Termination of Employment Contract due to Low Performance

For an employer to be able to terminate the employment contract of an employee within the scope of job security, valid reasons must exist. Indeed, this situation is expressed in Article 18 of Law No. 4857 as follows: "In workplaces where thirty or more workers are employed, the employer terminating the indefinite-term employment contract of an employee who has a seniority of at least six months must rely on a valid reason arising from the competence of the employee or his/her behavior, or from the necessities of the enterprise, workplace, or work." (Labor Law Article 18/1)

This study will examine which valid reasons performance decline falls under and the conditions for termination due to performance decline.

1. Valid Termination Reasons

The valid termination reasons in the Labor Law No. 4857 are stated as the inadequacy of the employee, the behavior of the employee, and reasons arising from the necessities of the workplace or the job. While the inadequacy and behavior of the employee relate to the individual characteristics of the employee, the reasons arising from the necessities of the workplace pertain to the workplace itself. Although the law expresses valid reasons in this manner without providing examples, various examples are given in the justification of Article 18 of the Law.

Examining the valid reasons based on the justification of the law, the situation is as follows:

Reasons stemming from the inadequacy of the employee: These reasons include working less efficiently compared to others performing similar tasks, having lower performance than expected from their qualifications, decreasing focus on work over time, lack of inclination towards work, inadequacy in learning and self-improvement, frequent illness, reaching retirement age in cases where termination is to be made due to reasons originating from the workplace without incapacitating the employee but continuously affecting their ability to perform their job properly due to illness or lack of adjustment.

Reasons stemming from the behavior of the employee: These reasons also fall outside the termination cases with just cause specified in Article 26 of the Labor Law and include causing harm to the employer or creating concerns about the repetition of harm, asking colleagues for money in a manner that disturbs the workplace, inciting colleagues against the employer, performing the job inadequately, poorly, or incompletely despite warnings, engaging in relationships with others in a manner that negatively affects the workflow and work environment, making long phone calls that disrupt work, frequently arriving late and wandering around the workplace, demonstrating serious incompatibility with supervisors or colleagues, and engaging in frequent and unnecessary arguments.

Reasons stemming from the necessities of the workplace or the job: Valid reasons stemming from the workplace are examined in two directions: those arising from outside the workplace and those arising from within the workplace. Reasons stemming from outside the workplace include situations where it becomes impossible to sustain work in the workplace due to factors such as a decrease in production and sales opportunities, a decrease in demand and orders, energy shortages, economic crises in the country, general economic downturn, loss of foreign markets, and shortages of raw materials. Reasons stemming from within the workplace may include the implementation of new working methods, downsizing the workplace, implementing new technology, canceling certain sections of workplaces, and eliminating certain types of work.

2. Termination of Employment Contract due to Low Performance

Termination of the employment contract due to an employee's performance has not been listed among the justifiable termination reasons. Therefore, it can only be considered a valid reason for termination if the conditions are met. Employee performance decline is generally expressed as the employee lagging behind other average workers in performing the job, learning, development, frequently falling ill, and slowing down work. However, each case should be evaluated separately, and the criteria adopted by the Court of Cassation and doctrine should be examined.

When assessing whether termination due to performance decline is due to the inadequacy of the employee or the behavior of the employee, if the employee intentionally and willingly fails to fulfill the requirements of the job, resulting in performance decline, it would be more appropriate to consider this under termination due to the employee's behavior. However, if the employee does not deliberately contribute to this situation but faces difficulties in learning or his/her abilities are insufficient, leading to performance decline, and if the other conditions I will mention shortly are met, then termination should be considered under termination due to the inadequacy of the employee.

For the termination of the employment contract due to an employee's performance decline, many conditions have been introduced through judicial decisions, as well as conditions specified in the Law:

Conditions specified in the Labor Law: According to Article 19 of the Law, if the employment contract is to be terminated due to the behavior or performance of the employee, the employee's defense must be heard first. In the case of termination due to performance decline, the employee's defense should also be heard first. Otherwise, the termination will be considered unjust. Other required conditions include the employer making the termination notice in writing and clearly specifying the reasons for termination.

The prerequisites set forth by the Court of Cassation: In summary, the Court of Cassation, in its decisions numbered 2007/27584 and 2015/26541, has established the following criteria:

a. The employer must establish an objective, realistic, reasonable, and workplace-specific performance evaluation system.

b. These performance evaluation criteria should be determined in advance and communicated to the employee, so the employee knows what is expected of them beforehand.

c. Necessary support and training should be provided to the employee for their performance.

d. In case of performance decline, the employee should be warned first, given a reasonable period to improve their performance, and provided with opportunities to rectify it.

e. When problems arise with the employee's performance, the employer should conduct periodic performance reviews and document them.

For the valid termination of the employment contract due to performance decline, as explained above, both the conditions required by the Law and the prerequisites developed by the Court of Cassation through judicial decisions must be fulfilled. Otherwise, the termination will be considered unjust.

Lastly, adherence to the principle of termination as a last resort is crucial. According to this principle, before the employer terminates the employee's contract, the employee should first be given necessary warnings, provided with training for self-improvement, and if possible, their duties should be adjusted in line with the coordination of the workplace. Only if all these efforts fail to yield results should termination be considered. Otherwise, the termination could again be deemed unjust.

3. Consequences of Termination due to Low Performance

If the employer terminates the employment contract due to performance decline without adhering to the aforementioned conditions, the employee may have the opportunity to return to work by filing a reinstatement lawsuit. Additionally, if the employee wins the case, the employer will be obliged to pay compensation for the period of unemployment. Furthermore, regardless of whether the termination is deemed valid, if the employee meets the other conditions for severance pay, they will be entitled to severance pay.

4. Conclusion

For the employer to validly terminate the employment contract of the employee due to performance decline, the employer must fulfill the conditions required by the law and the Court of Cassation, as explained above. Otherwise, there is a risk of the termination being considered unjust, and the employee may have a chance of winning a reinstatement lawsuit.

Zeynep Sude Sağlık

References:

1. Labor Law No. 4857

2. Justification of Labor Law No. 4857

3. Decisions of the 9th Chamber of the Court of Cassation dated 18.03.2008, with case numbers E.2007/27584 K.2008/5327, and dated 22.02.2016, with case numbers E.2015/26541 K.2016/3504.