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The Ministry of Family, Labor, and Social Services has been preparing a draft omnibus law aiming to prevent the negative impacts of COVID-19 on financial life. The said draft has now become law as the “Law on Diminishing the Negative Impact of the Novel Coronavirus (COVID-19) in Financial and Social Life and Amendment to Certain Laws no. 7244” (“Omnibus Law”), which is published in the Official Gazette on 17 April 2020 and entered into force on the same day.
The Omnibus Law provides a prohibition on termination of employment contracts for a certain period as well as setting out mandatory unpaid leave and financial aid for employees.
Prohibition on Termination of Employment Contracts
The Omnibus Law provides for a temporary article 10 to be inserted into the Turkish Labour Law no. 4857, setting out a prohibition on termination of employment and service contracts for a period of 3 months starting from 17 April 2020 (“Prohibition Period”). This prohibition applies to all employment and service contracts, regardless of the Labour Law’s applicability thereto. The sole exception to the prohibition is the violation of the principles of good faith and moral values and similar reasons, for which the article refers to article 25 (1) (II) of the Labor Law and “the relevant provisions of other laws”.
The Omnibus Law authorizes the President to extend the Prohibition Period from 3 months to 6 months.
Termination of employment contracts in violation of the said prohibition will result in an administrative fine in the amount of the gross minimum wage multiplied by the number of terminated employees.
Employer’s Right to Mandate Unpaid Leave
Temporary article 10 of the Labour Law also provides that employers will be able to mandate their employees to take a partial or fully unpaid leave for a period of 3 months starting from 17 April 2020 (“Mandatory Unpaid Leave”). In other words, an employer can now force its employees to take an unpaid leave with a unilateral decision. The relevant article expressly notes that the employees who were mandated to take an unpaid leave do not have the right to terminate their employment contracts based on just reasons.
The Omnibus Law authorizes the President to extend the mandatory unpaid leave period from 3 months to 6 months.
Financial Aid for Terminated Employees and Employees on Unpaid Leave
The Omnibus Law introduced a temporary article 24 to be inserted into the Unemployment Insurance Law no. 4447, providing that employees falling within the following categories will be eligible to receive a cash support of TRY 39.24 per day from the Unemployment Insurance Fund:
- Employees who were in an employment relationship as of 17 April 2020 but were mandated by their employers to take a Mandatory Unpaid Leave and who are unable to benefit from the short-time working subsidy and
- Employees whose employment contracts were terminated after 15 March 2020 as per article 51 of Unemployment Insurance Law and who are not eligible for the unemployment benefits as per other provisions of the same law.
The cash support will be provided to the employees during their unpaid leave periods or their unemployment but in any case, it will not exceed the Prohibition Period mentioned above. Further, employees who receive a retirement pension from any social security institution will not qualify for the cash support.
In addition, if an employee does not have general health insurance and cannot benefit from another person’s insurance as a dependent, such employee will be deemed as a general health insurance holder as per article 60 (1) (g) of the Law no. 5510 and her/his insurance premiums in relation thereto will be paid from the Unemployment Insurance Fund.
Acceleration of Payments under Short-term Working Subsidy
The government has previously announced that the steps required for benefiting from the short-term working subsidy will be eased and expedited. Accordingly, the eligibility requirements for short-term working subsidy was recently amended to allow more employees to benefit from the subsidy in applications deriving from Covid-19.
The Omnibus Law provides that payments for short-term working applications due to Covid-19 will be initiated based on the information provided by employers in their applications, without waiting for the Turkish Employment Agency to complete its evaluation of the employers’ applications. In case an employer provides incorrect information or documents, the surplus or undue payments made to such employer will be collected with legal interest.