1. INTRODUCTION
Job security provisions constitute one of the
fundamental mechanisms aimed at preventing the arbitrary or unjust termination
of an employee’s employment contract and protecting the employee in cases where
the termination is deemed invalid. One of the most important instruments under
these provisions is the reinstatement lawsuit, which is specifically set out between
Articles 18 and 21 of Labor Law Nr. 4857. In particular, Article 21 elaborates
in detail on the consequences of a dismissal made on invalid grounds.
According to Article 21 of Labor Law Nr. 4857 reading
as follows: “If the employer fails to present a valid reason or if the
reason presented is found by the court or a private arbitrator to be invalid,
and the dismissal is declared null and void, the employer is obliged to
reinstate the employee within one month.” As can be seen, in cases where
the dismissal is deemed invalid, the employer is required to reinstate the
employee within one month. This provision demonstrates that a reinstatement
lawsuit is not solely aimed at monetary compensation but also seeks, to the
extent possible, to ensure the continuation of the employment relationship.
However, the legislator also anticipated the
possibility that the employer might not actually reinstate the employee in
every case and provided a specific sanction for such situations. Accordingly,
if the employee applies to the employer to be reinstated within ten working
days as of the notification of the final court decision, and the employer still
fails to reinstate the employee within one month, the employer is obliged to
pay the employee a non-reinstatement compensation equivalent to a minimum of
four months’ and a maximum of eight months’ salary. This compensation
constitutes the legal consequence of the employer’s failure to comply with the
reinstatement obligation and serves as a deterrent element within the job
security system.
Moreover, the consequences of a reinstatement lawsuit
in favor of the employee are not limited to non-reinstatement compensation.
Pursuant to the third paragraph of the Law, the employee is also entitled to
receive wages and other rights accrued for the period during which they were
not employed, up to a maximum of four months, until the decision becomes final.
This payment, referred to in doctrine and practice as “wages for the idle
period”, aims to partially compensate for the income loss suffered by the employee
due to the invalid dismissal.
On the other hand, the employee is also subject to some
certain obligations to ensure the proper functioning of the reinstatement
process. If the employee does not apply to the employer to be reinstated within
ten working days as of the notification of the final court or private
arbitrator decision, the dismissal becomes valid, and the employer is only
liable for the legal consequences of a valid dismissal. This provision
demonstrates that the outcome of a reinstatement lawsuit does not automatically
favor the employee and that the process must also be actively pursued by the
employee.
2. THE ISSUE OF THE APPLICABLE WAGE IN REINSTATEMENT
LAWSUITS
One of the most debated issues in practice concerning
reinstatement lawsuits, and a frequent source of claims regarding loss of
rights, is the question of which date’s gross wage should be used to determine
non-reinstatement compensation and wages for the idle period. At the center of
these discussions are the amendments introduced to Article 21 of Labor Law Nr.
4857 by Law Nr. 7036 dated 12.10.2017. These amendments, most recently enacted
by Law Nr. 7036, have introduced a financial determination and mediation
dimension to the reinstatement process.
At this point, the question of which wage should be
taken as the basis in reinstatement lawsuits—whether the wage at the date of
dismissal or the wage at the date of the claim (or mediation)—has become one of
the most debated issues in practice and a matter that can lead to significant
loss of rights. This article, particularly in light of the Court of Cessation jurisprudence
since 2018, will examine the current practice regarding the determination of
the applicable wage in reinstatement lawsuits and the problems arising from
this practice.
3. COURT OF CESSATION PRACTICE BEFORE 2018: THE
“ASSUMPTION OF CONTINUED EMPLOYMENT”
Before the amendments to Article 21 of Labor Law Nr.
4857 by Law Nr. 7036, there was no explicit statutory regulation regarding the
date on which the wage should be determined in reinstatement lawsuits. During
this period, practice was largely shaped by the Court of Cessation’s
jurisprudence; in particular, the approach adopted by the Court of Cessation
with respect to wages for the idle period differed significantly from current
practice.
In the Court of Cessation’s established practice prior
to 2018, in cases of invalid dismissal, the employee’s situation was assessed
as if “the dismissal had never occurred and the employee continued to work.” As
a natural consequence of this approach, when calculating wages for the idle
period, the wage was not considered a fixed amount determined at the date of
dismissal; rather, it was assumed that the calculation should reflect the wage
and other financial rights the employee would have had if they had actually
continued working.
In its decision dated 28.12.2009, and bearing the
Basis number 2009/34595 and the Decision number 2009/37899, the 9th Chamber
of the Court of Cessation held: “For wages and other rights for a period of
up to four months of idle time, the calculation should be made based on the
wages following the dismissal. During the idle period of up to four months
after the dismissal deemed invalid, wages and other rights should be determined
as if the employee had continued working. If there is a wage increase or a new collective
bargaining agreement comes into effect during this period, calculations should
be made separately for each period.” [1] This clearly illustrates the
approach adopted before 2018. Under this approach, when calculating wages for
the idle period, not only the base wage but also wage increases, collective
bargaining agreement increments, bonuses, premiums, and similar financial
rights were taken into account, and the assumption that the employee had
actually worked during the four-month period was applied.
Therefore, under the pre-2018 practice, although the
wage calculation was not technically performed “as of the date of the
decision,” the wage was not frozen. The employee benefited from wage increases
occurring during the four-month period following the dismissal; in other words,
the judicial process was prevented from producing an adverse economic effect
for the employee. This approach appeared to be consistent with the fundamental
principle of employee protection, which is the core purpose of the job security
system.
In summary, under the Court of Cessation’s pre-2018
practice, the issue of which date’s wage should be used did not constitute a
matter of debate in the modern sense; the fundamental principle applied was the
protection of the employee as if they had continued working despite the invalid
dismissal. This approach allowed wages, increases, and financial rights to be
considered dynamically, and the length of the judicial process did not result
in adverse effects for the employee. The “wage as of the date of the claim”
rule introduced after Law Nr. 7036, however, eliminated this dynamic approach
by fixing the wage at a specific date, giving rise to significant disputes in
practice.
4. THE “WAGE AS OF THE DATE OF THE CLAIM” PRINCIPLE
INTRODUCED BY LAW NR. 7036
Law Nr. 7036 on Labor Courts (which came into force in
2018) amended Article 21 of Labor Law Nr. 4857 to introduce the “wage as of the
date of the claim” principle. The paragraph added to the article provides that:
“The court or the special arbitrator shall determine, in monetary terms, the
compensation regulated in the second paragraph and the wages and other rights set
out in the third paragraph based on the wage as of the date of the claim.”
Thus, the legislator has clearly and unequivocally regulated the issue of which
date’s gross wage should be used in calculating both the reinstatement refusal
compensation and the wages for the idle period. The Court of Cessation has also
adopted this amendment as a rule of practice. In recent case law, the Court of
Cessation emphasizes that, particularly in reinstatement lawsuits filed
following mediation, the wage as of the date of the claim must be taken
as the basis for determining compensation.
The legislator’s purpose underlying this regulation is
to eliminate the long-standing uncertainties in the practice of reinstatement
lawsuits and to ensure that monetary amounts in court decisions are determined
in a clear, precise and enforceable manner. Indeed, previously, there were differing
views on whether the wage should be determined based on the date of dismissal,
the date of the court decision, or the date the employee was required to return
to work; this situation created unpredictability for both the parties and
practitioners. By adopting the “wage as of the date of the claim” standard, the
aim was to remove this uncertainty and to limit the impact of the judicial
process on the wage calculation.
Under this new approach, the wages for the idle period
and the reinstatement refusal compensation are calculated not based on the
employee’s wage at the time of dismissal or at the conclusion of the
proceedings, but rather on the employee’s gross wage as of the date the claim
is filed. In this way, the court determines these monetary rights in its
decision using a fixed and definite wage, without taking into account
subsequent increases in wages or changes in economic conditions.
5. THE RIGHTS LOSSES CAUSED IN PRACTICE BY THE “WAGE
AS OF THE DATE OF THE CLAIM” PRINCIPLE
However, this regulation has also given rise to new
debates in practice. In particular, during periods of prolonged litigation and
high inflation, fixing the wage as of the date of the claim may result in the
employee’s inability to recover the economic losses incurred throughout the
course of the proceedings. By their nature, reinstatement lawsuits can be
lengthy; when the first-instance proceedings, appeals, and cassation stages are
considered together, the process often extends over several years. During this
period, the employee does not actually work, cannot earn a regular income, and
frequently has to take temporary jobs with lower wages. Nevertheless, fixing
the reinstatement refusal compensation and the wages for the idle period based
on a wage determined at the outset of the litigation produces a result that is
far from reflecting the economic reality experienced by the employee.
This issue becomes even more pronounced during periods
of high inflation. In an economic environment where wages increase
significantly over short periods, using the wage as of the date of the claim
causes the real value of the compensation to erode over the course of the
proceedings. As a result, the employee, despite having been subjected to an
unlawful dismissal, is effectively penalized a second time due to the prolonged
litigation, with the adverse effects of the delay falling disproportionately on
the employee. The fundamental purpose of the job security system, however, is
to protect the employee economically and socially against an unlawful
dismissal. In contrast, the practice of using the wage as of the date of the
claim produces a predictable and advantageous outcome for the employer. For the
employer, fixing the wage at a specific date eliminates the economic risks
arising from the prolonged litigation; in some cases, the extension of the
process may even become practically advantageous for the employer.
It should also not be overlooked that the “wage as of
the date of the claim” principle represents a significant departure from the
pre-2018 Court of Cessation practice, which adopted the approach that the
employee is to be protected “as if continuing to work.” Under the previous
practice, the wages for the idle period were determined based on the wages and
monetary rights the employee would have earned if they had actually continued
working, taking into account wage increases and collective bargaining agreement
provisions. Under the new practice, however, this dynamic approach has been
abandoned, the wage is frozen at a specific date, and the employee is prevented
from benefiting from subsequent economic developments. This constitutes a
structural change that weakens the protective character of the job security
system.
6. CONCLUSION
The wages and other entitlements for the idle period,
as well as the reinstatement compensation, should be awarded on a gross basis,
with any deductions to be applied at the enforcement stage. For the idle period
of up to four months following the date of the annulled dismissal, the wages
and other entitlements should be determined as if the employee had continued
working. All monetary values the employee would have earned during this period
had they actually continued working should be taken into account. However,
payments that can only arise from actual work, such as overtime pay,
remuneration for work on weekly rest days, public and religious holidays, or
sales-based commissions, cannot be considered part of the “other entitlements”
payable for the idle period of up to four months. [2]
In conclusion, while the “wage as of the date of the
claim” principle introduced by Law Nr. 7036 provides methodological clarity and
facilitates practical implementation in monetary calculations, it remains
insufficient to compensate for the real losses suffered by the employee,
particularly in cases where litigation is prolonged and economic fluctuations
are significant. Freezing the wage at a single point in time prevents the
employee from benefiting from inflationary erosion or wage increases occurring
during the course of the proceedings. This, in turn, undermines the protective
purpose of the job security system and leads to outcomes that are inconsistent
with the level of effective protection required under the principle of a social
state. Within this framework, legal doctrine emphasizes that, in light of
prolonged litigation and economic realities, more flexible approaches should be
adopted in determining the wage, without rigidly adhering to a fixed date. Such
approaches should take into account the specific circumstances of the case and
uphold the principle of interpreting provisions in favor of the employee.
Please note that this article, originally written in
Turkish, has been translated with the support of AI-based tools and then
reviewed and edited by human editors.
Eren Özcan, Legal Intern
References:
1.https://www.lexpera.com.tr/ictihat/yargitay/9-hukuk-dairesi-e-2022-8822-k-2022-11232-t-5-10-2022
