Abrogation Agreements

In Our Law

Atty. Betül Arslan

Abrogation has various meanings such as “cancelling a contract”, “reinstatement by legal act of a legal status which was legally constructed” and “reinstatement”.  

 

As a result of the freedom to contract regulated by Article 48 of the Constitution and Article 26 of Turkish Code of Obligations, just as free will is at stake for the parties while drawing up a contract, it is also at stake while terminating it. At this point, the act of abolition is called abrogation in the labour law.

 

As being a contract in general, abrogation agreements shall be subject to the provisions of Turkish Code of Obligations regarding the contracts. In this context, general provisions of Turkish Code of Obligations regarding the contracts are applied in the cases of abrogation agreements.

 

In abrogation agreements where general provisions of Turkish Code of Obligations regarding the contracts are applied, if there is hesitation concerning the balance of benefit, the principle of interpretation in favour of employees should be applied. Interpretation in favour of employees is mentioned in the 11.05.2016 dated decision of 9th Civil Chamber of the Court of Appeal as follows:    “The form of an abrogation agreement, its conclusion, its scope and validity will be determined pursuant to provisions of the Code of Obligations. However, termination of an employment agreement through the abrogation agreement will be interpreted considering the principle of interpretation in favour of the employee since it closely concerns labour law.” (9th Civil Chamber of the Court of Appeal E. 2015/31182 K. 2016/11766 T. 11.5.2016)

Although it is not regulated under our legislation how an abrogation agreement shall be concluded, based on the general provisions; the abrogation agreement is concluded when a party has communicated to the other a declaration concerning the conclusion of an agreement related to the mutual termination of the employment agreement (offer) and when the other party accepts this offer. At this point, it should be stated, as frequently stated also in the decisions of the Court of Appeals that the offer related to the conclusion of an abrogation agreement cannot be considered a termination.

 

During the negotiations of abrogation agreement between the parties, the employer should meet its obligation to inform, and the employee should be in a state to give a healthy and right decision. The reason lying behind is that, when an abrogation agreement is concluded between the parties, employee will not be able to benefit from the rights granted in cases of termination such as severance and notice pay, and file a re-employment lawsuit.  This matter is frequently mentioned in the Court of Appeal’s decisions regarding the abrogation agreements. 28.04.2016 dated decision of 7th Civil Chamber of the Court of Appeal sets forth following statements: “An employee whose employment agreement has been terminated by an abrogation agreement shall not only be deprived of job security but also shall not be entitled any more to receive notification and severance compensation rights, which are connected to the termination.  Furthermore, the employee will not be able to benefit from unemployment insurance within the scope of Act No. 4447. ….” (7th Civil Chamber of the Court of Appeal E. 2016/11587 K. 2016/ 9656 T. 28.4.2016)

 

It should be noted that since the concluded abrogation agreement is a contract by nature, parties shall be entitled to assert its invalidity as in the case of all other contracts. It is worth noting that the period of prescription is 1 year to file an action for annulment.

 

In terms of capacity, no special authority is needed for drawing up an abrogation agreement. According to the general provisions of Code of Obligations, every employer who has mental capacity, is major and unrestricted, or by taking the parent’s permission in case of minor who can work as per the provisions of labour legislation, shall be entitled to conclude an abrogation agreement. However, it should be noted that in cases where the employer is a legal entity, employer’s proxy representing the legal entity should be endowed with authority.  

Abrogation agreements have begun to be applied more often particularly after employment security institution gained its place in our law in 2003 and because of the risks posed by termination based on invalid grounds.  However, they were put in the right track only after 2007.  After 2007, it is seen from the judicial decisions that validity of abrogation agreements is based on the presence of reasonable benefit.

 

Following decision may be given as an example to the Court of Appeal’s approach regarding this matter. It is stated in the 28.04.2016 dated decision of 7th Civil Chamber of the Court of Appeal that: “First of all, the offerer must have areasonable interest in conclusion of an abrogation agreement. Although terminations of employment relationships through abrogation agreements were almost non-existent in application during and before the period of Act No. 1475, they have become increasingly common following the entry into force of employment security provisions, particularly after the Labour Act No. 4857. At this point, provisions for job security became dismissible by conclusion of an abrogation agreement even though the transaction, in reality, was a termination of an employment relationship by the employer.  In this respect, the reasonable interest of the parties in concluding an abrogation agreement must be determined separately from the control of intention defects”. (7th Civil Chamber of the Court of Appeal E. 2016/11587 K. 2016/ 9656)

 

With respect to identifying the scope of reasonable benefit, Supreme Court’s decisions stipulate that the offerer party and terms thereof should be considered.  Following expressions are repeated in various Supreme Court’s decisions: “Reasonable interest is determined by considering whether the employee or the employer is the offerer, and the characteristics of the instant case must be taken into account”.

 

At this point it is worth noting that; this doesn’t imply that the abrogation agreements are completely in favour of the employer. Waiving job security through a concluded abrogation agreement, bear consequences in favour of employee provided that the reasonable benefit is present. The employee who gains material benefit from the abrogation agreement will also avoid the re-employment lawsuit expenses. Furthermore, considering an employee who finds new job with better conditions will avoid the employee notice pay through the abrogation agreement to be drawn up, and the penal clause regarding prohibition of competition included in his/her work contract. 

 

If the abrogation intention is offered by an employee, scope of reasonable benefit has a limited interpretation compared with the case where the offer comes from the employer.  Reason lying behind this is that; in the event of termination of a contract of employment through conclusion of an abrogation agreement between an employer and employee, the employee will not be entitled to receive the termination indemnities and, the fact that the employer who does not want to grant its employee the rights arising from job security regulations may force the employee into concluding an abrogation agreement.

 

According to the 22nd Civil Chamber of the Court of Appeal, reasonable interest shall be considered fulfilled if the notice and severance compensations are paid in the event of declaration of intention concerning the termination of an employment agreement is made by the employee. 

 

However, in the event of abrogation agreements offered by the employer, payment of notice and severance compensations were not deemed sufficient by the Court of Appeal, and it was stated that reasonable interest would be considered fulfilled only if other employee receivables are also paid.

 

Therefore, to be able to consider reasonable interest as fulfilled for the validity of abrogation agreements, employee’s losses incurred as a result of the abrogation agreement should be compensated. Nevertheless, it should be separately evaluated in each instant case whether the reasonable interest criteria is in favour of the employee.