22 October 2019

Labor Law No. 4857 (“Labor Law”) provides for joint liability of the main employer and sub-contractor for labilities of the sub-contractor to the employees, arising from Labor Law, employment contracts and/or collective labor agreements that the sub-contractor is a party to.  Severance pay is one of these types of liabilities.  Based on the joint liability principle, while the main employer and sub-contractor are jointly liable to the employee, the main employer has the right to recourse to the sub-contractor for any excess payment that main employer makes. 

Through the amendments introduced to the Labor Law, with the Law dated 21.07.2019 and numbered 7166 on Amendments to the Social Services Law and Certain Other Laws (“Ominous Bill”),  the right of the main employer to recourse to the sub-contractor is removed in agreements entered into after 11.09.2014 to which public institutions and organization are party and which provides for sub-contracting engagements, unless such agreements explicitly provides for main employers right to recourse to the sub-contractor for the severance payments made to the employees in respect of the period after 11.09.2014. 

Through the Ominous Bill:  

  • Following paragraph is added to Article 112 of the Labor Law, to be inserted after the 5th paragraph: “There shall be no recourse to sub-Contractors for the severance payments made by the public institutions and organizations to the employees employed by the sub-contractors in accordance with limb (e) of first paragraph of Article 62 of the Law Numbered 4734, within the scope of the public tender contracts entered into after 11.09.2014 in respect of the period worked for by the employees in work places owned by public institutions and organizations, starting from 11.09.2014, unless there is an explicit clause under the public tender agreements providing for recourse to sub-contractor for such severance payments”
  • Following Provisional Article 9 is added to Labor Law: “Starting from the date on which this article enters into force, the claims in respect of which recourse is not allowed to sub-contractors as per sixth paragraph of Article 112, shall be dismissed based on there being no grounds for verdict on the merits of the case and judicial costs and attorney fees shall be borne by the relevant party incurring those. Execution Proceedings for the portion of the claims in respect of which there will not be a recourse, shall be dismissed without charging any duties and the execution expenses and attorney fees shall be paid by the party which has incurred these.  However, sub-contractors are not entitled to any right, claim or refund in respect of the amounts collected as a recourse.” 

The Constitutional Court’s ruling cancelling the paragraph added to Article 112 of the Labor Law and Provisional Article 9 based on the grounds that such contradicts with Article 10 of the Turkish Constitution on principle of equality; is announced in the Official Gazette dated 15 October 2019. 

Constitutional Court states that sub-contractors which gets appointed for providing services of employment to the public institutions not being liable to the public institutions for severance pays of the employees, only because there is not a clear recourse clause in their contracts, while other private parties in similar conditions which are contracted by private parties, remain liable for severance payments of the employees to the main employer, does not have an objective and reasonable ground.  


For further information, please contact:

Attorneys at Law
+ 90 (212) 236 36 44

Levent Mah. Sülün Sok. N.23
34330, Beşiktaş/Istanbul

This client alert provides very brief and generic information on certain recent legislative developments, for informational purposes only and is not intended and should not be construed as a legal advice.