INTRODUCTION
Transfers of undertakings occur as a result of various legal and organizational processes, such as the sale of a business, mergers and acquisitions, the transfer of a specific activity to another employer, or the transfer of part of a workplace. Such transactions and structures raise questions regarding the status of existing employment contracts on the date of transfer and the principles governing the protection of employees’ rights, as they entail changes on the part of the employer. Article 6 of the Labor Law No. 4857 (“Labor Law”) stipulates that in the event of a transfer of a workplace or a part thereof, existing employment contracts shall be transferred to the transferee employer with all rights and obligations, thereby establishing the continuation of the employment relationship as the rule.
A complementary element of this system is the prohibition of termination due to transfer, which aims to prevent the transfer of the workplace from being used to terminate the employment relationship. Accordingly, the transferring or acquiring employer cannot terminate the employment contract solely due to the transfer, and the transfer does not constitute a valid reason for termination on the part of the employee. However, as an exception, the parties’ rights to terminate immediately for just cause are reserved in cases where economic and technological reasons or changes in the organization of work make it necessary. This article will discuss the impact of workplace transfers on employment contracts, the scope and limits of the prohibition on termination, and working conditions after the transfer.
A. THE CONCEPT OF TRANSFER OF UNDERTAKINGS
Pursuant to Article 6 of the Labor Law, if a workplace or a part of a workplace is transferred to another party based on a legal transaction, the employment contracts existing at the workplace on the date of transfer are transferred to the transferee employer with all rights and obligations. In this respect, the employment relationship is protected as much as possible in the transfer of the undertakings and the continuance of the work is ensured.
However, a change in the employer or operator, or the commencement of operations by another company, does not automatically constitute a transfer of undertaking. For a transfer to be considered a transfer of undertaking, it must be based on a legal transaction, and the transferred structure must be transferred to the transferee within a specific organizational integrity in a manner that preserves its nature as an “undertaking.” In the case law of the Court of Cassation, this assessment is often based on whether the transferred economic entity retains its identity, rather than on the formal nature of the transaction. In other words, the mere fact that the transferee continues the activity in the same or a similar manner is not considered sufficient; how the activity is continued and the organizational structure within which it is carried out are important. Therefore, depending on the specific circumstances of the case, the elements that characterize the workplace (such as tangible assets, organizational structure, workforce, customer base, and contractual relationships) are evaluated together with whether they have been transferred and to what extent the transferee continues to use them.
In this context, while in some sectors the identity of the workplace is essentially determined by machinery, equipment, and physical infrastructure, in other sectors the transfer of labor and the continuation of the organization with the same staff may be more decisive. Likewise, operations may continue uninterrupted after the transfer or may be suspended for a short period, but what matters is whether this suspension and restructuring will undermine the continuity of the economic entity. Therefore, the transfer of a workplace is not reduced to a single criterion but is carried out by evaluating all elements together. Finally, it should be noted that even if some transactions are structured to appear as a “transfer” if the identity of the transferred organization is not preserved or if the activity is established entirely through a new structure, new personnel, and new elements, it may be difficult to determine the transfer of the workplace. Therefore, the existence and scope of a workplace transfer must be determined in each specific case by considering the elements and continuity with which the transferee continues the transferred activity.
B. THE EFFECT OF TRANSFER OF UNDERTAKINGS ON EMPLOYMENT CONTRACTS
In the event of a transfer of the undertakings, existing employment contracts as of the transfer date are transferred to the transferee employer without any additional procedures. This situation does not result in the establishment of a new employment contract or the renewal of the existing contract, but is based on the principle that the employment contract continues with the same content through a change in the parties to the existing employment relationship. Therefore, the rule in the transfer of a workplace is not the termination of employment contracts but the uninterrupted continuation of employment relationships with the transferee employer.
It is stipulated that the transferee employer is obliged to act according to the date on which the employee started working with the transferring employer in terms of rights based on the employee’s length of service. In this context, it is not possible to limit the calculation of rights based on length of service to the employee’s period of employment with the transferee or to “reset” the employee’s seniority due to the transfer. The period before and after the transfer must be considered when making an assessment.
On the other hand, in the case law of the Supreme Court of Appeals, the transfer of a workplace is generally considered to fall within the scope of the employer’s management rights. Therefore, it is accepted that the transfer of a undertakings alone does not give the employee the right to terminate the employment contract for just cause, but that it is necessary to examine whether the transfer has an aspect that makes work conditions more difficult in the specific case. This approach requires that the scope of liability for employee receivables be determined according to the type of receivable. Indeed, while severance pay is generally calculated by considering the service period before and after the transfer together, the liability of the transferring employer is assessed only for the period during which they employed the worker and based on the wage level at the time of transfer. For claims related to termination, such as notice pay and unused annual leave pay, the liability of the last employer generally comes into play. In contrast, for wages and similar periodic labor claims accrued up to the transfer date, both the transferring and acquiring employers are jointly liable under the Labor Law, and the liability of the transferring employer is limited to two years from the transfer date.
Furthermore, the transfer of employment contracts to the transferee with all rights and obligations as a result of the transfer of the undertaking does not legitimize the unilateral alteration of working conditions to the detriment of the employee on the grounds of the transfer. In practice, although changes may be made after the transfer on the grounds of organizational needs, such as changes in job description, work method, or place of work, if the intended change is “substantial” to the detriment of the employee, this change will only be valid within the framework of the procedure set forth in Article 22 of the Labor Law. In this context, the substantial change must be notified in writing, and the employee’s written acceptance must be obtained within the specified timeframe; otherwise, the change will not be effective.
C. PROHIBITION ON TERMINATION DUE TO TRANSFER OF UNDERTAKINGS AND RESERVED TERMINATION RIGHTS
As explained in this article, the Labor Law explicitly stipulates that the transferring or acquiring employer cannot terminate the employment contract solely due to the transfer of the workplace, in order to prevent the transfer of the workplace from being used for the purpose of terminating employment contracts. This regulation aims to prevent the change of employer from becoming a “ground for termination” and the weakening of job security through the transfer process. Under the same provision, it is stated that the transfer of a undertakings does not, in itself, constitute a valid ground for termination from the employee’s perspective, thus clarifying that the transfer does not, as a rule, terminate the employment relationship.
However, the prohibition on termination is not absolute. The legislator has reserved the right of termination for the transferring or acquiring employer where this is necessitated by economic or technological reasons or changes in the organization of work. Therefore, if the employer terminates the employment contract simultaneously with or after the transfer, it must be assessed based on the specific circumstances of the case whether the termination is based “solely on the fact of the transfer” or on a need arising from the requirements of the business or the job that can be objectively demonstrated independently of the transfer. In other words, if the transfer cannot be cited as a reason for termination but the conditions for termination based on valid or justifiable reasons independent of the transfer have been met, termination may be considered within the framework of general provisions.
The same approach applies to employees. Although the transfer itself does not constitute a valid reason for termination, if circumstances arise after the transfer, such as breach of the primary obligations arising from the employment contract, non-payment of wages, or substantial changes in the employee’s working conditions that are contrary to the law, the employee will be able to evaluate the possibility of termination under the general provisions. In this case, the termination assessment should be based on the legal nature of the specific violation or practice that occurs after the transfer, rather than on the fact of the transfer itself.
D. CONCLUSION
Within the framework of the explanations provided in this article, the transfer of a undertakings does not, as a rule, constitute a termination of employment contracts. Rather, it is based on the continuation of the employment relationship through the transfer of all rights and obligations under existing employment contracts to the transferee employer on the date of transfer. Therefore, a mere change of employer or the commencement of activities by another company will not result in a workplace transfer in every specific case; the existence of a workplace transfer will be determined based on the characteristics of the specific case, primarily whether the transferred economic entity retains its identity. On the other hand, in order to prevent the transfer of the undertakings from being used as a means of terminating the employment relationship, the Labor Law clearly stipulates that neither the transferring nor the acquiring employer may terminate the employment contract solely on the basis of the transfer, and that the employee does not have the right to terminate the contract solely on the basis of the transfer. Conversely, within the scope of the cases reserved in the law, the general provisions continue to apply with regard to termination for valid reasons arising from the requirements of the business, the work, and the organization, as well as the parties’ rights to immediate termination for just cause.
REFERENCES
- Labor Law No. 4857
- ASTARLI, Muhittin, “Karşılaştırmalı Hukuk Işığında İşyeri Devrinde İşverenin İşçiyi Bilgilendirme Yükümlülüğü”, TBB Journal, 2013
- DEMİR, Kübra, “İşyeri Devrinde Devreden ve Devralan İşverenin Sorumluluğu”, Marmara University Law Research Journal, Volume 25, Issue 2, 2019
- SEVİMLİ, Atahan, “İşyerinin Devrinin İş Sözleşmesine Etkisi”, Journal of Labor, Industrial Relations, and Human Resources, Volume 7, Issue 1, January 2005
- SÜZEK, Sarper, “İşyeri Devri ve Hukuki Sonuçları”, Dokuz Eylül University Law Faculty Journal, Volume 15, Special Issue 2013, 2014
- Supreme Court of Appeals 9th Civil Chamber, E. 2013/2647, K. 2013/4174, T. 04.02.2013 (Lexpera)
