ABSTRACT
In this article, if the agreed penalty clause is deemed invalid in employment contracts that are considered indefinite-term and not fixed-term employment contracts, it is evaluated whether it is possible for the employer to claim this invalidity.
I. INTRODUCTION
In this study, the concepts regarding the Decision (“Decision”) dated 08.03.2019 and numbered 2017/10 E. and 2019/1 K. of the Court of Cassation General Assembly on the Unification of Judgments (“Court”), which was taken in order to eliminate the difference of opinion and different practices that arose between the Supreme Court Assembly of Civil Chambers, 9th Civil Chamber and 22nd Civil Chamber, and the said decision will be examined.
II. REVIEW OF JUDGMENT
A. Dispute and Legal Issue
In labor law, indefinite-term employment agreements are the rule and fixed-term employment agreements are the exception, limited to the existence of objective conditions stipulated in the law. Therefore, employment agreements that are established for a definite term without the necessary objective conditions are deemed to be of indefinite duration in order to protect the employee.
One of the issues that is subject to the decision and that needs to be evaluated is whether the penalty clause in employment agreements that are deemed to be of indefinite duration due to the lack of objective conditions will face the sanction of invalidity, and whether the employer’s request to refrain from paying the penalty clause by claiming that the agreement should be deemed to be of indefinite duration will be contrary to the rule of good faith.
As will be mentioned when analyzing the decision, the principle that dominates the Law of Obligations is the principle of freedom of will and, as a reflection thereof, the principle of freedom of contract. According to Article 26 of the Turkish Code of Obligations (“TCO”), “The parties may freely determine the content of an agreement within the limits prescribed by law.”
In accordance with these principles, it can be said that the parties may freely determine the content of the agreement in the absence of any violation of law. However, this principle is not absolute and is subject to certain limitations. According to Article 27/1 of the TCO, “Contracts that are contrary to the mandatory provisions of the Law, morality, public order, personal rights or whose subject matter is impossible are absolutely null and void.”
Another provision that will affect the conclusion to be reached while examining the decision is regulated in paragraph 2 of the same provision. Accordingly, “The invalidity of some of the provisions contained in the agreement shall not affect the invalidity of the others. However, if it is clearly understood that the agreement cannot be concluded without these provisions, the whole agreement shall be absolutely null and void.”
Therefore, while evaluating the decision, the will of the legislator to keep the agreements alive should also be taken into consideration. Therefore, whether the sanction of partial invalidity should be applied here is subject to legal dispute.
B. Fixed-Term Employment Agreement
Article 8 of the Labor Law No. 4857 (“Labor Law”) defines an employment agreement as “an agreement whereby one party (the employee) undertakes to perform work dependently and the other party (the employer) undertakes to pay wages”.
Again, Article 393/1 of the TCO defines an employment agreement as “a contract in which the employee undertakes to perform work for a definite or indefinite period of time dependent on the employer and the employer undertakes to pay wages to the employee according to the time or work performed”.
Based on these definitions, it can be said that the elements of an employment agreement are performance of work, remuneration and dependency.
Pursuant to Article 11 of the Labor Law, a fixed-term employment agreement is “an employment contract concluded in writing between the employer and the employee for fixed-term work or subject to objective conditions such as the completion of a certain work or the occurrence of a certain event”.
In fixed-term employment agreements, the parties determine the moment when the agreement will expire at the stage of the establishment of the agreement. In other words, agreements where the date of expiry of the agreement is known or foreseeable by the parties during the establishment of the agreement are called fixed-term employment agreement1.
Although the parties may freely determine the content of employment agreements, these agreements may only be concluded in accordance with the limitations imposed by law. Based on this and considering the definition in Article 11 of the Labor Law, it is seen that the freedom of contract of the employee and the employer is limited by law. In order to establish agreements that comply with these limitations, the existence of objective conditions mentioned in the law will be sought in the agreement. Apart from this, the agreements made by the parties by specifying only a certain date range will not be considered sufficient to be qualified as fixedterm. In order for the relevant conditions to be met, as stated in the Labor Law, the existence of conditions such as the work being for a certain period of time, the completion of a certain work or the occurrence of a certain fact is required, and only in these cases, the employment agreements established will retain their fixed-term characteristic.
The first objective condition is that the work must be fixed-term. What is meant here is that the duration of the work is known or knowable at the time of the establishment of the Agreement2. For example, an employment agreement to be established for the campaign of a brand can be considered fixedterm. The specific period of time mentioned can be determined in terms of time, or such agreements can be established with the fiction that the agreement will end with the realization of the purpose by determining a purpose.
The second objective condition is that it is for the completion of a specific work. This refers to an employment agreement to work on a job that will end as soon as it is completed, rather than a job that continues over time. For example, the completion of a construction project or the completion of a project.
The third objective condition is the occurrence of a certain fact. What is meant here is fixed-term employment agreements established for the purpose of providing temporary labor force that may be needed due to a phenomenon that arises outside the normal activities of the relevant workplace or outside of an ongoing situation. Examples of this situation are situations such as making an agreement with another employee for a certain period of time instead of the employee who is on leave for reasons such as illness, pregnancy, military service.
In addition, although these conditions are not listed as limiting in the Labor Law, it is stated that they are listed by way of example as “similar cases”. Therefore, it may be possible to establish a fixed-term employment agreement in case of the occurrence of facts similar to the aforementioned cases.
In addition to these cases, it is assumed that objective conditions exist when the Law stipulates that the agreement must be of a fixedterm nature. For this reason, the existence of objective conditions will not be sought in agreements where the Law stipulates a fixedterm agreement.
C. Chaining of a Fixed-Term Employment Agreement
Another possibility that should be mentioned while examining the decision is that, pursuant to Article 11/2 of the Labor Law, employment agreements that are established in succession will be deemed to be indefinite-term employment agreements from the beginning, even if the fundamental reason that existed at the time of the establishment of the agreement does not continue. As can be understood from the wording of the law, if the reason for a fixed-term employment agreement that meets the objective condition continues or a new reason has emerged, these agreements will be renewed and will not turn into an indefinite-term employment agreement.
D. Consequences of a Fixed-Term Employment Agreement
Due to their nature, fixed-term employment agreements terminate automatically upon the expiration of the specified period without the need for a notice of termination. In such agreements, the employee will not be entitled to severance pay and will not be able to benefit from the notice period stipulated in indefinite-term employment agreements in cases where the agreement is terminated upon the expiration of the specified period. In addition, since employees working under fixed-term employment agreements will not be covered by job security, they will not have the right to file a reinstatement lawsuit3. Nevertheless, if the employer terminates the employment agreement without just cause before the specified period, the employee will be able to claim the remaining period wage and, if agreed in the agreement, the employer will be obliged to make a payment to the employee in the amount of the penal clause due to unfair termination before the specified period.
III. PENAL CLAUSE IN FIXED-TERM EMPLOYMENT AGREEMENTS
The concept of penalty clause, which can be expressed as an institution that forces the debtor to perform, is regulated between Articles 179 and 182 of the TCO, and there is no definition of the penalty clause in the relevant articles.
Although the definition of the penal clause is not included in the Labor Law, the provisions of the TCO, which is a general law, will also be valid in labor law.
According to one definition in the doctrine, a penalty clause is “a separate performance with a financial value that must be paid in case of non-performance or incomplete performance of the existing debt”4. In another definition, it is stated as “a penalty clause is the debtor’s commitment to the creditor to make a pre-agreed performance in the event that the debt is not performed at all or properly”5.
A penalty clause is an ancillary obligation and its validity depends on the validity of the principal obligation. Pursuant to Article 182 of the TCO, if the principal obligation is invalid for any reason, the penalty clause cannot be demanded. However, the subject matter of the penalty clause is independent from the performance that constitutes the subject matter of the principal obligation, and this agreed performance must have an economic value.
The purpose of setting a penalty clause in agreements is to guarantee the performance of the principal obligation and to determine the damage that will arise if the obligation is not fulfilled. If a penalty clause is agreed in the agreement, the creditor will be able to obtain compensation without the obligation to prove the damage suffered.
One of the most widely used areas of penalty clause is labor law. Since there are power imbalances between the parties in labor relations, it is necessary to make arrangements in accordance with the principle of reciprocity in the penalty clause. Likewise, pursuant to Article 420 of the TCO, penal clauses in employment agreements that are imposed only against the employee shall be deemed invalid. As a matter of fact, as will be frequently mentioned in the decision, one of the dominant principles of labor law is the “principle of interpretation in favor of the employee”. Therefore, for example, a penal clause that does not have the element of reciprocity and is subject to the agreement only against the employee will be deemed invalid, whereas a penal clause only in favor of the employee will also be deemed valid6.
As a reflection of the same principle, in the event that the penal clause stipulated in the agreement against the employee exceeds the amount and conditions of the penal clause stipulated for the employer, the employee’s liability will be deemed valid, provided that it does not exceed the amount of the employer’s liability.
In some cases, penal clauses are stipulated in employment agreements in an unfair amount without taking into account the economic situation of the employee. In these cases, if deemed necessary, pursuant to Article 182/3 of the TCO, the judge may ex officio reduce the amount of the penalty clause that he deems excessive.
IV. OPINION OF THE 9TH CIVIL CHAMBER OF THE COURT OF CASSATION
The 9th Civil Chamber of the Court of Cassation is of the opinion that a penal clause may be stipulated in fixed-term employment agreements and that the parties may stipulate a penal clause in indefinite-term employment agreements by agreeing on a minimum working period. On the other hand, the same Chamber is of the opinion that a penalty clause linked to the duration cannot be stipulated if no duration is specified in the agreement. The main emphasis here is that although the parties intend to establish a fixed-term employment agreement, the penalty clause is not valid since the employment agreement that does not contain any of the objective conditions listed in the Law will be deemed indefinite-term, and the reason for this is that the penalty clause stipulates a sanction for the fulfillment of the specified condition, and if the agreement is accepted as indefinite-term, it will not be possible to apply the penalty since the condition of working for a certain period of time that can be mentioned will not be fulfilled. According to this opinion, a fixed-term employment agreement and a minimum-term employment agreement have the characteristics of atypical agreements, and when the parties establish an agreement without making such a qualification, it will not be correct to transform the agreement that does not meet the objective conditions into a minimum-term employment agreement, and the penal clause provisions related to the termination before the expiry of the term, which are the subject of the decision, will be invalid in the employment agreement that does not contain objective conditions and also does not mention the minimum term.
A. Parallel Opinions in the Doctrine
Based on a decision of the Court of Cassation, Ekonomi7, who is of this opinion in the doctrine, argues that the penalty clause for the period specified in the agreement should no longer be applied after the chain employment agreements are converted into indefinite-term employment agreements, and if a penalty clause is agreed upon in case of unfair termination of the employment agreement established by agreeing on a certain period of time, if the objective conditions continue when the employment agreement is renewed, it will remain valid like the other conditions in the agreement; On the other hand, in cases where a fixedterm employment agreement is renewed and the objective conditions are no longer met, the successive employment agreement will be deemed to be of indefinite duration from the beginning, and it will not be possible to talk about a penal clause that can be applied in case of non-compliance with the fixed term, and termination with notice and all other related consequences will be applied in the termination of the agreement. On the other hand, for example, in the event that the employment agreements renewed pursuant to Article 339/1 of the Code of Obligations numbered 818 (“CO”) after the expiry of the fixed term in the employment agreement established for two years continue to be valid in the event that there is a just cause, the penal clause, which was determined as two years at the establishment of the agreement, will continue for one year due to the renewal of the employment agreement, and the judge may use his discretionary power and make a reduction due to Article 161/3 of the CO8.
Once again in the doctrine, Gümrükçüoğlu is of the opinion that the penal clause will lose its validity in the event that the agreement is transformed into an indefinite term for the same reasons, and that the penal clause will remain valid in the case of a successive employment agreement, provided that objective conditions are met9.
V. OPINION OF THE 22ND CIVIL CHAMBER OF THE COURT OF CASSATION
Contrary to the opinion of the 9th Civil Chamber of the Court of Cassation, the 22nd Civil Chamber of the Court of Cassation, in its opinion on the subject, argues that one of the basic principles of the law of obligations is to keep the agreements alive and to protect their validity, and therefore, even if there are no objective conditions that require the employment agreement to be considered as fixed-term, the elements of reciprocity and equivalence will come into play at this point, and if these elements are present, the penalty clause should not be considered invalid. As a matter of fact, the relevant Chamber argues that when the will of the parties are united on the penalty clause within the framework of the principle of freedom of contract, which is one of the basic principles of the law of obligations, this provision will not contravene Article 27 of the TCO.
In this case, the invalidity of the period determined in the agreement should not affect the validity of the provision regarding the penal clause to prevent the unfair termination of the agreement within the specified period, since the fixed term of the agreement is related to the life of the agreement and the penal clause, which provides protection for the unfairness of the termination, is intended to prevent the unfair termination of the agreement before the specified period, In other words, it is argued that the objective conditions that justify the conclusion of a fixed-term employment agreement and the validity conditions of the penalty clause are separate, and the invalidity of the penalty clause should not result from the invalidity of the agreement due to the absence of objective conditions. Here, it is stated that the wills regarding the penalty clause agreed by the parties should be kept alive and it is necessary to accept that the provisions containing penalty clauses are valid as a rule in the presence of the principle of reciprocity.
A. Parallel Opinions in the Doctrine
When the issue of the validity of the “penal clause due to unfair termination before the expiry of the term” is discussed in the doctrine, it is necessary to include the opinions that are in parallel with the opinion of the 22nd Civil Chamber of the Court of Cassation; firstly, Süzek, in his opinion on the subject, interpreted within the framework of a decision of the Court of Cassation10 and asserted that the penal clause would be valid. In this case, Süzek, in parallel with the opinion expressed in the cited decision, draws attention to the freedom of contract and states that the essence of the parties’ right of termination should not be touched and that even if the employment agreement is deemed to be of indefinite duration because it does not meet the necessary objective conditions, the employer is required to terminate the employment agreement without just cause. In addition, the employer who establishes a fixed-term employment agreement without objective conditions and later claims that the agreement will be deemed as indefinite-term due to the failure to pay the wage for the remaining period and the penalty clause will be contrary to the rule of honesty and the prohibition of contradictory behavior, which is a special manifestation of the prohibition of abuse of right pursuant to Article 2 of the Turkish Civil Code (“TCC”) and the prohibition of contradictory behavior, which is a special view of the prohibition of abuse of right11.
Baycık, referring to the same decision, argued that the invalidity of the agreement due to the absence of objective conditions for the establishment of a fixed-term employment agreement and the penal clause for wrongful termination within the agreed period should be separated from each other. As a matter of fact, the will of the employee and the employer, when concluding a fixed-term employment agreement, is to provide job security to the employee for the agreed period and to guarantee the performance of the employee’s work for the employer for that period. Therefore, since the intention of the parties when agreeing on the penalty clause is only for the termination of the agreement for just cause, and that the agreement will continue in cases where there is no just cause, the agreed penalty clause is foreseen as a means of pressure in order to ensure the performance of the agreement. Therefore, according to Baycık, the invalidity of the penalty clause stipulated by the parties in order to guarantee the performance of the agreement should not be in question. In addition to this, Baycık states that it is also possible for the parties to agree on a penalty clause against the unjust termination of the agreement in indefinite-term employment agreements, and argues that the exercise of the right of termination during the agreed period, even if the employee and the employer have legitimate or valid reasons, will not change the necessity to pay the penalty clause12. The basis of Baycık’s opinion can be interpreted as the fact that the employee is in an economically weak position and therefore it is necessary to defend the personal rights of the employee and the protection of the employee in order to guarantee his economic future is seen as a requirement of equity. Since the restriction is limited to a certain period of time, it would not be fair to say that it violates the freedom of the employer.
According to Alpagut, who is of the same opinion, although the sanction of the violation of Article 27 of the TCO is regulated as nullity if the employment agreement is deemed to be of indefinite duration because it does not meet the objective conditions required for it to be of definite duration, the relevant provision should be eliminated when such a situation is encountered. According to this provision, in cases where the invalidity of a part of the legal transaction is claimed, the entire transaction is deemed invalid if it leads to the inference that the transaction would not have been realized without this part. At this point, the Labor Law aims to protect the contractual relationship by separating the provision regarding the duration determined in fixed-term employment agreements from the other parts of the agreement. Otherwise, while it is aimed to protect the employee within the framework of the principle of interpretation for the benefit of the employee, which is one of the principles of labor law, greater damages will arise for the employee with the elimination of the agreement. According to Alpagut’s opinion, there are two problems that may arise here. Firstly, it should be investigated whether it is appropriate to consider the agreement as indefinite-term from the beginning, assuming that it does not meet the necessary objective conditions, and secondly, it should be determined whether the employer’s later assertion of the contradiction in this agreement, which was established unlawfully, is compatible with the rule of honesty within the framework of Article 2 of the TCC. As is known, the intention of the legislator is that the judge should be obliged to take into account the unlawfulness even in the event that the parties do not object to the indefinite duration of the agreement. At this point, the purpose of the legislator is to ensure that the rights subject to termination are not eliminated. The reason for this is that the employer has aroused a trust in the employee by demonstrating its will to continue the agreement for the specified period of time during the establishment phase of the agreement. For this reason, Alpagut’s opinion is that in the absence of objective conditions, it would not be appropriate for the judge to consider this situation ex officio and that the assertion of this situation by the employer would not be in line with the rule of honesty13.
Finally, Alp, approaching the issue from a different perspective, states that the sanction for the absence of objective conditions is the transformation of the agreement into an indefinite term; however, despite the mandatory legal provision, if the court conducts an ex officio examination on this issue, the conclusion to be reached may not be in accordance with the principles governing labor law. As mentioned in the previous opinions, since the purpose of labor law is to protect the employee, it can be said that the employer’s claiming the invalidity of the agreement in order to obtain a result in his favor after establishing the agreement for a definite term would be contrary to the rule of honesty and may even be considered as an abuse of right. For these reasons and due to the fact that the purpose of labor law is to protect the employee, according to Alp, it should be accepted that only the relevant party should benefit from the sanction of acting contrary to the law, The authority to claim that the agreement is of indefinite duration would belong only to the employee, and even for the same purpose, ex officio observation of the absence of objective conditions would not be compatible with the principles of labor law, and only if the employee claims that the agreement should be examined whether the agreement should be converted into an indefinite term or not, or as another solution, even in the event that the employment agreement established by the parties for a definite term turns into an indefinite term. It is of the opinion that during the period specified in the agreement, the agreement can be considered as a minimum term employment agreement and that it would be appropriate for the parties not to use the right of termination during this period, and that the will of the parties at the establishment stage of the agreement should not be ignored14.
VI. OPINION OF THE COURT OF CASSATION GENERAL ASSEMBLY ON THE UNIFICATION OF JUDGMENTS
According to the opinion of the Court of Cassation General Assembly on the Unification of Judgments, in the event that the employee and the employer conclude an employment agreement for a definite term and stipulate a “penalty clause for unjust termination before the expiry of the term” in the agreement, the sanction should be partial invalidity pursuant to Article 27/2 of the TCO, the will of the parties should prevail and the penalty clause should be deemed valid limited to the agreed term, even if any of the objective conditions listed in the Labor Law are not present and the agreement is deemed to be for an indefinite term.
According to the Court, the purpose of a fixed-term employment agreement is to provide job security for the employee and to guarantee the employer the performance of the work to be performed by the employee. In this way, the employee and the employer prevent the termination of the agreement without just cause. In line with these purposes, the parties have agreed on a penalty clause in the agreement, and since there are no objective conditions, the acceptance of the agreement for an indefinite term should not override the will of the parties and should not lead to the invalidity of the penalty clause.
VII. OUR OPINION
In my opinion, with regard to the “penal clause due to unjust termination before the expiry of the term” clause agreed in employment agreements that are established for a definite term but are deemed to be indefinite term because they do not meet any of the objective conditions listed in the Law, it should be noted that both the principle of interpretation in favor of the employee and the possibility of the employer claiming the invalidity of the agreement in violation of the rule of honesty after the employer establishes a fixed-term employment agreement knowing the situation should be taken into consideration. It is also stated that the sanction of partial invalidity should be applied to such penalty clauses and that this is a necessity for the protection of the employee and that this will create more reasonable results in order to protect the freedom of agreement of the parties, and in these cases, the penalty clause to be determined in proportion to the duration of the agreement should be deemed valid.
Therefore, although I believe that the decision of the Court of Cassation General Assembly on the Unification of Judgments is appropriate, I believe that it is possible to demand a penal clause in such agreements, provided that the essence of the right of termination is not touched. As a matter of fact, as emphasized in the doctrine, in the event that the employer asserts the invalidity of the agreement contrary to the rule of honesty, the possibility that the employer may make such a statement in order to avoid paying the remaining period wage and penal clause supports this. For these reasons, I argue that the penal clause can be claimed in cases of termination without just cause, even if the employment agreement turns into an indefinite term if it does not meet the necessary objective conditions.
VIII. CONCLUSION
Following the evaluation of the opinions of the Civil Chambers on the validity of the penalty clause, the opinions in the doctrine and the decision of the Court of Cassation General Assembly on the Unification of Judgments, the conclusion can be summarized as follows it is concluded that the employee and the employer have agreed on a penalty clause for a certain period of time with their common will at the stage of the establishment of the agreement, and during this process, in the event of termination by the employee or the employer without just cause, the party who performs the wrongful termination must pay this penalty to the other party, and in the absence of the objective conditions required for the agreement to be of a definite term, the penalty clause will maintain its validity and claimability, limited to the period agreed in the agreement, even if the agreement is deemed to be of indefinite duration.
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FOOTNOTE
1 Yeliz Bozkurt Gümrükçüoğlu, Türk İş Hukuku’nda Belirli Süreli İş Sözleşmeleri, İstanbul 2012, p. 15.
2 Haluk Hadi Sümer, “Özel Öğretim Kurumu Öğretmenlerinin İş Sözleşmelerinin Hukuki Niteliği, Prof. Dr. Turhan Esener’e Armağan”, İstanbul Kültür Üniversitesi Hukuk Fakültesi Dergisi, Special Edition, V. 15, I. 1, Ocak 2016, p. 425.
3 Nuri Çelik/ Nurşen Caniklioğlu/ Talat Canbolat, İş Hukuku Dersleri, 29th Edition, İstanbul 2016, p. 129.
4 Kenan Tunçomağ, Türk Hukukunda Cezai Şart, İstanbul 1963, p. 6.
5 Cevdet İlhan Günay, Cezai Şart, Ankara 2002, p. 5.
6 Yargıtay 9. H.D., T. 13.9.2021, E. 2021/7222, K. 2021/11608.
7 Yargıtay 9. H.D., T. 17.11.1993, E. 1993/15152, K. 1993/16726.
8 Münir Ekonomi, “Belirli Süreli Hizmet Akdinin Susma ile Yenilenmesi”, İş Hukuku Dergisi, V. 3, I 3, p. 565-571.
9 Gümrükçüoğlu, p. 362.
10 Yargıtay 22. H.D., T. 29.11.2016, E. 2015/18939, K. 2016/26066.
11 Sarper Süzek, İş Hukuku, İstanbul 2018, p. 729,730.
12 Gaye Baycık, “İş İlişkisinin Kurulması, Hükümleri ve İşin Düzenlenmesi”, Yargıtay’ın İş Hukuku ve Sosyal Güvenlik Hukuku Kararlarının Değerlendirilmesi Semineri 2016, İstanbul 2018, p. 185-190.
13 Gülsevil Alpagut, “İş İlişkisinin Kurulması, Hükümleri ve İşin Düzenlenmesi, Yargıtay’ın İş Hukuku ve Sosyal Güvenlik Hukuku Kararlarının Değerlendirilmesi 2014, İstanbul 2017, p. 43-48.
14 Mustafa Alp, Yargıtay’ın İş Hukuku ve Sosyal Güvenlik Hukuku Kararlarının Değerlendirilmesi 2013, İstanbul 2017, p. 178-185.
