In a labour dispute, the Court of Appeal recently rendered a judgment which is expected to receive heavy criticism from foreign investors and international groups that have offices in Turkey.
Under Turkish Labour Law, termination of employment agreements is subject to a special set of rules if the employer is employing more than 30 employees. One of the most important consequences of being subject to the said set of rules is that the employer would not be able to terminate employment agreements in the absence of valid grounds which is a very vague concept.
Until recently, the precedents of the Court of Appeal consistently provided that legal entities established in Turkey are deemed as persons independent from their other offices abroad. As such, when determining the number of employees with a view to establishing whether the special rules would apply, only the number of the employees at the Turkish offices was taken into account.
However, in a recent precedent, the Court of Appeal implicitly held that if the Turkish entity is a member of a group that has offices in other countries, the cumulative number of all employees employed around the globe should be taken into consideration.
The practical result of this precedent is that foreign investors and international groups that have offices in Turkey must now be very careful when laying off employees in Turkey and, as a precaution, seek to comply with the special rules as much as possible.