Substantial Change on Wage and Additional Wage Payments

In case the employers decide to change the agreed terms and conditions of employment in a substantial manner, such as reducing employee’s wages or wage supplements, changing location of the workplace, or increasing the working hours due to business requirements, then they should follow the procedure set out under the Labour Law (the “LL”). The employers are only entitled to make changes which are not substantial and unfavourable for the employees within the frame of their management right.

Scope of Substantial Change

If the changes to be made over the employment contract and personnel regulations that are complementary and additional part of the employment contract, are to the disadvantage of the employee and the employment relationship is aggravated so as to become unbearable for the employee, such change would be considered as substantial change in employee’s working terms and conditions.

Payment of wage is considered as one of the fundamental elements of the employment contract and unilateral changes made to wage and wage supplements of the employer which are disadvantage of the employee are considered as substantial change. For instance, reduction of wages or wage supplements such as premium, private health insurance, meal and transportation allowances or any other benefits in cash or in kind would be considered as substantial change. Moreover, changes which increase expenses of the employee would also be considered as substantial change. Likewise, change of location of the workplace increasing the employee’s transportation expenses in a considerable manner would be deemed as substantial change notwithstanding the explicit contract term regulating the employer’s right to change the workplace of the employee. On the other hand, in case the employer provides the employees with additional benefits in order to compensate the employees’ loss while changing the working terms and conditions, such change shall not be considered as substantial change. For instance, providing the employee with meal at the workplace following cessation of payment of meal allowance shall not be deemed as substantial change.

However, the employer may unilaterally implement minor changes basing on his management rights. As an example, amending the commencement and ending hours of work may be considered as minor change on condition that the working hours are not prolonged and such change does not cause any wage reduction or other kind of difficulties for the employee.

Procedure to be followed by the Employer

In order to implement substantial changes in working terms and conditions of the employees, the procedure regulated under the article 22 of the LL must be followed by the employers. In this context, the employer must serve a written notice to each employee with respect to that substantial change and the employees’ written consents must be obtained within 6 working days. If the employees do not accept the change and return any acceptance letter to the employer, such change will not be applicable for the employee. It may be argued that the employee has implicitly accepted the new working terms and conditions in cases where the employee has raised no objections as regards substantial changes for a considerable period. However, please note that as per the precedents of the Court of Appeals, the employee’s silence cannot be taken as implicit acceptance for the changes affecting financial benefits of the employee.

On the other hand, the employer may implement substantial changes in working terms and conditions of the employees without following the procedure set out in the LL provided that such change is advantageous for the employee. However, where the employee’s wage is increased by the employer due to promoting him to a higher level which also increases the employee’s responsibilities shall be considered as substantial change even though such promotion and increase on wage appear to be in favour of the employee, and even in such case the employee’s consent must be obtained. Nonetheless the parties may always change working conditions by mutual agreement.

Actions to be taken by both parties

If the employee does not accept the proposed change which is considered as substantial change in working terms and conditions of the employee, the employer may decide not to apply the change or terminate the employment contract of the employee basing on valid cause by respecting notice periods and pay severance compensation. On the other hand, if the employer insists on implementing the proposed change, then the employee may claim deficient amounts of his monetary rights from the employer, or abstain from working, or immediately terminate his employment contract based on just cause due to change of employment conditions in a substantial manner, or claim that the employer has made a unilateral termination in action. In this context, the employee shall be entitled to certain payments such as severance pay or severance payment and notice payment depending on the way that the employee follows after the employer’s implication of the substantial change.

Please note that in case the employer terminates employment contract of the employee upon the employee’s unacceptance of such change or the employee claims that the employer made unilateral termination in action by implementing a substantial change without his consent, the employee who is within the scope of job security provisions may initiate reinstatement to work lawsuit against the employer by alleging that the termination was not valid and request him to be reinstated to work following obligatory mediation session. In the event of ruling for invalid termination by the court, the employer must either reinstate the employee back to work or pay compensation for not reinstating the employee. If the employer decides to make termination compensation payment to the employees, then the employer will pay (i) a payment of up to four months’ total of the wages of the employee and other entitlements until the issuance of the labour court’s final ruling; and (ii) reinstatement compensation between the employees 4 months’ and 8 months’ wages.

The employees who are not within the scope of job security provisions may claim that the right to terminate employment contracts was abused. If it is determined that the employment contract was terminated in an abusive manner, the employer will pay bad-faith compensation to the employee which would be three times of his notice pay.

Att. Ahu Pamukkale