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Unpaid Leave Implementation within the Scope of the Law Numbered 7244

2020, Erdemir&Özmen Attorney Partnership

Unpaid Leave Implementation within the Scope of the Law Numbered 7244

The Law on Mitigating the Effects of the New Corona Virus (Covid-19) Outbreak on Economic and Social Life with the Law on Making Amendments to Certain Laws, numbered 7224 (“the Law”) was published in the Official Gazette dated 17 April 2020 and numbered 31102. The Law makes quite significant legal arrangements in field of the Labor Law.

Separately for the employees and the employers, our newsletter provides detailed information about “Unpaid Leave” which is one of the legal arrangements made under the aforesaid Law.

What is unpaid leave, prior to the effective date of the Law numbered 7244?

Unpaid leave implementation means that the employment contract is suspended. Throughout the period that the contract is suspended, the employee does not work and the employer does not pay the wage. During this period, no wage is paid to the employee and no insurance premium is declared in the name of the employee.

If the employment contract concluded between the employee and the employer or the collective labor agreement concluded with the workplace contains a provision regulating unpaid leave, the right to unpaid leave may be exercised in compliance with that provision. However, in the absence of such relevant provision, unpaid leave becomes possible only upon the mutual consensus of the parties.

May the employee work in another job while he is on unpaid leave?

In the event that the employee works in another job in the unpaid leave period, the employer will have the right to terminate the employment contract immediately for justifiable reason. This circumstance is considered as an act in breach of the loyalty obligation on the part of the employee and constitutes a justifiable reason for termination of the employment contract by the employer.

However; in practice, in cases of unpaid leave whose period is not notified to the employee, the employers can, as an indicator of goodwill, grant consent to the employee for him to work at another workplace during the unpaid leave period.

May an employer grant unpaid leave to his employee in the absence of the employee’s approval?

As we have mentioned above, it is not possible for the employers to grant unpaid leave to their employees unilaterally and against the employees’ wills. In the light of the decisions rendered by the Supreme Court of Appeals, while the grant of unpaid leave to an employee against his will means an unjust termination of the employment contract by the employer, this circumstance also grants the employee the right to terminate the employment contract for justifiable or valid reason. In such a circumstance, the employee becomes entitled to collect his severance pay and other labor receivables if any.

Pursuant to the article 22 of the Labor Code numbered 4857; if the employer notifies in writing to the employee that he wants to grant unpaid leave to the employee and if this proposal is accepted by the employee in writing within six working days, the employment contract shall be deemed to have been suspended. If this proposal is not accepted in writing by the employee, this change in the working conditions shall not become effective for the employee. In case the employer’s proposal for the grant of unpaid leave is fulfilled by the employee without raising any objections, the employee shall be deemed to have granted consent to unpaid leave. The burden of proof about whether or not the employee has granted consent to unpaid leave shall lie with the employer. At this point, it is crucial to state that it is of importance for the consent, which will be obtained from the employee, to be explicit in such a degree that leaves no room for doubt, since the burden of proof that the employee has granted the consent is imposed on the employer.

In addition to the above, the unpaid leave implementation should last for “a reasonable and temporary period”, by its nature. Furthermore, the addition, by the employer, of the unpaid leave period into his proposal in this regard is of importance for the employee to carry out a proper evaluation and to know the length of the period during which the employee will be deprived of his wage. On the other hand, it is also considered that the condition “to state the exact period” will not be sought for the cases where it is not possible for the employer to know exactly the duration of the situation that will require the employee to be on unpaid leave.

After the effective date of the Law numbered 7244

Without prejudice to the generality of our above explanations about unpaid leave in the Labor Law; the Law numbered 7244 introduces significant legal arrangements in respect of unpaid leave implementation, for the employers and employees that work at the workplaces which are closed temporarily by virtue of the official orders or decrees issued due to the COVID-19 outbreak existing in the Country or whose operation times are reduced or whose activities become impossible in whole or in part due to the current situation.

In principle, unpaid leave could be implemented only in case the employee has granted the relevant approval. However, differently under the legal arrangement that has been introduced newly, it is adopted that employers may resort to unpaid leave implementation in the absence of the employee’s approval, and it is prescribed that payments shall also be made through the Unemployment Insurance Fund to the employees who are granted unpaid leave. Namely:

What changes does the Law numbered 7244 contain in respect of employees?

Under “the Law on Mitigating the Effects of the New Corona Virus (Covid-19) Outbreak on Economic and Social Life with the Law on Making Amendments to Certain Laws”, numbered 7224 that was published in the Official Gazette dated 17.04.2020 as we have referred to above, the employees who are granted unpaid leave by their employers and are unable to benefit from the short-time working allowance and the employees who are unable to benefit from the unemployment allowance as per the other provisions of the Law and whose employment contracts are terminated within the scope of the article 51 after 15.03.2020 shall be provided cash wage support through the Fund in the amount of 39.24 Turkish Liras on a daily basis for the period of time corresponding to the period that they become unemployed or take unpaid leave within this period of time, provided that the period referred to in the temporary article 10 of the Code numbered 4857, during which termination shall not be made, is not exceeded and that those employees do not receive old age pension from any social security institution.

In other words, pursuant to the Law numbered 7244 that has been published newly, a cash wage support in the amount of 39.24 Turkish Liras on a daily basis, which will be covered through the Fund, shall be provided to the employees who are granted unpaid leave and are unable to benefit from the short-time working allowance and to the employees who are unable to benefit from the unemployment allowance as per the other provisions of the Law and whose employment contracts are terminated under the article 51 after 15.03.2020.

With the exception of stamp tax, no deductions shall be made from the payments made.

It should be stated that the cash wage support does not represent a wage in technical sense, it represents a payment of social relief nature. The employees who have employment contracts in force on the effective date of the legal arrangement and the employees whose employment contracts have been terminated after 15 March 2020 may benefit from this wage support according to the following conditions. 

Who may receive cash wage support?

As per the legal arrangement introduced, the employees who may benefit from the cash wage support are listed below one by one:

  • The employees whose employment contracts are currently in force, however, who are granted unpaid leave
  • The employees who are unable to benefit from the short-time working allowance
  • The employees whose employment contracts have terminated after 15 March 2020 in such a scope granting them the right to receive unemployment salary and who are unable to benefit from the unemployment allowance since they fail to meet the other conditions
  • The employees who do not receive old age pension from the Social Security Institution

May an employer, who is granted unpaid leave, terminate the employment contract by resting on valid or justifiable reason?

With the newly-introduced legal arrangement, the employee who will take unpaid leave at the employer’s request shall not terminate the employment contract for valid or justifiable reason. In other words, the grant of unpaid leave based on the statutory provision shall not be made a ground of termination by the employee.

Accordingly, even though the employee is not entitled to terminate the employment contract due to non-implementation of the working conditions or for compelling reason by resting on the fact of unpaid leave, the employee may exercise his right to termination for the reasons arising from underpayment of the wage and from the non-implementation of the working conditions, in case the employer acts in violation of his obligation “equal treatment” in the unpaid leave implementation.

Apart from the above, the employees’ rights to termination are reserved during the unpaid leave period in the following circumstances: The employee’s health reasons, or in case the male employee quits working since he will join the army to perform his military service, or in case the female employee quits working since she got married, or in case the employee quits working due to retirement or by waiting to complete a certain age.

Since the prohibition of termination, introduced for the employee, is limited to the unpaid leave period, and since the employee is not entitled to exercise his right to make notice (for termination) during the unpaid leave period, the employee’s right to termination with prior notice is suspended during the unpaid leave period. If the employee wishes to exercise his right to termination with prior notice in the course of the unpaid leave, the notice period shall start to run only after the completion of the unpaid leave period.

What if an employee, who is granted unpaid leave, is in breach of the limited prohibition of termination?

If the employee is in breach of the limited prohibition of termination which is imposed on him, i.e. if the unpaid leave is made immediately a ground of termination by the employee, such termination shall be deemed to be unlawful and irregular. In such case, the obligation to make payment in lieu of notice in favor of the employer shall arise on the part of the employee. Furthermore, if it is found that the employee has caused a loss against the employer due to this termination, it may also be in question for the employee to indemnify the employer in such amount corresponding to the loss.

It should be stated importantly that, in case the employee wishes to terminate with notice as mentioned above, such termination will create its consequences only after the employee has worked throughout the notice period; therefore, the employee’s will of termination in this direction shall not be deemed to be a breach of the prohibition of termination, and the notice period will come into effect after expiration of the unpaid leave period.  

How will the unpaid leave implementation take place in respect of fixed term employment contracts?

Since the unpaid leave implementation will take place due to interruption of the work in whole or in part, such interruption of the work in whole or in part may also be in question in respect of the fixed term works. Therefore, when the unpaid leave implementation is carried out for those employed under fixed term employment contracts, the contract shall be deemed to have extended for a period of time corresponding to the definite unpaid leave period.

In order for a fixed term employment contract to terminate, it is necessary that the fixed term work has been completed or that the temporary need for labor force has ceased to exist. However, the fixed term employment contract will not terminate, since these two circumstances will not be in question, during the unpaid leave period. Such temporary need for labor force is deemed to have been suspended only with the completion of the fixed term work, during the unpaid leave period. 

May an employee, who is granted unpaid leave by his employer and is provided the cash wage support, be continued to be employed?

The legal arrangement introduced prescribes that, in case the employer is found to employ on a de facto basis the employee who benefits from the cash wage support as the employee takes unpaid leave, the Provincial Directorates of the Labor and Employment Agency shall impose administrative fine on the employer in the amount of the monthly gross minimum wage determined by the article 39 of the Code numbered 4857 on the date that the action has been committed, which administrative fine shall be imposed separately for each employee who has been employed in this way and for each month that the employee has been employed in this way.

Hence, in case of an employee who is granted unpaid leave by his employer and is provided the cash wage support, however, is continued to be employed by his employer, such administrative fine can be charged to the employer.

May an employer grant unpaid leave to a part of his employees?

The employer may grant unpaid leave to all or a part of his employees. However, in the case the employer grants unpaid leave to a part of his employees and continues to employ the other part of his employees and pays their wages, it is mandatory for the employer to base his choice on objective reasons.

The objective reasons may be such reasons arising from the requirements of the work, the workplace and the business and may also be such reasons arising from the employees’ personal situations. In the contrary case, such different implementation carried out by the employer may be considered as an arbitrary discrimination, and such case may constitute a breach of the obligation “equal treatment”.

As is known, such breach of the obligation “equal treatment” may grant the employee the right to claim indemnity in the amount of his 4 months’ wage, and the employee may also claim the lacking wages that he is deprived of. The right to equal treatment is a working condition arising from the laws. In case the employer is in breach of this obligation, this case will therefore grant the employee the right to terminate the employment contract immediately and this right to termination shall not be deemed to be included into the scope of the prohibition of termination prescribed for the employee. 

With the new legal arrangement, may an employee resort to unpaid leave implementation instead of applying for short-time working allowance?

As we have mentioned in detail, the unpaid leave implementation, which may be resorted to as a last remedy against termination, requires in principle the employee’s approval. However, under the temporary article prohibiting termination of the employment contracts in the 3 months’ period, it is adopted that the employers may resort to the unpaid leave implementation without the employees’ approval. Nevertheless, differently from the former practice, the employees who are granted unpaid leave are also provided with the opportunity to be paid through the Unemployment Insurance Fund.

The legal arrangement expressly aims that the employees, who cannot benefit from the short-time working allowance or who have been dismissed prior to the prohibition of termination and cannot benefit from the unemployment insurance, are able to receive allowance through the Fund for a period of 3 months. Within this framework, we are of the opinion that, in case the employer carries out an implementation to the contrary, this might be considered as a valid ground of termination by the employee, depending on the employer’s act in bad faith.

In such case, it is possible to consider that the prohibition of termination shall not apply to the cases where the right is abused and beyond that, it is also possible to consider whether the grant of unpaid leave by acting in bad faith represents a termination by the employer.

In conclusion, even if unpaid leave is implementable only in case the employee grants the relevant approval; it is adopted under the temporary article that, the employers may resort to the unpaid leave implementation without the employee’s approval. Under the Law that has been published newly; the employees who are granted unpaid leave by their employers and are unable to benefit from the short-time working allowance and the employees who are unable to benefit from the unemployment allowance as per the other provisions of the Law and whose employment contracts are terminated within the scope of the article 51 after 15.03.2020 shall be provided cash wage support through the Fund in the amount of 39.24 Turkish Liras on a daily basis for the period of time corresponding to the period that they become unemployed or take unpaid leave within this period of time, provided that the period referred to in the temporary article 10 of the Code numbered 4857, during which termination shall not be made, is not exceeded and that those employees do not receive old age pension from any social security institution. With the legal arrangement introduced, it is set forth that an administrative fine shall be imposed on the employer in case the employer is found to employ on a de facto basis the employee who benefits from the cash wage support as the employee takes unpaid leave.

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