Arbitration Becomes Compulsory in Labor Disputes

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Employees and employers shall resort to arbitrator in the first place instead of litigation process for their labor disputes and conflicts, as per the “Law on Labor Courts No. 7036” issued in Official Gazette numbered 30221, dated 25 October 2017.

The also called “mandatory mediation” aims at lessening  the heavy burden of labor courts  by directing the parties to reach out-of- court settlements which are time saving and less costly in comparison with litigation.

ARBITRATION AS CAUSE OF ACTION

The new law introduces the “arbitration as a cause of action,” a new concept in Turkish legislation, meaning that no lawsuit before resorting arbitrator.

CONFLICTS HANDLED BY ARBITRATOR

  • Workers' claims arising from employment contract and collective bargaining agreements and re-employment claims shall be referred to arbitration before initiating a lawsuit. The claims should be relate to labor relationship.  
  • For severance, notice payment and suchlike compensations, overtime, annual leave wages, both employee and employer will go to arbitrator.
  • Compensation claims arisen from employee and employer insulting each other, or from the harms to the products and materials caused by employee shall be referred to arbitrator before filing a lawsuit.

PROCEDURES

Parties may choose, by a mutual agreement, an arbitrator recorded in “registry of arbitrator.” Application should be made to arbitrator office where the opposite party established. And the arbitrator finalizes the claims within 3 weeks or in case of force major in 4 weeks at the most.

Arbitrator will inform and invite the parties for a meeting through every communication instruments possible and send the final report to the arbitrator office at the end of the negotiation.

Parties may join the negotiations themselves, or by their legal representatives or their lawyers.

The expert that can contribute to reconciliation may be kept available in the negotiation.

Unless the parties reach an agreement they may resort to labor court. In this case the final report that shows no reconciliation is reached should be annexed to lawsuit petition.

STATUTE OF LIMITATION

As per the “Additional Article 3” of Labor Law 4857 that appended by above mentioned Law;

  • Period of limitation in annual leave wage, severance pay, notice pay, bad faith compensation and compensation for terminating employment contract against equal treatment principle will be 5 years.
  • Period of limitation for severance and notice payment, unused vacation wages will starts at the date of termination of employment contract. In other words, these should be paid at the day the contract is terminated, otherwise period of limitation starts.
  • In case the employer doesn’t observe the reemployment claim ruled by a labor court, he has to pay an amount of compensation to the employee equal to employee’s 4 to 8 months’ wage. Limitation period in these cases starts at the date of court decision.  

During the period between resorting the arbitrator and the final report is prepared, statutory limitation will rest.

REEMPLOYMENT IN CASE OF SUB-CONTRACTOR RELATION

In the presence of subcontractor relation, primary employer and subcontractor will join mediation discussion together for reemployment cases, and their will should correspond to each other.

OCCUPATIONAL ACCIDENTS AND PROFESSIONAL DISEASES ARE OUT OF SCOPE

For material and immaterial compensation lawsuits there is no need to resort to arbitrator.

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