Turkish Labor Law
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Resul Kurt
This is a really sensitive issue. On one hand, there are employers imprisoned because they could not pay their checks and on the other, there are employees whose greatest subsistence assuranceis their labor.
Generally, the severance pay should be paid on the day the employment contract is terminated. However, sometimes the severance pay is not or could not be paid on the day of termination.
Upon the expiration of the employment contract, employee’s wage claims as well as all the benefits based on the employment contract and employment law must be paid in full.
Labor Law no 1475 defines a specific interest ratio for delayed severance pays. If the severance pay is not paid on time, the court concludes that interest should be applied.
The court concludes interest should be applied for notification and other employment rights following the default date or (in case the default cannot be proved) following the day of court appeal.
However, for severance pay, this interest ratio is set according to the highest interest ratio applied to deposit accounts following the day of termination.
In case the severance pay is not paid, the employer should appeal to labor court. The court should conclude that severance pay should be paid with interest set according to the highest rate applied to deposit accounts following the day of termination or the death of the employee. (Labor Law 14/11) The highest interest rate applied to deposit accounts is determined through written information requested from Turkish Central Bank and other banks.
While computing the above mentioned default interest, the procedure is followed as if the employer had paid the severance pay on time and the employee had put the money in the bank that would pay the highest interest ratio at the time being. For severance pay, application of interest starts on the day of termination.
Payment in Installments
Upon compromise between the employer and the employee, it is possible to pay severance payment in installments. If the severance pay is paid in installments, default interest is applied according to payment dates (Supreme Court 9th Civil Chamber decision dated 13.4.1993 base 1992/196 no 1992/15138). According to Supreme Court (Supreme Court 9th Civil Chamber decision dated 11.5.1992 base 1992/196 no 1992/5126) decisions, the employee may demand interest for overdue interest for the severance pay paid in installments. However, to claim this, the payments should be received under reservations. In a Supreme Court decision (Supreme Court 9th Civil Chamber decision dated 8.3.1988 base 1988/552 no 1988/2731), it is concluded that if the severance pay is paid in installments, the employee may demand interest for the payments under reservations following the day of termination.
Interest Demand
Labor Law no 1475 article 14/11 states that if the severance pay is not paid on time, it should be paid out with the highest interest rate applied to deposit accounts. The clauses that regulate default interest rate do differentiate between state and private banks. As the clauses state “the highest interest ratio”, it should be checked whether the mentioned interest rate is applied. Applicable interest rates notified by the banks to the Central Bank are not taken into consideration unless they have been actually applied. (Supreme Court 9th Civil Chamber decision dated 21.4.2008 base 2007/16243 no2008/9366)
The Supreme Court approves that in law cases regarding application of interest to severance pay due to delay, according to article 113 of Code of Obligations, when the principal debt is paid out, if the right to demand the accrued interest is not reserved, this interest cannot be demanded. (Supreme Court 9th Civil Chamber decision dated 30.12.1994 base 19319 no 2004/8521). In a Supreme Court decision, Supreme Court 9th Civil Chamber decision dated 15.4.2004 base 2004/100 no 2004/8521), it is stated that if the employee accepts payment with check, even though the check is post-dated, and he gives up his right to demand interest in the quittance. This choice is binding; declaring off the will to give up the right to demand interest cannot be regarded as reserving the right to demand interest in accordance to Code of Obligations article 113/2; the quittance given after the right to severance pay originates, that is, after the termination will be binding.
In a Supreme Court decision in 1996, (Supreme Court 9th Civil Chamber decision dated 4.7.1996 base 19319 no 2004/8521) it is concluded that although collective labor agreements ensure that the severance pay will be paid out within 30 days, no interest should be applied to the payments within that period. Code of Obligations article 104 states that overdue interest payments are not subjected to a secondary interest. According to Supreme Court, interest can be demanded in case there is a delay in severance pay payments. However, delay in interest payments does not constitute a base for applying interest on interest payments.
In case that the severance pay is paid in the course of court trial, indicating that the payment is accepted by the prosecutor, the Supreme Court concluded that if the principal debt is paid out, non-imperative 84th clause of Code of Obligations suggesting deduction first from the interest than from the principal debt cannot be applicable. Only the right of interest reserved in the bill of claims can be subjected to sentence.
Mental Reservation
The employee who notified through notarial medium that his right to demand interest for delayed payment of the debt is reserved does not forfeit his right for not claiming mental reservation.
Supreme Court Assembly of Civil Chambers … it is concluded that with the statement “I hereby sign this quittance on condition that my future legal rights will be reserved” within the quittance, the right to demand the accruing interest between the due date and actual date of payment is reserved.
Upon not receiving severance pay, the prosecutor whose employment contract is terminated hands a petition to the defendant demanding payment and informing that his legal rights are reserved and partial payments will be counted for interest and expenditure. As the prosecutor will receive the severance pay in installments and interest will accrue due to the delay, the payments made shall be counted for the interest. (Supreme Court 9th Civil Chamber Decision dated 07.07.2003, basis 2003/1699 no 2003/12804)
Source: Dünya Gazetesi
