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Law no 7036 on “Labor Courts” (LLC) aiming to regulate the establishment of Labor Courts, their duties, authorities and trial procedures, was published in Official Gazette[1]and entered into force on October 25, 2017. The new law outlawed fifty years old Labor Courts Law numbered 5521, as it has long been considered as not adequately responding to the needs of everchanging Turkish Labor Market and demands of Labor law.  However, most notably, by the introduction of new LLC, long debated “Mandatory Mediation” institution formally established as a condition for commencement of court litigation in the labor law disputes for the first time in the Turkish Legal System.

Mediation, as an alternative dispute resolution in the labor disputes, is not a new institution as it has been used on the voluntary basis since 2012 after the introduction of Law on Mediation in Civil Disputes[2]. In accordance with the general preamble of the Labor Courts Law bill, it is highlighted that during the implementation period, 85 percent of mediated civil disputes were labor disputes and approximately 93 percent of these disputes were concluded with a settlement.[3] Thus, efficiency of pre-court settlement through a fast and flexible method of dispute resolution which helped to ease the workload of Labor Courts is the main motivation behind the rationale of shifting from voluntary mediation model to mandatory mediation in Labor Disputes.

Article 3 – Mandatory Mediation

By the virtue of article 3 of new LLC, mediation becomes a condition precedent to litigation in the disputes related to the employee[4] or employer receivables and compensation and reinstatement claims arising from law, labor or collective labor contracts. Therefore, for the disputes falling within the scope of article 3, Mandatory Mediation must be attempted and access to adjudication is only possible if the mediation has failed. As an exception, compensation claims with respect to pecuniary and non-pecuniary damages arising from occupational diseases and work accidents are not subject to compulsory mediation.

Within this respect, “mediation first” rule covers such employee claims on severance pay, notice pay, compensation for bad faith damages, compensation for discrimination, trade union compensation, wage, overtime pay, annual leave pays, payments for working on weekend, public and general holidays and such employer claims on notice pay, penal clause or repayment of advance payments. Additionally, claims with respect to employee or employer receivables and compensation within the scope of service contracts defined under Law no 6098 on Obligations[5] also fall within the scope of article 3. Mediation period is determined under article 3 as maximum three weeks and this period can only be extended for one more week.

To support and encourage mediation institution, some sanctions are also introduced under the subparagraphs of article 3 to discourage non- participation. Parties who are not attending mediation without a valid excuse should pay litigation expenses even subsequent judgment is in favor of them.

Amendments to the Turkish Labor Law

In a way to incorporating mediation into litigation in labor disputes, new LLC slightly amended respective articles 20 and 21 of Turkish Labor Law which are two notable pillars of Job Security[6] principle of Turkish Labor Law.  Article 20 of Turkish Labor Law sets forth the principles regarding objection against notice of termination and its procedure. Accordingly, prior to amendment, the employee whose contract is terminated could initiate a reinstatement case at a labor court within one month as of the serving of the notice of termination with the claim that no ground is asserted in the notice of termination or the asserted ground is not valid. Through the new amendments introduced by article 11 of new LLC, employee whose contract is terminated needs first to apply to mediation within one month as of the serving of the notice of termination. If disputed parties cannot come to a final agreement through mediation, lawsuit then might be filed within 2 weeks after the preparation of final official mediation report.  Court decision on the cases on reinstatement claims regulated under article 20 of Turkish Labor Law is final and cannot be appealed.[7]

Similarly, article 21, which is regulating consequences of termination based on invalid grounds, is also amended to reflect changes in the article 20.  Article 21 provides that employers are obliged to reinstate employee within one month if the court or arbitrator concludes that termination of employment contract is unjustified due to invalid reasons for termination.  The employee should apply to the employer for re-employment within ten days after the notification of the final decision of the court or special arbitrator. Article 12 of LLC, makes additions to article 21 to integrate mediation into the reinstatement procedure. Accordingly, when disputed parties come to final agreement on reinstatement of employee; (1) employee’s re-employment date (2) the wages and other claims that have accrued for up to maximum four months, for the period that employee has not been employed until the finalization of the decision (3) the amount of indemnity payable in cases when the employee is not re-employed, should be determined. Otherwise, the agreement would be deemed void. New LLC also introduces that in the reinstatement claims when there is employer – subcontractor relationship, it is required that primary employer should participate in the mediation and their wills should match together.

Finally, with the effect of article 15, limitation periods are redefined for the labor claims by the addition of new additional article 3 to Turkish Labor Law.  Accordingly, the limitation period for the claims arising from employment contract on annual leave, severance pay, notice pay, compensation for bad faith damages and compensation for discrimination has been determined as five years.

[1] O.G. 25 /10 / 2017 No:30221

[2] Law no 6325 on Mediation in Civil Disputes (O.G. 22 /06 / 2012 No:28331)

[3] Preamble para.10, Law no 7036 on Labor Courts

[4] In terms of defining employee, to avoid confusion, under the subparagraph 20 of article 3, seamen and journalists, although their working conditions are regulated by different laws, are also considered within the scope of article 3.

[5] Art. 5, Law no 7036 on Labor Courts

[6] As per article 18 of Turkish Labor Law, any employer who is employing thirty or more workers and who terminates the indefinite-termed labor contract of an employee with at least six months of service has to ground the termination on a valid reason arising out of the qualification or behaviors of the worker or the requirements of the enterprise, business or work.

[7] Art 8, Law no 7036 on Labor Courts

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