Important Ruling for Subcontracted Workers Who Became Permanent Employees
The 9th Civil Chamber of the Court of Cassation issued a precedent-setting decision regarding subcontracted workers who were transferred to permanent staff. The ruling clarified that, when determining the wages of these workers, the pay level is governed by the employment agreement signed between employer and employee; collective bargaining provisions apply only if they include a specific rule on that point.
Significant Decision Affecting Subcontracted Workers
A security officer working at a hospital was transferred to permanent status under Decree Law No. 696, which enabled the absorption of subcontracted staff into institutional payrolls. While employed by the subcontractor, the security officer earned 28% above the statutory minimum wage and continued to receive that wage until December 31, 2018. Following a directive issued by the Ministry of Family, Labour and Social Services on February 1, 2019, wages for workers who had been transferred from subcontractors to permanent positions were adjusted: the workplace reduced the security officer’s wage to the applicable minimum wage level for that year and then applied only a 4% increase.
As a result, although the worker had previously earned a higher wage under the subcontractor, after becoming permanent he was paid a lower salary. He sued on the grounds of underpayment. The trial court ordered that the worker’s previous percentage-based wage be calculated and that a 4% increase be applied to that amount. The Court of Cassation, however, overturned this decision.
Emphasis on Collective Bargaining Outcome
In its new ruling on the wages of employees transferred to permanent positions, the Court of Cassation reversed the lower court and explained that contracts made at the time of procurement govern wage terms—such as multiples of the minimum wage or fixed percentages above it—only for the duration those procurement contracts remain in effect. Accordingly, service procurement agreements in place for employees who were later absorbed into permanent staff under Decree Law No. 696 cease to be effective as of the date the transition to permanent employment occurs.
The Court of Cassation also noted that the absence of an individual employment contract with the public institution after permanent hiring does not change the outcome. The ministry’s February 1, 2019 decision clarified that where collective bargaining wage increases applied, wages as of January 1, 2019 could receive a 4% raise; and where daily net wages were below 85 Turkish lira, those wages were to be raised to the minimum wage. The ministry further stated that these adjustments apply in accordance with amounts set out in announced collective bargaining agreements.
Attention to the Employment Contract
The court pointed out that collective agreement provisions agreed under the subcontractor cease to apply once the worker moves to permanent status. In the case at hand, the employee received the subcontractor’s agreed wage until the collective agreement expired during that same year; after the collective agreement’s expiry the institution applied its own wage policy, and under the ministry’s decision it paid the worker a 4% increase over the minimum wage. The Court held that upon transition to permanent employment, the subcontractor’s service contract no longer governs and the institution’s employment relationship becomes determinative.
Therefore, if the employment contract signed between the worker and the new employer does not explicitly continue the terms of the previous subcontractor agreement, the rules of the newly established employment contract prevail. Because the subcontractor’s terms do not continue automatically after the transition to permanent staff, the Court of Cassation’s decision establishes an important precedent concerning wage determination for workers who move from subcontractor status to permanent institutional employment.