PENAL CLAUSE IN EMPLOYMENT CONTRACT OF DEFINITE DURATION

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Employment contract is an agreement whereby one party (the employee) undertakes to perform working in subordination to the other party (the employer) who undertakes to pay a remuneration. As it clear with the text of the Law, the employment contract consists of performing a work, paying a remuneration and the personal/legal subordination.

Employment contract could be made;

  • For definite – indefinite durations,
  • For minimum- maximum durations,
  • As conditional, with trial period, seasonal,
  • As temporary, permanent
  • As part time and full time,

Penal Clause; Even though the provisions on the penal clause has been included in the old Law of Obligations, the definition of the penal clause has not been made. However, the term “penalty condition” is used instead of “penal clause” in the Turkish Code of Obligations numbered 6098. According to the Article 179 of Turkish Code of Obligations;

“If a penalty is decided for the contract not to be executed at all or properly, unless otherwise understood from the contract, the creditor may request whether the performance of the obligation or the penalty clause.”

Due to the fact that the penalty clause is subsidiary, its existence depends on the existence of the original debt. The debt may arise from an wrongful act, contract or law.

The Effect of The Penal Clause In Terms Of Labor Law;

The Labor Law is one of the most common branches in which the penal clause is applied. As a rule, even though deciding on penal clause in the employment contract is accepted, the penal clause should be determined for both parties. According to the fact that determining the penal clause  about the employee and employer and for both parties, the penal clause determined for the employee should not be more than the one determined for the employer.

Employment Contract of Definite Duration; It is defined in the Article 11 of Labor Law. According to this;

“An employment contract of definite duration is one that is concluded between the employer and the employee in written form, which has a specified term or which is based on the emergence of objective conditions like the completion of a certain work or the materialization of a certain event.”

In employment contracts of definite duration, when the contract is made, the expiration date of the contract is known by the parties. As a rule, the employment contract of definite duration ends automatically after the period specified in the contract has passed without any termination notice. In addition, the employees who work with the employment contract of definite duration could not be included in employment security. Employment contract of definite duration could not be made more than once unless there is a fundamental reason. In other words, it is accepted that an employment contract of definite duration will be turned into an employment contract of indefinite duration if there are not any objective conditions.

In this context, the uncertainty in practice and doctrine about whether the penal clause due to unfair termination before the agreed period in the contract which has become an employment contract of indefinite duration is valid has been revealed with the decision file numbered 2017/10, decision numbered 2019/1 and dated 08.03.2019 of the General Civil Assembly of Unification of Decisions of the Supreme Court. Based on the following reasons and with the majority of votes, it has been decided that by the General Civil Assembly of Unification of Decisions that, “the penal clause for the unfair termination prior to predetermined time period within the employment contract of definite duration which is deemed as an employment contract of indefinite duration due to lack of objective conditions, is valid by being limited to such predefined time period.”

Reasons

  • In all contracts, it is accepted that the parties should act with the belief that the debt will be performed mutually. In employment contracts, due to the nature of the contract that creates a personal relationship, it is extremely important for the parties to maintain the trust on the fact that both the employee and the employer will perform the contract, in other words, the employment contract could not be terminated. The parties of the employment contract, in order to limit the right to terminate the contract by granting the notice priority, include regulations about penal clause in the employment contract.
  • Even though the contract is accepted as an employment contract of indefinite duration since it does not have any objective conditions when the employment contract is concluded by the employee and the employer for a certain period of time and penal clause is foreseen due to unfair termination in the contract, according to the article 27/2 of Turkish Code Of Obligations, it is accepted that the superiority should be given to the will of the parties by applying partial invalidity and the penal clause of unfair termination before the predetermined period is valid for the agreed period.
  • It is accepted that during the period agreed by the parties, the contract could only be terminated with the valid reason and in other situations, if there is not valid reason, the contract should be continued. The parties included the regulation regarding the penal clause which is for the pressure, in the contract. Specifying an employment contract of definite duration as an employment contract of indefinite duration due to lack of objective conditions shall not be deemed as contractual consents of the parties regarding the penal clause is invalidated.
  • It is decided that the penal clause stipulated in the contract in order to ensure that the contract is not terminated without the valid reason for the period determined by the employee and the employer in the employment contract of definite duration, in case of the employment contract of definite duration is accepted as employment contract of indefinite duration since it does not have objective conditions is valid to be limited to the agreed time.
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Mert-Yalcin

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