Are Employers Entitled to Terminate Premiums or/and Bonuses Unilaterally Under the Turkish Labour Law?
Today’s employment relations are more complex since companies offer their employees more than a standard wage in order to increase workplace motivation and become prominent in the market. For instance, it has become common practice for employers to incentivize employees’ salaries with extra benefits such as premiums and/or bonuses. Since these extra benefits may constitute a financial burden for employers, their contents and amendments are important for both sides. The points will be briefly summarized.
What is regarded as a premium and/or bonus? What are their sources?
Turkish legislation does not contain any binding bonus and/or premium regulation with regard to the private sector, therefore their implementation is at the discretion of employers. As a result, premiums and bonuses mostly arise from labour contracts, collective agreements or internal regulations of the company.
A premium is an additional payment to be paid to the employee in consideration of successful performance in terms of quality and quantity[1]. On the other hand, a bonus may be defined as an additional payment that is provided to the employee for creating a positive employer-employee relation or celebrating a special occasion, for example, the New Year, a national or religious holiday, marriage, birth, establishment anniversary of the business, etc.[2]
Since it is based on personal performance, an employee gains the right to receive a premium when he/she has fulfilled conditions set for such additional payment. Apart from premiums, if any of the employees receive benefits, then all employees must benefit from bonuses in compliance with equal treatment principle unless there is a valid reason to differentiate since the bonus is a general implementation. In addition to this, there is no requirement on employee to work till the end of a certain period to be able to demand the bonus, but employee must be paid for the work performed up until the period when bonus payments are periodically made. In other words, if bonus payments are made on an annual basis and the employee has only worked for six months, their bonus should be calculated proportionately.
Although it is not compulsory to provide, an employer must perform its obligations regarding premiums and bonuses once an employee is entitled to such additional payment in a result of the above-mentioned legal instruments. Moreover, payment of a premium and/or bonus may be regarded as a part of the labour contract even when it is not a contractual obligation and provided by the company unilaterally if it has become a workplace practice, which will be explained below. Premiums and bonuses are also important since they are considered while calculating an employee’s severance and notice pay.
Otherwise, an employee may use his/her right for termination with a valid reason and apply to labour courts for compensation. Besides, employees may refrain from fulfilling their work when their wage is not paid within twenty days of the day it was due, except for force majeure, as per 34th Article of the Labour Law numbered 4857 (“Labour Law”). As has been stated by the Turkish Court of Cassation’s 9th Civil Chamber by its decision numbered 2012/30916-2013/568 and dated 15/01/2013, premiums and bonuses are regarded as a supplement of the wage and such remedy may become applicable with regard to them as well.
When premiums and/or bonuses become compulsory?
It is a natural result that premiums and/or bonuses are the employer’s liability when they are regulated as an obligation under a labour contract or collective agreement. It is important to keep in mind that a premium and/or bonus may also become compulsory even when it is applied unilaterally by the employer if it is regarded as a ‘workplace practice’.
First of all, workplace practice shall be a common practice. Additionally, it must continue for a length of time. For instance; three months/years in a row has been regarded enough to consider an implication as a workplace practice in most judicial opinions. Thirdly, a workplace practice must also be unconditional. Last but not least, it must not arise out of the employer’s misconduct.
As a consequence, if an employer provides certain premiums or bonuses to the employees unilaterally these premiums and/or bonuses may become a workplace practice depending on the fulfilment of the above-mentioned conditions. Hence, an employee may expect to receive them even though their labour contracts do not have such clauses.
Is it possible to amend them? If yes, how?
The answer is positive. However, the law strictly governs such amendments and stipulates that a certain procedure ought to be followed. Above all, parties may change the working conditions with mutual agreement. It is also possible to bring new rights or improve existing ones in favour of the employee. On the other hand, changes to the detriment of an employee shall be conducted in accordance with the 22nd article of Labour Law. Pursuant to 22nd Article of Labour Law, any alteration by the employer in working conditions based on the employment contract, on the rules of work which are annexed to the contract, and on similar sources or workplace practices shall be made only after written notice. The alteration may become binding for the employee subject to his/her written consent to this alteration within six days. Thus, a premium and/or bonus may not be removed or decreased by a unilateral act of the employer once the employee is entitled to it because of a contractual obligation or workplace practice.
[1] Süzek Sarper, İş Hukuku, Beta, İstanbul, 2016, p. 399.
[2] Ibid.
Author: Kaan Erdoğan
Contributing Advisors
