Applicable Law and Jurisdiction Issues in Cross-Border Employment Disputes Between Foreign Employers and Employees in Turkey

Introduction

The globalization of the workforce has resulted in an increasing number of employment relationships involving foreign employers and local employees in Turkey. These cross-border employment arrangements can lead to legal disputes over jurisdiction and applicable law. This article explores the legal framework regulating such employment disputes, focusing on Turkish law’s interaction with international regulations, and the mechanisms for determining jurisdiction and applicable law.

1. Legal Framework for Cross-Border Employment in Turkey

1. Turkish Labor Law (Law No. 4857)
   • The Turkish Labor Law provides the legal foundation for employment contracts in Turkey. It applies to all employees working within Turkish territory, regardless of whether the employer is domestic or foreign.
   • Mandatory Provisions: The law ensures minimum wage, working hours, and termination rights. Even if foreign law governs the contract, mandatory Turkish labor standards will apply.
2. Private International Law and Procedural Law (Law No. 5718)
   • Turkey’s Private International Law (PILA) regulates the choice of applicable law and jurisdiction for employment contracts involving foreign employers. Under Article 27 of the PILA, parties can choose the governing law, provided that mandatory provisions of Turkish labor law are still respected.
3. European Union Influence and Bilateral Agreements
   • Although not an EU member, Turkey aligns many of its labor regulations with EU directives. Turkey also has bilateral labor agreements with certain countries to facilitate worker protections and cross-border employment.

2. Determining Applicable Law in Employment Contracts

1. Choice of Law by Parties
   • Employers and employees can include choice of law clauses in their contracts, selecting the legal system that will govern their employment relationship.
   • However, the chosen law cannot derogate from the mandatory provisions of Turkish labor law if the employee works in Turkey or if the employment has a close connection to Turkish territory.
2. Default Rules in the Absence of Choice
   • If the contract does not specify a governing law, the law of the place of work (lex loci laboris) typically applies. This means that Turkish labor law will govern if the employee works primarily in Turkey.

3. Jurisdiction in Employment Disputes

1. Turkish Courts’ Jurisdiction
   • Turkish courts have jurisdiction over employment disputes if the work is performed in Turkey, even if the employer is foreign. This ensures that local employees can access legal remedies without traveling abroad.
2. Exclusive Jurisdiction Clauses
   • Some employment contracts contain clauses specifying that disputes will be resolved in foreign courts. However, Turkish courts may not honor these clauses if they contradict Turkish public policy or restrict the employee’s access to justice.
3. Arbitration as an Alternative
   • While arbitration is common in international commercial disputes, labor disputes are often excluded from arbitration due to concerns about unequal bargaining power between employers and employees.

4. Common Challenges in Cross-Border Employment Disputes

1. Conflict Between Chosen Law and Turkish Mandatory Rules
   • A major challenge arises when the law chosen in the employment contract conflicts with Turkish labor standards, such as termination procedures or severance pay obligations.
2. Jurisdictional Overlap
   • Disputes may arise over which country’s courts have jurisdiction, particularly when work is performed in multiple countries. This creates uncertainty and may result in parallel proceedings in different jurisdictions.
3. Enforcement of Foreign Judgments and Awards
   • If a foreign court issues a judgment in favor of either party, enforcing that judgment in Turkey requires compliance with Turkish enforcement procedures under the PILA and relevant treaties.

5. Recommendations for Employers and Employees

1. Clear Choice of Law and Jurisdiction Clauses
   • Employment contracts should include precise clauses regarding the governing law and jurisdiction, with awareness of Turkish mandatory provisions.
2. Local Legal Counsel Involvement
   • Employers are advised to engage local counsel to ensure compliance with Turkish labor law, while employees should seek legal advice to understand their rights.
3. Alternative Dispute Resolution Mechanisms
   • Incorporating mediation as part of the dispute resolution process can help resolve conflicts efficiently, reducing the need for lengthy court proceedings.

Conclusion

Employment disputes involving foreign employers and local employees in Turkey present complex legal challenges regarding applicable law and jurisdiction. While parties can choose the governing law, Turkish labor law’s mandatory provisions will still apply when relevant. Disputes may arise over jurisdictional issues, especially when conflicting laws and cross-border elements are involved. By including clear legal provisions in contracts and seeking local legal advice, both employers and employees can navigate these challenges more effectively.