Extended Summary

The employment of workers with fixed-term employment contracts has become widespread in practice as a flexibility tool. However, it is important that the conclusion and renewal of the aforementioned contracts should not be used to keep the worker out of job security and to protect the malicious practices related to them. Especially, the unjust termination of the fixed-term employment contract before its term, the compensation for remaining term wage and the penal clause seem to have taken the first place among the issues that have occupied the judiciary in recent years. It is crucial to evaluate these issues systematically and to propose solutions.

In the historical development process and today, because it is an insecure employment model, the contract of employment with an indefinite term has been taken as a basis in regulations to provide assurance to workers. In fixed-term employment contracts, it is assumed that the worker has at least employment security for the period stipulated by the parties in the contract and the conclusion, renewal and termination of such contracts are left to the classical contract theory. However, work-related securities such as job security, severance pay and notice pay granted to workers under an indefinite term contract has led to a negative outcome, namely the increase in the number of fixed-term employment contracts preferred by employers in pursuit of avoiding the said work-related securities. Here, in response to this, especially in the 2000s, this problem has been subject to special regulations at both the EU and national level. This development also affected Turkish law and article 11 of the Labour Law No. 4857 regulated the principles of concluding and renewing fixed-term employment contracts, and it was foreseen that fixed-term employment contracts that were not made under these principles would turn into contract of employment with indefinite term from the beginning.

The legal solutions adopted by the Supreme Court and later by the regional courts of justice regarding the conditions of conclusion and renewal of fixed-term employment contracts were mostly against the article 11 of the Labour Law. However, the adoption/acceptance of the legal consequences especially in the decisions that have turned into established jurisprudence on the conditions of concluding and renewing the fixed-term employment contracts in compliance with the purpose of the aforementioned provision and the absolute mandatory regulations in recent years, should be noted as an appropriate development. In this respect, the contractual stipulation of the parties regarding the term of the contract which is not related to the nature of the work (such as six months, one year) or a contract based on the qualifications of the worker, shall not be valid and shall be deemed as an indefinite term employment contract from the beginning. According to the Supreme Court, the nature of the work which is subject to the contract (Labour Law art. 11/I) will determine the validity of a fixed-term employment contract. As a natural consequence of this legal solution, the will of the parties to limit the contract to a certain period will not be sufficient, and the existence of objective conditions stipulated in the aforementioned provision will be sought. The will of the parties will not play a role in the existence of these conditions, the nature of the work subject to the contract or whether there is a need of labour force temporarily in the workplace will be considered objectively. The same principles will also be taken into consideration for the renewal of the fixed-term employment contract. Without a doubt, the jurisprudence under this provision is correct.

Another problem that has been resolved with the jurisprudence of the Supreme Court is related to the legal nature of a fixed-term employment contract. Indeed, in its previous decisions, the Supreme Court adopted an unsuitable solution which accepted to claim by the employer later that the objective conditions stipulated in the law did not exist or to re-qualify the type of the contract by taking this matter into consideration ex officio by the judge. The Supreme Court has changed this jurisprudence in recent years and appropriately emphasising that the purpose of the provision (Labour Law art. 11) should be based on protecting the worker, has adopted that such a claim can only be made by the worker.

The existence of a penal clause in the fixed-term employment contract, which has turned into an indefinite-term contract, has led to a case-law disagreement between the different chambers of the Supreme Court (9th and 22nd Civil Chambers) and the problem has been the subject of the decision of joint chambers on 08.03.2019. In the decision, it was concluded that the penal clause stipulated by the parties in the contract should remain valid with the limitation of the agreed period, even if the contract is converted into an indefinite term employment contract. We state that this solution is inappropriate. Because the will of the parties has stipulated a penal clause, as a civil fine, in order to have a deterrent effect on the fact that the contract is for a definite period and is not terminated before the deadline. If the contract has lost this quality (legal nature), the reason for the existence of the penal clause will have lost its meaning, since the purpose pursued by the parties has also disappeared.

Another problem that arises regarding fixed-term employment contracts is whether “the amount to be entitled in the event that the term would be observed” (the compensation for remaining term wage), regulated in the Turkish Code of Obligations No. 6098 (TCO) article 438 and the penal clause can be claimed together. Based on the provision of article 179 of the TCO, the Supreme Court accepts that demanding two claims together is a repetitive enjoyment of a right. We think that this solution is not appropriate. Because first, the penal clause, as a sanction of the infraction to the contract, constitutes the assurance of compliance with the contract. The compensation for the remaining term wage is to compensate for the damage of the worker. If one of the contracting parties terminates the contract by failing to comply with the period stipulated in the contract without a just reason, it is not acceptable to avoid paying compensation in the amount of the remaining term wage by paying only the penal clause. In addition, when such a solution is adopted, the function of the penal clause will be eliminated. The compensation for the remaining term wage is a result of this mandatory provision (TCO. art.438/I). The contrary solution constitutes a violation of this mandatory provision.