02 Mayıs 2025
Critical Precedent from the 9th Civil Chamber of the Supreme Court: Failure to Prepay Leave Payment Constitutes Just Cause for Termination
×
A dispute has arisen between the decisions of the civil chambers of the regional courts of appeal as to whether, under Article 57/1 of the Turkish Labor Law No. 4857, the employer’s failure to prepay or advance the leave payment for the employee's annual paid leave period constitutes just cause for termination by the employee. This matter was subsequently brought before the High Court (Court of Cassation).
In its decision numbered 2025/24 E. and 2025/2487 K., the 9th Civil Chamber of the Supreme Court ruled that the employer is obligated to prepay or provide as an advance the leave payment before the employee commences their annual paid leave.
The Court further stated that if the employer fails to fulfill this obligation, the employee shall be entitled to terminate the employment contract with just cause pursuant to Article 24, Paragraph II, Subparagraphs (e) (failure to pay wages in a timely manner) and (f) (non-compliance with working conditions) of the Labor Law No. 4857, and shall thereby be eligible for severance pay.
In addition, under Article 26 of Labor Law No. 4857, the right to immediate termination for just cause must be exercised within six working days from the date the employee becomes aware of the cause, and in any event within one year from the date of the act.
Accordingly, it is assessed that in the event the leave payment is not made before the employee begins their annual leave, and the employee terminates the contract within six working days on justifiable grounds, they would be entitled to severance pay.
Moreover, in cases where the employer fails to pay, unlawfully pays, or underpays the leave payment, an administrative fine may be imposed per employee in accordance with Article 103 of Labor Law No. 4857. (As of 2025, an administrative fine of 3,837 TRY per employee applies.)
Practical Effects of the Ruling
- Annual leave payments must be made on time and in full.
- Employees must receive their full annual leave payment for the relevant period before the commencement of leave.
- This payment must be explicitly recorded on the payroll as "annual leave payment."
- Proper documentation and record-keeping systems must be established.
- Leave request forms, payroll records, payment receipts, and other relevant documents must be archived completely and accurately.
- These documents will serve as evidence in the event of termination or legal proceedings.
- Internal procedures should be revised.
- The HR and accounting departments should be informed, and internal policies must be reviewed and updated accordingly.
- Payment planning must be aligned with scheduled leave dates and made prior to the start of leave.
- A written leave protocol should be established.
- The process encompassing “leave request – approval – payment – leave period” should be clearly documented and communicated to all employees.
Conclusion
In light of Supreme Court precedents and the relevant legislation, failure to pay the annual leave payment before the commencement of leave poses a significant legal risk for the employer.
- The employee may terminate the employment contract with just cause and become entitled to severance pay.
- Additionally, an administrative fine may be imposed on the employer.
To mitigate these risks:
- All annual leave payments must be made on time and in full,
- Proper documentation must be maintained,
- Internal procedures must be structured in full compliance with applicable legislation.
You can access the relevant decision here. (In Turkish)
Should you have any queries or need further details, please contact us.
Notification!
