Statute of Limitation Decreases to Five Years on Severance Payment

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Period of limitation for annual leave wage, severance pay, notice pay, bad faith compensation and compensation for terminating employment contract against equal treatment principle will be 5 years, as per the “Law on Labor Courts No. 7036” issued in Official Gazette, numbered 30221, dated 25 October 2017.   

Statute of limitation (also called period of limitation or lapse of time) can be described as a time limit in which a claim/action/legal proceeding can be brought. Any claim cannot be actionable-cannot be brought before a court-if the statute of limitation has expired. 

Shortening of the statute of limitation from 10 years to 5 years in above mentioned claims arisen from labor relationship will help to prevent fraudulent claims, and also contribute the early reconciliation between employee and employer. 

AMENDMENT IN TURKISH LABOR LAW

The “Law on Labor Courts” has appended an “Additional Article 3” to Labor Law 4857 that reads as follows;

“Statute of Limitation

ADDITIONAL ARTICLE 3 – Period of limitation for annual leave wages and below stated compensations is five years, provided that they arise from employment contract;

1. Severance payment.
2. Compensation for terminating the employment contract without having to observe the notice term.
3. Bad faith Compensation.
4. Compensation for terminating employment contract against equal treatment principle.

START OF LIMITATION PERIOD 

When does the limitation period start on termination related compensations rights?

• Period of limitation for severance payment starts at the date of termination of employment contract. In other words, severance should be paid at the day contract is terminated, otherwise period of limitation starts. In case of filing a lawsuit the judge decides for payment of highest interest rate applied to deposits for the delayed period.
• Also for compensation for terminating the employment contract without having to observe the notice period, and for wages of unused vacations the period of limitation starts at the date of termination.
• In case the employer doesn’t observe the reemployment claim ruled by a labor court, he has to pay an amount of compensation to the employee equal to employee’s 4 to 8 months’ wage. Limitation period in these cases starts at the date of court decision.  

PREVIOUS RIGHTS

Statute of limitation for annual leave wages and compensations rights prior to enactment of the Law on Labor Courts shall be 10 years. However, in case the “unexhausted part” of the limitation period is over 5 years, the right will be considered as statute-barred in 5 years’ time.