total weekly working time is not spent under the employer’s supervision and management, in this situation no overtime work arises unless the contrary is proved by the employee, and overtime pay may not be separately accrued. However, where there are documents serving to prove overtime work, such as a work schedule provided by the employer and the like, the employee will be able to claim his overtime work under the conditions explained above.
V. Provisions Concerning Social Security Institution Premium Payments
On account of the new coronavirus (covid-19) outbreak, pursuant to the General Communiqué on the Tax Procedure Law published in the repeated Official Gazette No. 31078 of 24/3/2020, the insurance premiums relating to the months of March, April and May of private sector employers employing insured persons within the scope of subparagraph (a) of the first paragraph of Article 4 of Law No. 5510 at workplaces operating in the sectors deemed by the Ministry of Treasury and Finance to be in a state of force majeure between 1/4/2020 and 30/6/2020 (these dates included) have been deferred. The sectors directly affected by the coronavirus outbreak and whose payments have been deferred within the above scope are as follows.
• Retail, including shopping centres,• Health services,• Furniture manufacturing,• Iron and steel and metal industry,• Mining and quarrying,• Building construction services,• Industrial kitchen manufacturing,• Automotive manufacturing and trade and the manufacturing of parts and accessories for the automotive industry,• Vehicle rental,• Logistics and transport, including warehousing activities,• Artistic services such as cinema and theatre,• Publishing activities of books, newspapers, magazines and similar printed products, including printing,• Accommodation activities, including tour operators and travel agencies, • Food and beverage services, including restaurants and coffee houses,• Textile and clothing manufacturing and trade,• Taxpayers operating in the sectors of event and organisation services, including public relations,• Workplaces belonging to taxpayers operating in the sectors in which there are situated workplaces whose activities it has been decided to suspend temporarily, by reference to their main field of activity, within the scope of the measures taken by the Ministry of the Interior.
The deferred months and the dates on which payment is due are as follows:
• The period for payment of the insurance premiums relating to March 2020, which are required to be paid by the end of April 2020, has been deferred to 2/11/2020, owing to the fact that 31/10/2020 falls on a Saturday,• The period for payment of the insurance premiums relating to April 2020, which are required to be paid by the end of May 2020, has been deferred to 30/11/2020,• The period for payment of the insurance premiums relating to May 2020, which are required to be paid by the end of June 2020, has been deferred to 31/12/2020. On account of the deferral, the late payment penalty and late payment surcharge specified in Article 89 of Law No. 5510 shall not be applied. The point to be noted is that no deferral has been made in respect of the periods for all manner of information, documents and declarations required to be submitted to the Institution under Law No. 5510, or for the applications required to be made, and proceedings will be conducted in accordance with the current procedures and periods.
As regards the period for the filing of Withholding and Premium Service Declarations by those operating in the sectors listed above, by the General Communiqué on the Tax Procedure Law (Serial No: 518);
• those required to be filed by 27/4/2020 to Monday 27/7/2020, and the periods for payment of the taxes accruing on the basis of those declarations to Tuesday 27/10/2020,• those required to be filed by 27/5/2020 to Monday 27/7/2020, and the periods for payment of the taxes accruing on the basis of those declarations to Friday 27/11/2020,• the filing of those required to be filed by 26/6/2020 to Monday 27/7/2020, and the periods for payment of the taxes accruing on the basis of those declarations to Monday 28/12/2020
it has been decided that they be deferred.
Sinem Muğla – Musa Kurtulmuş
SOMS LEGAL LAW OFFICE