Turkey: Laws, Rulings Protect Employees Against ‘Collusive’ Contracts

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By Jenny David

Oct. 20—Primary employers are required to audit their subcontractors on a monthly basis to ensure their employees are receiving full and proper payment of wages, under Omnibus Law 6552 passed by the Turkish parliament in mid-September. Under the new law, primary employers can be held solely responsible for employees' unpaid salaries, bonuses, social security premiums, unused paid leave and tax liabilities, if these obligations are not met by subcontractors, as well as any difference between the subcontractor's payments and what the primary employer should have paid were the workers employed directly. The new provisions also entitle the primary employers to make the payments and deduct them from their fees to subcontractors.

‘Collusive' Agreements

This sharpened legislative focus on primary employers has to some extent left subcontractors “out of the picture,” leading Turkey's High Court of Appeals to rule that subcontractors share liability for workers' rights in the case of a “collusive contract,” even though such agreements are barred under Turkish law, Gönenç Gürkaynak, managing partner at ELIG Attorneys at Law, told Bloomberg BNA Oct. 17. According to Gürkaynak, a near absence of workplace inspections, combined with low administrative fines, “encourages employers to disregard certain obligations which would otherwise be costly to fulfill” and lead them to “confidently enter into collusive subcontractor relationships in order to further reduce their costs.”

Under Subcontracting Regulation 27010, a collusive agreement is one in which:

• part of a company's main job, which does not require expertise, is transferred to the subcontractor;

• a subcontracting relationship is established with an ex-employee;

• the employees of the primary employer are hired by the subcontractor and provided more limited rights; or

• the intention is to avoid public obligations or limit/eliminate the rights of employees arising from the labor contract, the collective agreement or labor legislation.

Reestablishing Balance

While Turkish Labor Law 4857 and Omnibus Law 6552 are intended together to defend employees, “leaving subcontractors free of any liability ultimately leaves employees unprotected,” Gürkaynak said, adding that subcontractors “are usually not concerned about a court ruling which would most likely leave them out of the picture” because of the law's focus on primary employer liability.

Recent rulings of the High Court of Appeals have filled this vacuum, Gürkaynak said, by holding that—even when subcontracts are deemed collusive and thus void— primary employers and subcontractors must still be held jointly liable for employees' rights.

“No one can benefit from his/her own collusion,” the 9th Civil Chamber of the Court of Appeals held in a March 2014 ruling.

Even though Article 2/7 of the Labor Law provides that a collusive contract is not valid and that responsibility for subcontracted employees automatically reverts to primary employers, the law should not be interpreted to exempt subcontractors from their responsibilities to the workers, the appeals court held.

To contact the reporter on this story: Jenny David in Jerusalem at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at mailto:%20rvollmar@bna.com

Omnibus Law 6552 is available in Turkish at http://bit.ly/YHajMp.