Termination of Employment Due to the Closing a Legal Entity
General
Please note that termination of an employment contract has to be made in writing and such termination notice should be made in an express and clear manner. Pursuant to the Labour Code, a termination notice, similar to other notices, shall be served to the relevant person in writing and with a signature. In this regard, the notice shall be served through a notary public or by hand delivery or registered postage-paid mail.
Steps
Please note that when a legal entity in Turkey will be closed, a resolution regarding the same should be taken by the relevant corporate body of the entity in question. Upon such a resolution, all employees should be notified in writing of the termination of their employment contracts due to the closure of such entity. In such a case, all employees should be provided with notice periods, which may differ upon the length of the service of each employee.
The statutory notice periods are following
• 2 weeks – if the employee was employed for less than 6 months,
• 4 weeks – if the employee was employed for from 6 to 18 months,
• 6 weeks – if the employee was employed for from 18 to 36 months,
• 8 weeks – if the employee was employed for more than 3 years.
The Turkish Labour Code allows an employer not to employ an employee during the notice period. The employer may terminate the employment contract with immediate effect provided that the employee is paid in advance an amount equal to the salary that the employee would normally receive for the applicable notice period.
In the calculation of the advance payment, the net salary, along with the money and other benefits which arise from the contract or laws and have a monetary
value, shall be taken into consideration.
Timing
Please note that the termination of employment contracts due to the closure of the business should be made after a decision to close the business is duly taken by the relevant corporate body of the relevant legal entity (i.e. the board of directors or shareholders’ committee). If there is any trade union, further notification and consultation, if required, should be made.
Costs
Please note that when an employment contract is terminated an employee should be paid a redundancy payment. This will include:
• severance pay (provided that the period of employment with the employer has continued for at least one year). The employer is not obliged to make the severance payment which exceeds the above legal threshold.
• notice pay (in the case of termination with immediate effect as mentioned above), and
• payment for any unused annual leave.
In addition to the redundancy payment, an employee should also be paid other amounts according to any contractual rights in his employment contract. Other issues to be considered with regard to these payments are company policies and workplaces practices.