Recent Development
The Court of Appeals’ General Assembly of Civil Chambers on the Unification of Decisions ruled in its decision dated March 8, 2019 and No. 2017/10 E. – 2019/1 K. that with respect to an employment agreement executed as definite-term but deemed an indefinite-term agreement due to the absence of an objective reason, the penalty clause deterring the parties from terminating the agreement before its term, without a just reason, is valid only for the duration of the agreement. The decision was published on the Official Gazette on July 18, 2019.
Conclusion
Definite-term employment agreements are made in writing and executed based on the existence of an objective reason, such as the completion of a particular work or the performance of a particular temporary assignment. If a definite-term employment agreement does not rely on one of these objective reasons, the agreement is considered an indefinite-term employment agreement. The existence of an objective reason is also required for the renewal of a definite-term employment agreement.
The Civil Chambers of the Court of Appeals rendered conflicting judgements on the validity of the penalty clause deterring parties from terminating definite-term employment agreements executed without an objective reason before their term and without a just reason.
To eliminate future conflicting decisions, the Court of Appeals’ General Assembly of Civil Chambers on the Unification of Decisions’ decision concludes that the penalty clause in an employment agreement executed for a definite-term but deemed an indefinite-term employment agreement due to the absence of an objective reason is valid only for the duration of the agreement.
