INTRODUCTION
As a result of the rapid changes that took place both in the global and Turkish economy due to the technological developments and constantly escalating concept of competition, the need for specialization in specific sectors and service areas and the issue of reducing the production costs for manufacturers has risen especially over the course of last 40 years. One major cost among the aforesaid is definitely the costs of labour. In today’s economy in which the specialization, technology and the costs have become most prominent, the practice of subcontracting by assigning of some certain works to the subcontractors to be performed by the employees of the subcontractors has become widespread due to the concern of reducing the costs.
As a result of the complications faced in practice and especially the experiences gained during the judicial processes, the practice of subcontracting of which the legal history roots back till 1930s in Turkey, has changed over the course of time and these changes has reflected in the legislative regulations. Over the period after 1980’s, it has been observed that the rate of problems faced, has increased considerably with the rapid increase in the practice of subcontracting and the solutions which are brought by the doctrine and jurisdictional decisions have been insufficient. The regulations stipulated under the Labour Law No. 4857, dated 2003 (“the Labour Law”) and the Directive on Subcontracting dated 2008 which aims to concretize and elaborate these regulations stipulated under the Labour Law has provided a significant development in overcoming the problems faced in this field by addressing the issues with respect to the relationship between the principal employer and the subcontractor. However, following these regulations, due to the complex structure of the relationship between the principal employer and the subcontractor and that each case includes specific, sui generis problems, the misuse in the practice has continued in various aspects and this situation has reflected in many decisions of the Court of Appeals in a specific way.
This article primarily addresses the essential elements in a subcontracting relationship and the collusion in the relationship between the principal employer and the subcontractor, one of the most important and crucial subject of the practice of subcontracting.
1. SUBCONTRACTING RELATIONSHIP
The fundamental principle in labour law is that the employer manufactures in its own place of business with his own employees. However, in some cases the Labour Law has brought exception to this principle and provides for the constitution of a subcontracting relationship.
The subcontracting relationship is defined in a controversial and complicated way in the Labour Law. According to that, the subcontracting relationship is the relationship between;
• the subcontractor who undertakes the carry out work in auxiliary tasks related to the production of goods and services or in a certain section of the main activity due to operational requirements and for reasons of technological expertise in the establishment of the main employer and who engages employees recruited for this purpose exclusively in the establishment of the main employer (“the subcontractor”)
• and the main employer from whom the subcontractor undertakes the performance of the work (“the principal employer”)
According to this definition which is also stated in the Court of Appeals decisions, in order for a subcontracting relationship to be mentioned, it is required that there are two different employers existing, there is a work related to the production of goods or services; the employees are charged only for the task for which they are recruited and that the parties do not engage in a collusive relationship. Although there is no restriction for the auxiliary tasks related to the production of goods and services in the establishment of the principal employer to be given to the subcontractor, in order for a certain section of the main activity to be assigned to a subcontractor, it is essential that the task to be assigned is a task which requires technological expertise due to operational requirements.
In other words, subcontracting relationship can only be constituted with respect to the;
• the auxiliary tasks related to the main activity conducted in the workplace;
• certain sections of the main activity conducted in the workplace that requires expertise with technological reasons due to operational requirements.
In case a subcontracting relationship is constituted except the above mentioned two cases, this will be considered as collusion and such relationship will not be acknowledged as a valid subcontracting relationship in accordance with the law. Below is aimed to provide and concretize as to in which cases a subcontracting relationship could be constituted.
1.1. Auxiliary Tasks Related to Production of Goods and Services
The Labour Law does not stipulate as to what constitutes auxiliary task related to the production of goods and services. According to the preamble of the Labour Law, auxiliary tasks are the tasks carried out at the workplace such as freight, stevedoring, cleaning, catering, refreshment and food services, staff transportation, security and technical maintenance, which are not directly included within the organization of production.
Additionally, according to the Directive on Subcontracting, the auxiliary tasks are the tasks which are related to the production of goods and services but yet not directly involved within the organization of production and are not an essential component of the production and which carry on dependently with the main task.
1.2. Tasks that Requires Expertise with Technological Reasons due to Operational Requirements in Certain Sections of the Main Activity Conducted in the Workplace
According the Article 2 of the Labour Law, in order for a certain section of the task to be given to a subcontractor, it is required that the conditions that; “the task shall be one that requires expertise due to technological reasons” and “operational requirements” shall exist together. For instance, in a weaving factory, the tasks related to colouring, weaving or clothing can be given to a subcontractor provided that such task requires expertise due to technological reasons. This means the employer is unable to perform the task with his own technology and the expertise of its own staff and thus needs further expertise and technology for the performance of such task.
In order to determine whether the task given to subcontractor is one that requires special expertise and technology due to operational reasons, some facts will be taken into consideration such as the type of the technological specifications of the machine, tools or equipment that the employer owns, or the type of certificates of expertise that the staff owns.
2. SUBCONTRACTING RELATIONSHIP BASED ON A COLLUSIVE TRANSACTION (COLLUSION)
As the subcontracting relationship is a legal transaction based on mutual agreements and declaration of will, in terms of validity, it will be subject to the general validity conditions for legal transactions. In this context, it is required that the declaration of wills with respect to the subcontracting are reliable and the subject matter does not constitutes any collusion and impossibility or any contradiction with public morality and order. Where the parties to a legal transaction which they do not have the intention of carrying out actually, but seems to do with the purpose of deceiving third parties is defined as Collusion. As also stated in the Court of Appeals decisions, in case of collusion, the intention of deceiving third parties exists and the actual purpose in the agreement is concealed.
The Regulation on Subcontracting, defines collusion between the subcontractor and the principle employer as the agreement which contains;
i. Assigning tasks which do not require expertise in certain sections of the main activity related to the production of goods or services carried out at the workplace
ii. Establishing a subcontracting relationship with the person who had been employed at that workplace before,
iii. Subcontractor’s recruiting principle employer’s employees and continue to employ these employees by restricting their rights,
iv. The transactions with purposes of concealing the actual intentions of the parties such as avoiding public obligations or restricting rights of employees arising from employment agreement, collective labour agreement or employment legislation.
It is also stipulated in Labour Law that, the rights of the principle employer’s employees cannot be restricted by recruitment of such employees by the subcontractor or that a subcontracting relationship cannot be established with the person who had been employed at that workplace before. Otherwise, as it is explicitly set forth in the Labour Law that, the relationship between the subcontractor and the principle employer is based on a pretended transaction and so constitutes collusion and the employees of the subcontractor shall be considered as the employees of the principle employer from the beginning.
In the doctrine and the several decisions of the Court of Appeals, it is considered that the principle employer’s giving instructions and orders to the employees of the subcontractor based on the right to govern, does constitutes collusion between the principle employer and the subcontractor. Likewise, in a valid subcontracting relationship, the only authorized person to decide as to who are to be employees of subcontractor and the training they will be subjected, their recruitment, the instructions and orders they will take during the time of their employment, the disciplinary penalties that will be applied, dismissal etc., is the subcontractor who is the actual employer of such employees. The principle employer cannot have any authority on the mentioned subject matters. The principle employer can only give general instructions related to the subjects such as work safety and similar issues. Any intervention and supervision of the principle employer other than these issues will result in collusion and the employee shall be considered as the employee of the principle employer from the beginning of the work.
However, some decisions of the Court of Appeals sampled below constitute some divergence:
• "All the services subject to Service Procurement Agreement are auxiliary tasks and it has not been detected that the claimant has been physically employed for the works outside the scope of the agreement such as sick nursing despite being a cleaning worker. That the respondent Ministry has given auxiliary tasks to the subcontractor is allowed in accordance with the Article 2/6-7 of the Labour Law No. 4857, although it is provided in administrative and technical conditions of contracts that the subcontractor shall take the opinion of approval from the administration, in choosing and changing the employees; and that the place of performance shall not be changed without the knowledge of the subcontractor, acting in accordance with the will of the administration while determining the durations of annual leaves; such regulations should be considered normal due to the joint liability of the principle employer against employee claims, work safety and audit mandate of the principle employer. For this reason, above mentioned provisions does not show that the practice of subcontracting collusive. According to the available evident, there is valid and non-collusive subcontracting relationship contract existing.” (Court of Appeals, 9. HD. 2009/42282 E. 2010/6655 K.)
• According to the content of the file, it is evident that the defendant employer enters into contracts with subcontractors in order to have 15 employees working in the field works, by making of a tender every year. It is also evident that the claimant has been employed at the same work place of the defendant employer as a subcontractor employee although the subcontractors have been changed. The witnesses of the claimant assert that the subcontractor’s employees have been employed under the instruction and supervision of the defendant employer. This assertion is not enough for determining whether the relationship between the subcontractor and the principle employer is based on collusion. In order to come to a conclusion as to whether the subcontracting relationship is collusive, it is required to obtain records of Trade Registry, Social Security Authority and Tax Rolls with respect to the subcontractors who had been notified of the lawsuit, and also to determine whether the companies undertakes works by way of tenders other than the defendant workplace, and whether their commercial activities are registered or not, an investigation must be conducted within the workplace and the records of workplace and the contract between the defendant and the companies notified of the lawsuit should be examined within the scope of Article 2/6 of the Labour Law and expertise reports which are covering these issues and available for audit should be obtained. It is wrongful to come to a conclusion based on only witness statements with a partial investigation. ( 9th Civil Chamber of Court of Appeals 2006/32217 E. 2007/3258)
When it is taken into consideration the decisions of Court of Appeals in this aspect, due to the responsibility of the principle employer with respect to the health and safety at work, the instructions of the principle employer to the subcontractor’s employers should not be considered as collusion. Likewise, since a harmony is required in the management of the work due to the technical dependence between the work performed by the principle employer and the work performed by the subcontractor; it should not be considered as collusion that; the principle employer gives instructions to the subcontractor’s employees like he does to its own employees and that the principle employer is obliged to apply the disciplinary rules to all employees as a requirement for the order at the workplace during the production process.
When the varying decisions of the Court of Appeals is taken into consideration, it must be accepted that only the principle employer’s giving instructions and supervision over the subcontractor employees will not give rise to collusion in the subcontracting relationship. The existing relationship must be examined thoroughly and it must be evaluated whether there are any other facts constituting a collusive relationship.
3. PROBLEMS FACED FREQUENTLY IN PRACTICE – SUBCONTRACTING RELATIONSHIPS WITH SERVICE CORPORATIONS AND COLLUSION
In practice, auxiliary tasks helping the main task at the workplace such as food service, cargo handling, packaging, cleaning, security, maintenance, garden arrangement, is given to the service corporations under names such as ‘staff management and subcontracting services’. Such companies have been engaging in subcontracting relationships for long years, in accordance with the definition in the law with respect to the auxiliary tasks.
However, over the course of time, upon the strong demands of the employers in order to decrease the costs, such service corporations has started to enter into subcontracting agreements for works which are not within the scope of their activity field and even started to become a part of the works related to the production and enter into subcontracting agreements for such works. Such corporations, of which the examples have been faced frequently over the last decade, actually have been serving only to provide employee and take these employees under their own pay rolls. In other words, the management of the work in an operational aspect is undertaken by the principle employer. As a result, there is no doubt as to the existence of a collusive and accordingly invalid subcontracting relationship. Likewise, the prejudication precedent of the Court of Appeals in that aspect is as follows;
• It is stated in the agreement dated 12.03.1999-12.31.2008, concluded between the respondent company and extrajudicial İ. Personal Yönetimi ve Taşeronluk Hizm. Ltd. Şti., that the labour services related to production of rubber and plastic hose of defendant company shall be provided by extrajudicial İ. Personal Yönetimi ve Taşeronluk Hizm. Ltd. Şti. While the plaintiff was working on the performance of the tasks within the scope of the aforesaid agreement, the employment agreement has been terminated by the defendant employer. In the sixth paragraph of Article 2 of the Turkish Labour Law No. 4857, it is set forth that; “The connection between the subcontractor who undertakes to carry out work in auxiliary tasks related to the production of goods and services or in a certain section of the main activity for reasons of technological expertise due to operational requirements in the establishment of the main employer (the principal employer) and who engages employees recruited for this purpose exclusively in the establishment of the main employer is called “the principal employer-subcontractor relationship”. It is also provided in the last paragraph of the Labour Law that “The main activity shall not be divided and assigned to subcontractors, except for the jobs requiring expertise for technological reasons, operational and work-related requirements.”
Accordingly, it is not only possible for the main activity tasks to be given to the subcontractor by way of dividing the main task except for the tasks requiring expertise due to operational requirements and for technological reasons, but also not possible for the agreements that are entered into with the purpose of employee recruitment, to be considered within the scope of aforesaid provisions. It is clear that the above mentioned task given to the extrajudicial company by way of a contract is the main activity task of the respondent company.
It is also not proven that there is a task requiring expertise due to operational requirements and for technological reasons. When also taking into consideration that the employment agreement has also been terminated by defendant company, it should be accepted that the agreement concluded between the defendant company and the extrajudicial İ. Personel Yönetimi ve Taşeronluk Hizm. Ltd. Şti., is invalid and there is no subcontracting relationships between them. Therefore, the defendant company is the only and actual employer of the plaintiff and it should be accepted that the plaintiff simulated as the employee of the extrajudicial company on the social insurance registry, is based on a collusive transaction. Collusion as a fact should be taken into consideration ex officio. (9th Civil Chamber of Court of Appeals 2006/ 32217 E. 2007/ 3258 K)”
4. DETERMINATION OF THE COLLUSIVE TRANSACTION AND ITS CONCEQUENCES
In case of a valid subcontracting relationship constituted in accordance with the criteria set forth in the Labour Law, in such relationship, the principle employer will be jointly responsible with the subcontractor for the employees of the subcontractor regarding that workplace with respect to the obligations arising from the Labour Law, employment agreement or the collective labour agreements of which the subcontractor is a party. If the principle employer had been under an obligation of making a payment to the subcontractor’s employee due to this responsibility and made such payment, he will be able to extend a recourse claim to the subcontractor for such amount by relying on the provisions of subcontracting agreement. However, in case of collusion in subcontracting relationship, the subcontracting agreement will be considered as never done and the employees of the subcontractor will be considered as the employees of the principle employer from the beginning of the agreement. In this case, there will be no several and joint liability of the subcontractor. Thus, in a collusive subcontracting relationship, the principle employer will have the single liability for the labour claims of the subcontractor’s employees starting from the date of their recruitment.
In the collusive subcontracting relationship, since the subcontractor does not have the title as an employer, he shall have no title as a party in proceeding related to reinstatement lawsuit. Likewise, the exemplary decision of 9th Civil Chamber of Court of Appeals 2007/16559E. 2007/30529K. related to the subjects is as follows;
• “The plaintiff claimed for his reinstatement and for the invalidity of the employment contract’s termination. Although it is not understood from file contents whether there is a written subcontracting agreement has been concluded or not between the defendants, according to witness statements it is understood that a certain section of the main activity is exercised by the defendant company ‘Y… Ltd. Şti.’ who is stated to be the subcontractor. Whereas the aforesaid task is not proven to be one that requires expertise due to technological reasons, according to the workplace registry records of plaintiff, it is seen that the Board Chairman and the General Director of defendant B… T.A.Ş. has given approval for the plaintiff’s recruitment. In accordance with the present facts, it is understood that the subcontracting application between defendants is based on collusion. Therefore, the lawsuit brought against the defendant Y.. Ltd. Şti. who has no title of employer, shall be rejected in terms of hostility. It has been wrongful of the Court to render a verdict as if there is a valid subcontracting relationship between the defendants.”
It is emphasized that the subcontractor does not hold the title as an employer in a collusive subcontracting practice.
In another decision of 9th Civil Chamber of Court of Appeals it is stated that;
• “Bringing of a lawsuit for the contract’s termination and reinstatement against both the subcontractor and the principle employer in a subcontractor relationship, with no collusion, the plaintiff employee is an employee of subcontractor and as the employment agreement is terminated by the subcontractor, the liability with respect to the invalidity of the termination and the reinstatement belongs to the subcontractor. As the principle employer does not have the title of a party to the employment agreement between the subcontractor and the employee, there cannot be any liability of the principle employer in terms of the reinstatement. After the reinstatement decision, principle employer shall have joint liability with the subcontractor for the compensation of nonreinstatement and the salary for the time spent unemployed up to 4 months due to the non-reinstatement of the employee by the subcontractor upon the employee’s application in accordance with the above mentioned provision.”
With this decision, the consequences of the reinstatement suit are regulated in case there is no collusion.
In a recent decision of 22th Civil Chamber of Court of Appeals 2012/28980 E. 2013/435 K. it is stated that;
• “When it is concluded that the termination has not been based on the valid reason, if it is understood that the subcontracting relationship has been based on collusion, it should be decided that the employee should be reinstated at the workplace of the principle employer. In case it is understood that there is no collusive subcontracting relationship, it should be decided that the employee should be reinstated at the workplace of the subcontractor and the principle employer would be liable for the legal rights with the subcontractor.”
With this decision, it is ruled that, in a reinstatement lawsuit, in case of the determination of a collusion, it should be decided that the employee shall be reemployed by the principle employer; in case of determination that there is no collusion, it should be decided that the employee should be reemployed by the subcontractor and that the subcontractor and the principle employer shall have joint and several liabilities in terms of pecuniary liability.
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