Employment law is one of the most important legal workstreams in any merger or acquisition involving a Turkish target. In many transactions, buyers initially focus on price, tax, regulatory approvals, and corporate control. Yet in practice, a poorly managed employment-law analysis can create post-closing liabilities that are just as serious as tax exposure or merger-control risk. Turkish official investment guidance reflects this reality by listing labor law among the core legal topics investors should examine when entering the Turkish market. It also states that foreign investors generally have the same rights and liabilities as local investors and that the conditions for establishing a business and transferring shares are the same as those applied to local investors.
That does not mean employment law works the same way in every Turkish M&A structure. One of the first legal distinctions is between a share deal and an asset or business transfer. In a share sale, the employing entity usually remains the same legal employer after closing, even though control changes. In a transfer of a workplace or a section of a workplace, Turkish Labor Law contains specific statutory rules on the automatic passage of employment contracts, preservation of seniority, joint liability for certain pre-transfer debts, and restrictions on termination purely because of the transfer. These rules make employment-law structuring in Turkey highly transaction-specific.
For that reason, employment law issues in Turkish M&A deals should never be treated as a routine HR checklist. They influence transaction structure, due diligence scope, the drafting of indemnities and covenants, post-closing integration planning, and sometimes even whether the transaction should proceed as a share acquisition or as a statutory transfer. In Turkey, the real employment-law questions are usually practical: Do employees transfer automatically? Can the buyer restructure immediately after closing? What happens to accrued rights and seniority? Is collective dismissal triggered? Are union or collective labor issues present? Does the target have foreign key personnel whose work permits need attention? And is the company compliant with occupational health and safety obligations that remain attached to the workplace after completion?
Why employment law matters so much in Turkish transactions
Employment law matters in Turkish M&A because employees are not simply movable business assets. Their rights are protected by statute, and in many circumstances those rights either survive the transaction or constrain how the parties may implement post-closing changes. The Turkish Labor Act applies broadly to establishments, employers, employer representatives, and employees working under an employment contract, subject to the listed statutory exceptions. This broad scope is important because it means labor-law analysis in M&A is not limited to large industrial employers; it reaches most mainstream commercial targets.
The legal and commercial consequences can be significant. If a transaction qualifies as a workplace transfer, Turkish law automatically moves employment contracts to the new employer with all related rights and obligations. If the buyer wants to change terms of employment after closing, unilateral changes are restricted. If the new owner wants to reduce headcount, Turkish dismissal and collective-redundancy rules may apply. If the target has historic wage, overtime, social-security, subcontracting, or OHS problems, the buyer may inherit operational and financial risk even in cases where the employees never signed anything in relation to the transaction itself.
This is why employment law in Turkish M&A is often less about whether a transaction is legally possible and more about how it should be implemented. A deal that looks simple at board level may still create operational disruption if employees are transferred incorrectly, dismissed without valid reason, or integrated without attention to statutory notice, consultation, or safety obligations. Turkish buyers and foreign investors therefore need employment due diligence not only to price liability, but also to plan integration lawfully.
Share deals versus asset deals: the first employment-law split
The most important starting point is the difference between a share acquisition and a workplace transfer. In a share deal, the employer is usually the same company before and after closing. The shareholder changes, but the employing entity remains intact. As a result, the employment contracts generally continue with the same employer, and Turkish Labor Law’s workplace-transfer rule is not triggered merely because the company’s ownership changed. This is one reason share deals are often easier from an employment-transfer perspective, even though they may still carry historical labor liabilities inside the target.
By contrast, Article 6 of the Labor Act provides that when, due to a legal transaction, an establishment or one of its sections is transferred to another person, the employment contracts existing on the transfer date pass to the transferee with all rights and obligations involved. The same article further states that seniority-based entitlements must be calculated by reference to the employee’s original start date with the transferor. That means Turkish law protects continuity of service in a transfer of business scenario rather than allowing the buyer to treat employees as newly hired workers from the closing date.
Article 6 also creates an important liability rule. It states that the transferor and transferee are jointly liable for obligations that materialized before the transfer and were payable on the transfer date, while the transferor’s liability is limited to the two-year period following the transfer. This is one of the most important employment-law risks in Turkish asset acquisitions. Even when the buyer does not acquire the seller’s shares, the law can still impose continuity and shared liability for certain employment-related obligations.
The same provision contains two additional rules that matter in M&A structuring. First, the joint-liability rule does not apply where legal personality ceases to exist because of a merger, participation, or change of corporate type. Second, the Article 6 framework does not apply where the establishment is transferred as a result of liquidation of the employer’s assets due to insolvency. These distinctions show that Turkish employment law differentiates among transaction forms and therefore needs to be analyzed together with the corporate structure of the deal.
Transfer of workplace does not itself justify termination
A core protection in Turkish employment law is that neither side may treat the transfer itself as a free-standing dismissal ground. Article 6 states that the transferor or transferee is not authorized to terminate the employment contract solely because of the transfer of the establishment or part of it, and the transfer does not entitle the employee to terminate for just cause merely because the transfer occurred. This rule is central in Turkish M&A because it blocks the simplistic assumption that the seller can “clear out” staff before closing or the buyer can automatically dismiss transferred employees just because the business has changed hands.
That protection is not absolute. The same article expressly reserves the right of the transferor or transferee to terminate for reasons necessitated by economic, technological, or organizational changes, and it also preserves the employer’s and employee’s right to terminate for just cause where the legal conditions exist. In practice, this means Turkish law does not forbid post-closing restructuring. What it does forbid is using the transfer itself as the only legal explanation. The employer must still ground dismissals in a recognized termination framework.
For deal planning, this is a critical distinction. A buyer may be able to carry out a lawful restructuring after closing, but only if it can justify the dismissals under the ordinary rules on valid termination, operational necessity, or just cause. Turkish employment law therefore requires a separation between transaction rationale and termination rationale. If that separation is not respected, post-closing dismissals can become litigation risks.
Notice periods and dismissal protections after closing
Where the buyer or the post-closing employer wants to terminate indefinite-term employment contracts, Article 17 of the Labor Act governs notice periods. The minimum notice periods are 2 weeks for employees with less than 6 months of service, 4 weeks for 6 months to less than 1.5 years, 6 weeks for 1.5 years to less than 3 years, and 8 weeks for more than 3 years. The same article allows these periods to be increased by contract and provides for notice compensation where the required notice is not given. In M&A transactions, this matters because seniority usually continues to count, especially in workplace transfers, so a buyer cannot safely assume short notice obligations for long-serving transferred staff.
Article 18 adds another major layer of protection. It provides that an employer terminating an employee engaged under an indefinite-term contract in an establishment with 30 or more workers, where the employee has at least 6 months of seniority, must rely on a valid reason connected with the employee’s capacity or conduct or based on the operational requirements of the establishment or service. In other words, Turkish law applies job-security protections to a substantial segment of the workforce, and those protections can become highly relevant in post-acquisition integration programs.
The statute also identifies what is not a valid reason. Article 18 says that union membership or participation in union activities, acting or seeking office as a union representative, filing complaints or participating in proceedings against the employer, and discrimination based on characteristics such as sex, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction, or social origin are not valid grounds for dismissal. This matters in Turkish M&A not only because unionized or dispute-prone workplaces need careful treatment, but also because restructuring exercises often generate complaints, whistleblowing, or union activity around the time of closing.
Procedural requirements and reinstatement risk
Turkish law also regulates how dismissal must be carried out. Article 19 requires that termination notice be given in writing and that the reason be stated clearly and precisely. It further provides that an employee engaged under an open-ended contract may not be terminated for reasons related to conduct or performance before being given an opportunity to defend against the allegations, while reserving the employer’s right to immediate termination for serious misconduct under Article 25/II. This procedural layer is highly relevant in M&A-driven restructurings, where rushed dismissals are one of the most common sources of litigation.
Article 20 gives employees the right to challenge dismissal in court within one month of receiving the notice, and it places the burden of proving a valid reason on the employer. It also states that the court must use a fast-hearing procedure and conclude the case within two months, with the Court of Cassation expected to issue its final decision within one month on appeal. Even if actual case duration may vary in practice, the statutory framework clearly signals that employment disputes over invalid termination are meant to be treated urgently.
Article 21 then sets out the main consequences of termination without valid reason. If the court or arbitrator finds the dismissal unjustified, the employer must re-engage the employee within one month. If the employee applies and is not reinstated, the employer must pay compensation of not less than four months’ wages and not more than eight months’ wages. The employee is also entitled to up to four months’ wages and other entitlements for the period not worked until the court decision becomes final. For acquirers planning workforce rationalization, these remedies are a direct economic risk and should be built into both due diligence and integration budgeting.
Unilateral changes to terms and conditions are restricted
Post-closing integration often involves attempts to standardize policies, compensation structures, reporting lines, and workplace rules. Turkish law imposes real limits here. Article 22 states that any change by the employer in working conditions based on the employment contract, annexed work rules, similar sources, or workplace practices may be made only after written notice to the employee. It further provides that changes not made in conformity with this procedure and not accepted in writing by the employee within six working days do not bind the employee. If the employee rejects the proposed change, the employer may terminate only by respecting notice requirements and stating a valid reason.
This is a major M&A integration issue. A buyer cannot assume that post-closing harmonization of salaries, bonus plans, titles, benefits, working hours, or other material employment conditions can simply be imposed from headquarters. In Turkey, changes to working conditions need to be managed through employee consent or through a lawful termination-and-offer framework. That makes change-management planning a core employment-law issue in Turkish acquisitions.
Collective redundancies in Turkish M&A deals
Where the post-closing plan involves larger headcount reductions, the Turkish collective dismissal regime becomes central. Article 29 of the Labor Act states that where an employer contemplates collective terminations for economic, technological, structural, or similar reasons arising from the requirements of the enterprise, establishment, or activity, it must provide written information to the union shop-stewards, the relevant regional directorate of labor, and the Public Employment Office at least 30 days before the intended layoff.
The same article defines when a collective dismissal occurs. The thresholds are: at least 10 employees in workplaces employing 20 to 100 employees; at least 10% of employees in workplaces employing 101 to 300 employees; and at least 30 employees in workplaces employing 301 or more employees, where the terminations take place on the same date or on different dates within one month. This statutory threshold analysis is essential in Turkish M&A because restructuring plans that look moderate from a global perspective may still cross the Turkish collective-redundancy threshold locally.
Article 29 also requires consultations with union shop-stewards after the notification. Those consultations must address measures to avoid or reduce the terminations and to mitigate their adverse effects on the workers concerned, and a document showing that the consultations were held must be drawn up. Notices of termination then take effect 30 days after the notification to the regional labor authority. The article further states that collective dismissal rules may not be used to evade the application of the job-security protections in Articles 18 to 21. These rules make collective redundancy in Turkish M&A a managed legal process rather than a pure managerial decision.
Union and collective labor issues
Unionization changes the employment-law profile of a Turkish target. Even without mapping every detail of the collective bargaining framework, the Labor Act itself makes clear that union activity affects termination analysis. Article 18 expressly says that union membership, participation in union activities, or acting or seeking office as a union representative do not constitute valid reasons for termination. Article 29 separately requires notice to union shop-stewards in collective dismissal situations. In practice, this means a buyer acquiring a unionized workforce must assume a more formal and more scrutinized restructuring environment.
The Ministry of Labour also hosts the current Law No. 6356 on Trade Unions and Collective Bargaining Agreements in its work-life resources, confirming that union and collective labor relations remain a formal part of the Turkish employment-law architecture. For M&A due diligence, the practical consequence is that buyers should identify whether the target has union presence, workplace representatives, collective bargaining agreements, pending authorization disputes, or a history of industrial relations conflict. Those items can affect both closing risk and post-closing integration options.
Occupational health and safety does not disappear after closing
Occupational health and safety is another major employment-law issue in Turkish M&A, especially in manufacturing, logistics, construction, energy, healthcare, retail, and other operationally intensive sectors. The official Occupational Health and Safety Law No. 6331 states that its object is to regulate the duties, authority, responsibilities, rights, and obligations of employers and workers in order to ensure occupational health and safety at workplaces and improve existing health and safety conditions. This broad formulation matters in M&A because OHS obligations attach to the workplace and its operation, not merely to the seller’s period of ownership.
The same law requires employers to take necessary measures, monitor compliance, and carry out or procure risk assessments. Article 6 further requires the employer to designate or procure an occupational safety specialist, an occupational physician, and other required health staff or services, depending on the workplace profile. These obligations are highly relevant in acquisitions because historic non-compliance may create inherited exposure, and ongoing non-compliance can become the buyer’s immediate operational problem after closing.
For diligence purposes, this means buyers should examine accident records, risk assessments, OHS committees, service contracts with external OHS providers, training logs, and compliance with workplace-specific safety obligations. In Turkish M&A, OHS is not just a compliance footnote. It is a liability and continuity issue that can directly affect workforce safety, administrative exposure, and operational disruption after the transaction.
Foreign employees and key personnel in inbound transactions
Cross-border acquisitions often involve foreign executives, specialists, or secondees. Turkish official guidance on foreign direct investments and work permits is therefore relevant in employment planning. The Ministry of Labour’s international labor-force guidance defines key personnel in FDI-scope companies to include persons working in top management or executive positions, managing all or part of the company, supervising or controlling administrative or technical staff, or having authority regarding hiring and termination, as well as persons possessing knowledge essential to the company’s services, research equipment, techniques, or management.
Official work-permit guidance also states that work-permit applications are submitted through the E-Permit System and that, for domestic applications, a foreigner in Türkiye generally must have a residence permit of at least six months, except for foreigners deemed appropriate by the General Directorate of International Labor Force. The employer is the applicant for the work permit, and the application requires documents such as the employment contract, passport copy, and Turkish Trade Registry Gazette showing the employer’s current capital and partnership structure. In practical M&A terms, this means post-closing integration may require permit strategy for foreign managers, not just board appointments.
This issue is particularly important where the acquisition plan includes replacing local management with foreign executives or installing expatriate technical leadership. The buyer may own the shares immediately, but that does not automatically authorize foreign nationals to work in managerial or technical roles without compliance with the international labor-force regime. Turkish employment planning in M&A should therefore include a work-permit workstream wherever foreign personnel are part of the post-closing model.
What employment due diligence should cover
A serious Turkish employment due diligence exercise should go beyond counting employees and reviewing sample contracts. At a minimum, buyers should examine employment-contract types, seniority profiles, accrued notice and severance exposure, overtime and annual-leave practices, litigation and mediation history, disciplinary procedures, union presence, collective dismissal exposure, subcontracting arrangements, OHS compliance, and foreign-work-permit status. Turkish Labor Law itself underlines the importance of several of these issues: Article 17 on notice, Article 18 on valid reason, Article 19 on written termination procedure, Article 20 on challenge rights, Article 21 on reinstatement consequences, and Article 29 on collective dismissals.
Subcontracting deserves particular attention. Article 2 of the Labor Act states that the principal employer is jointly liable with the subcontractor for obligations arising from the Labor Act, the employees’ employment contracts, or a collective agreement signed by the subcontractor. In M&A, that means labor due diligence should not focus only on directly employed staff. A target using subcontracted labor may still carry direct labor-law exposure if the arrangement is not compliant or if the law treats the principal employer as jointly responsible.
Severance exposure also remains an important diligence item. Transitional Article 6 of the Labor Act states that a severance pay fund will be established and that employees’ severance entitlements under Article 14 of the former Labor Act No. 1475 are protected until a new severance-pay law is adopted. For transaction practice, the key point is that severance exposure remains part of the Turkish employment landscape and should be modeled carefully in acquisitions, especially where long-service employees are involved.
How these issues should be reflected in deal documents
Employment-law findings in Turkish M&A should feed directly into the SPA or share subscription documents. Typical drafting responses include specific warranties on compliance with employment legislation, absence of undisclosed labor disputes, compliance with OHS rules, accuracy of social-security reporting, and legality of subcontracting structures. Where due diligence identifies concrete risks, buyers often negotiate special indemnities for pre-closing employee claims, unpaid labor receivables, workplace accidents, OHS breaches, or collective-dismissal violations. The need for this drafting discipline follows naturally from the legal framework: Turkish law preserves rights, seniority, notice protections, and reinstatement remedies in ways that can produce post-closing cost if risk is not allocated contractually.
Interim covenants are also important where there is a gap between signing and closing. If the transaction requires regulatory approval or a longer closing period, the buyer will often want the seller to refrain from changing compensation, hiring or dismissing staff, amending key contracts, or triggering collective dismissal procedures without consent. These covenants matter in Turkish deals because employment liabilities can change quickly during the pre-closing period, especially if the seller reacts to the pending sale by starting workforce measures too early.
Conclusion
Employment law issues in Turkish M&A deals are central because Turkish law protects continuity of employment, seniority, dismissal rights, collective redundancy procedure, union-related protections, and workplace safety in ways that materially affect transaction execution and integration. In a workplace transfer, Article 6 automatically moves employment contracts to the transferee, preserves seniority, and imposes joint liability for certain pre-transfer obligations for two years, while also prohibiting dismissal solely because of the transfer. For post-closing restructuring, Articles 17 to 21 govern notice, valid reason, written procedure, dismissal challenges, reinstatement, and compensation. Where larger workforce reductions are planned, Article 29 adds a formal collective-dismissal regime with notification and consultation requirements.
The practical lesson is that Turkish employment law should be integrated into M&A planning from the start. Buyers should distinguish share deals from workplace transfers, map union and collective-dismissal exposure, assess OHS compliance, review subcontracting risk, model severance and notice costs, and plan work permits where foreign key personnel are part of the post-closing structure. In Turkey, employment law is not a secondary HR matter in M&A. It is part of the legal architecture of the deal itself.
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