AMENDMENTS BROUGHT BY THE LABOUR COURTS CODE: MANDATORY MEDIATION REGULATION AND OBLIGATION TO APPLY TO SOCIAL SECURITY INSTITUTION

Labor Courts Code numbered 7036 (“Code”) abolishing Labor Courts Code numbered 5521 has been published on the Official Gazette dated 25 October 2017. By this Code, certain amendments have been also made in the Social Security and General Health Insurance Code numbered 5510.

A mandatory mediation for employment disputes and an obligation to apply to Social Security Institution for the disputes arising from social security legislations were introduced with these amendments.

The aim of these new regulations is to avoid prolonged employment lawsuits and to resolve employment disputes within the shortest time and at a smaller expense.

Scope of the Mandatory Mediation

As a significant amendment, applying for mediation is regulated as pre-condition for the lawsuit under this Code. The obligation of applying for mediation is set forth for lawsuits regarding the employee or employer receivable and compensation and re-instatement claims arising from individual and collective employment agreements. As a result of this change, the lawsuit would be dismissed due to non-satisfaction of pre-condition if it is not applied to mandatory mediation before filing the same. On the other hand, mandatory mediation shall not be applied for pecuniary and non-pecuniary compensation claims arising from occupational accidents and diseases and for objection, recourse and declaratory lawsuits related to these claims.

Within this scope, the claimant must submit, together with its petition, the original or certified copy of the definitive report by the mediator indicating that the parties did not reach an agreement upon the mediation activity. If this obligation is not fulfilled, the court shall send an invitation to the claimant notifying that the definitive report must be submitted within 1 week, otherwise the case shall be dismissed on procedural grounds. If the requirement is not fulfilled, the case shall be dismissed on procedural grounds without the service of the claimant’s petition to the counter party. In case that it is understood that the lawsuit is filed without applying to the mediator, the case shall be dismissed due to non-satisfaction of precondition on procedural grounds without proceeding with any further actions.

As per the above-mentioned provision, with article 11 of the Code, subsections 1 and 3 of article 20 of the Labor Code numbered 4857 are amended as below:

“Pursuant to the provisions of the Labor Courts Code, the employee whose employment contract is terminated, must apply to the mediator for re-instatement claim within 1 month upon the receipt of the termination notice on the basis that a reason is not stated in termination notice or the reason stated in the same does not constitute a valid ground. If there is no settlement in the end of mediation process, a lawsuit can be filed before the Labor Court within two weeks starting from the date which the definitive report were drafted by the mediator. If the parties agree, the dispute can be brought to a private arbitrator within the same period instead of the labor court. The dismissal verdict shall be, ex officio, notified to the parties in case the lawsuit is dismissed on procedural grounds as a result of directly initiating a lawsuit without applying to the mediator. The parties can apply for mediation within 2 weeks upon the receipt of the dismissal verdict.”

The mediator shall cease the mediation activity and immediately report this situation to the meditation bureau by drafting the definitive report in cases that the parties are unreachable, no negotiation is made due to non-participation of the parties or an agreement is reached or not reached.

From the application to the mediation bureau to the drafting of the definitive report, the statute of limitations shall cease and the time bar shall not be applied.

Pursuant to article 3 of the Code, the effective date for mandatory mediation as a precondition of lawsuit is determined as 01.01.2018.

The provisions of the Code regarding the mediation as a pre-condition of lawsuit shall not be applicable for the pending cases before courts of first instance and regional courts of justice and Supreme Court as of the effective date of these provisions.

Application procedure for mediation, assignment of the mediator and other matters regarding the negotiations that are not mentioned in the Code shall be determined by a regulation to be issued by the Ministry of Justice.

Duration, Cost and Participation

Pursuant to article 10 of the Code, the mediator should resolve the application within 3 weeks following his assignment date. This period can be extended by the mediator for a maximum of one week, in case of compulsory situations.

Pursuant to article 18 of the Code, the parties can attend to the mediation meetings in person, by their legal representatives or by their attorneys. An employee authorized by a written letter by the employer can also represent the employer at the meetings and sign the definitive report.

If it is applied for mediation for re-instatement claim in an employer/sub-employer relationship, attendance of both the employer and sub-employer and their consensus are required at the meetings.

If the parties settle at the end of the mediation meetings, unless otherwise agreed, the mediation fee shall be borne equally by the parties according to section 2 of the Mediation Fee Tariff which is annexed to the Mediation Minimum Fee Tariff. If the mediation ends because of the absence of either one of the parties at the first meeting without any valid excuse, the party which did not attend to the first meeting shall be held responsible for all proceeding expenses even though this party is partially or entirely proved right.

Obligation to Apply to the Social Security Institution

Pursuant to article 4 of the Code, excluding the determination of compulsory insurance terms due to work under the employment contract, it is obligatory to apply to Social Security Institution before initiating a lawsuit regarding the disputes arising from Social Security and General Health Insurance Code numbered 5510 and other social security legislation.

The Institution shall respond to the application within 60 days, otherwise the claim shall be deemed as rejected. A lawsuit can be filed against the Institution in case that the application is rejected or deemed as rejected.

Statute of Limitations

Another important amendment introduced with the Code is regarding the statute of limitations in the annual leave payment and for certain compensations. The statutes of limitations for annual leave payment and below listed compensations are regulated as 5 years on condition that they are arising from an employment contract:

a) Severance payment,
b) Compensation arising from the termination without complying with notice requirement,
c) Compensation for bad faith,
d) Compensation arising from the termination without complying with equity principle.

With the aforesaid provision, the practice of general statute of limitations for 10 years set forth in the Code of Obligations numbered 6098 has been abolished for above claims. The new statute of limitations shall be applied regarding the annual leave payment and compensations arising from the employment contracts which are terminated following the effective date of the Code.

If you have any questions regarding the Code and the new regulations, please do not hesitate to contact with our firm at info@gurlaw.com.

GUR LAW FIRM