Terminating Employment Contract Due to Lack of Performance

Per Turkish Labor Law No. 4857 ("Law"), it is stated that the termination of the indefinite period employment contracts should be based on a valid reason. Some preconditions would need to be met by the employers to terminate an indefinite period contract of an employee due to the lack of performance.

Otherwise, as a result of reemployment lawsuits, the termination could be deemed invalid and the employee could be reemployed.

You can find the details of Article 18 on Turkish Labor Law No. 4857

Justification of Termination With a Valid Reason

"Article 18 - The employer, who terminates the contract of an employee engaged for an indefinite period, who is employed in an establishment with thirty or more workers and who meets minimum seniority of six months, must depend on a valid reason for such termination connected with the capacity or conduct of the employee or based on the operational requirements of the establishment or service.

In the computation of the six-month seniority, periods enumerated in Article 66 shall be considered.

The following, inter alia, shall not constitute a valid reason for termination:

• Union membership or participation in union activities outside working hours or, with the consent of the employer, within working hours.
• Acting or having acted in the capacity of, or seeking office as, a union representative.
• The filing of a complaint or participation in proceedings against an employer involving alleged violations of laws or regulations or recourse to competent administrative or judicial authorities.
• Race, color, gender, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction, or social origin.
• Absence from work during maternity leave when female workers must not be engaged in work, as foreseen in Article 74;
• Temporary absence from work during the waiting period due to illness or accident foreseen in Article 25 of the Labor Act, subsection I (b).

The "six-month" minimum seniority (length of service) of the employee shall be calculated based on the sum of their employment periods in one or different establishments of the same employer. In the event the employer has more than one establishment in the same branch of activity, the number of employees shall be determined based on the total number of employees in these establishments.

This Article and Articles 19 and 21 and the last subsection of Article 25 shall not be applicable to the employer's representative and their assistants authorized to manage the entire enterprise as well as the employers' representative managing the whole establishment but who is also authorized to recruit and to terminate employees."

The valid reasons stated in Article 25 quire termination notice period and do not reach the level of just cause listed in Article 18. The employer may terminate the employment contract with the notice periods and pay the employee's severance pay and other allowances. However, in the event of a termination per Article 25 of the Turkish Labor Law, the employer can terminate the employment contract immediately without any notice period and without paying the employee's severance pay.

In practice, valid reason and just cause are confused from time to time. Per the concrete case, if a certain behavior of the employee "cannot be expected to be important and reasonable for the employer to continue the employment relationship", it can be deemed as a valid reason. If there is a violation of the rules of morality and goodwill listed in Article 25 of the Turkish Labor Law, the employer can terminate with a rightful termination immediately. Per the characteristics of each event, it should be noted that the principle of proportionality between the behavior of the employee and the type of termination applied by the employer is an important criterion in the decision-making process.

What is the Procedure of the Contract Termination?

Per Article 19, the terminations should be made in writing and the reasons should be explained clearly.

In addition, the defense of the employee must be obtained as well.

Article 19 is as below:

ARTICLE 19 - The employer shall give the notice of termination in the written form involving the reason for termination, which must be specified in clear and precise terms.

The employment of an employee engaged under a contract with an open-ended term shall not be terminated for reasons related to the worker's conduct or performance before he is provided an opportunity to defend themselves against the allegations made. The employer's right to break the employment contract under Article 25/II of the Labor Act (for serious misconduct or malicious or immoral behavior of the employee) is, however, reserved.

What are the Preconditions to be Met for a Termination Due to Lack of Performance?

The preconditions are summarized in a decision of the Supreme Court (decision dated 18.03.2008 of the 9th Civil Chamber of the Court, Article no. 2007/27584, Decision no. 2008/5327) as below:

"Objective criteria would need to be determined to consider the performance and productivity result as a valid reason. Performance and productivity standards should be specific to the workplace. Objectivity criterion should be applied in such a way that the same rules should be applied for the employees who do the same job in that workplace. Performance and efficiency standards should be realistic and reasonable. There must be consistently low or downward trending performance and efficiency results for a valid reason. Results that vary depending on the conditions and are inconsistency would not be considered as a valid reason. In addition, failure to achieve the performance increase targets would not be a valid reason alone. If the employee's capacity is sufficient for the performance targets, but the employee does not show the required effort for these targets, there may be a valid reason.

"Performance evaluation criteria should be determined and communicated to the employee in advance to be objective in the performance evaluation process. And, knowledge, skills and experience required for the positions, behaviors suitable for the workplace, and work and personal development goals expected from the employee should be based on these criteria.

In other words, the quality of the employee, behaviors and the goals would be important. These criteria should be put forward objectively in accordance with the job description of the employee, the employer's corporate principles and the workplace rules to be followed. The performance evaluation forms should be prepared based on these objective rules and a Performance Evaluation System should be developed and implemented in the workplace.(The same statements are also included in the decision Article no 2007/13994, Decision no 2007/27720):

"If the employment contract is terminated due to poor performance and productivity within the probationary period (which must be at least six months), this cannot be accepted as a valid reason. In other words, the working standards, and professional characteristics of the employee during this period are considered as the criteria / limits for the future period. However, if these performance limits are dropped and if it persists, a valid reason may arise. If the employer expects a performance above these limits, the employer should also prove that it provides performance-developing opportunities such as training and improving working conditions to confirm this expectation.

The below statements are included in the Supreme Court decision dated 22.02.2016 with Article no: 2015/26541 and Decision no: 2016/3504:

Firstly, the performance of the employees should be evaluated, and if low performance is detected, the reasons and consequences of this low performance should be analyzed and a portion of time should be given to the employee to fix it. Otherwise, direct dismissal alone would not justify the termination.

In the light of the above, we can summarize the criteria below:

1- A performance evaluation system should be established, and the criteria should be objective, workplace-specific, realistic and reasonable.

2- Performance evaluation criteria should be determined in advance, communicated to the employee, and the knowledge, skills and experience required by the job, behaviors suitable for the workplace, and work and personal development goals expected from the employee should be based on these criteria.

3- A reasonable time should be given to the employee (at least 6 months) to correct and reanalyze own performance.

4- Periodically performance interviews should be organized by the employer if an issue about the performance begins to arise regarding the performance of an employee to keep records about this situation. At least 3 performance interviews would be required.

5- A written defense statement about the lack of performance would need to be requested from the employee. If a written defense statement is not received, the termination might be deemed as invalid (Supreme Court Decision dated 27.04.2005, Article no 2005/10261, Decision no 2005/14718)

6-) Following this, the employer is obliged to provide any opportunity to improve an employee's performance such as additional training. (Supreme Court decision dated 20.04.2016, Article no 2015/41444, Decision no 2016/8802).

Based on the above-mentioned facts and the sensitivity of the process, it is recommended to apply mediation for the termination cases due to the lack of performance.

You can review the details about the mediation process by clicking the link.

You can reach the Labor Law no: 4857 via the link.

Should you have any queries or need further details, please contact your customer representative.