Due to the coronavirus pandemic, millions of workers had to receive short-time work allowance, their social security premium payments were not made on a full-time basis, and many employment contracts were temporarily suspended. This raised questions about whether employees would still be entitled to severance pay. The Supreme Court (Yargıtay) has issued a significant ruling on this matter.
Short-Time Work Allowance Suspended Employment Contracts
As the coronavirus pandemic affected the whole world and hit Turkey economically, many employment contracts were placed on hold. Known as the short-time work allowance, this measure was extended twice within monthly intervals and, by August, about 9 million people had benefited from it. With the latest decisions, the short-time work allowance was given the option to be extended through the end of the year. The exact number of beneficiaries in August will be determined from data announced in September.
The short-time work allowance had previously been implemented during the 2008 crisis and between 2018 and 2019. Under normal conditions, employees are entitled to severance pay calculated as 30 days’ gross salary for each year worked with the same employer. However, during short-time work, employees do not perform work and employers do not pay their regular wages, so employment contracts are temporarily suspended. The application varied by workplace: in some workplaces activity stopped entirely, while in others working hours were reduced by one third. Because employment contracts are suspended under short-time work, employees have been concerned about their entitlement to severance pay.
A Three-Month Period Was Requested for Severance Pay
There is a precedent at the Supreme Court on this issue because the short-time work allowance has been used before. The Supreme Court 9th Civil Chamber decision, Case No: 2010/50993, Judgment No: 2011/27305, arose from a 2008 case where an employee who received short-time work allowance sued for underpaid severance. The lower court ruled that the days for which severance had not been paid should be compensated.
However, at the request of the Ministry of Justice, the Supreme Court reviewed the case. The Ministry argued that it was unclear whether the short-time work period should be included in the calculation of the primary period for severance pay and noted that, under the existing law, the short-time work period is generally limited to three months within the Labor Code. The Ministry requested that any period exceeding three months should not be taken into account. In simpler terms, citing a legal gap, the Ministry argued that only up to three months of short-time work should be included in severance pay calculations and longer periods should be excluded.
Precedent-Setting Ruling from the Supreme Court
The Supreme Court ultimately ruled in favor of those seeking severance pay. In its calculation, the Court emphasized that although the law generally set short-time work at three months, this limit had been extended to six months during the 2008 crisis. Noting that the plaintiff had benefited from the allowance for five months, the Court decided that the employee was entitled to severance pay for all the missing days.
This precedent is particularly relevant for workers who received short-time work allowance due to the coronavirus pandemic. If this ruling is applied as a reference, employees who benefited from the short-time work allowance will be able to receive severance pay for the entire duration of the short-time periods when they leave their jobs, regardless of how long those periods lasted. Since the short-time work allowance was extended through the end of the year as a measure against the coronavirus, this interpretation would cover everyone benefiting from the allowance through year-end.