Turkey's New Short Time Work Allowance

Turkey

As the situation with COVID-19 is still developing and continuing to spread all around the world, the closure of certain businesses and the partial lockdown measures recommended to the public in Turkey in order to prevent the spread of the virus has begun to have adverse financial and commercial impacts on employers. In this respect, the “Short Time Work” concept has become one of the main topics on the agenda of employers.

This note aims to be a high-level guideline for employers concerning the concepts short-time work and short-time work allowance as per the rules applicable as of 26 March 2020.

The Turkish government had already announced following the emergence of the first COVID-19 case that the conditions under which employers could benefit from the short-time work allowance would be simplified and that the related procedures would be expediated. Accordingly, while certain amendments have already been made, in line with that announcement, to the Unemployment Insurance Law ("Law") which governs this matter, there may be even further changes to the below rules in the upcoming days as part of the measures taken by the authorities to battle against the COVID-19 pandemic.

What is the short time work allowance?

The short-time work allowance is a means to provide employees with income support to be paid from the unemployment fund if and when the working hours in a work place are decreased by one-third of the ordinary working hours or the operations of a work place have been wholly or partially suspended for at least a 4-week period due to a general economic, sectoral or regional crisis or a force majeure event. 

Is the Covid-19 pandemic a valid reason to benefit from the short-time work allowance?

Although there is no established precedent in general under Turkish law as to whether a pandemic constitutes force majeure, in this case, COVID-19, as a pandemic, is considered a force majeure event arising from external circumstances, within the meaning of the Law and the related secondary legislation. Therefore, entities suffering from the effects of COVID-19 may apply to benefit from the short-time work allowance. However, whether this allowance will be awarded to them shall be evaluated on a case-by-case basis.

Who can apply for the short-time work allowance?

Employers who are facing the situations explained under bullet 1 above can apply for short-time work allowance on behalf of their employees. Employees cannot directly apply to receive the short-time work allowance.

What are the conditions for receiving short time work allowance?

First, to apply for the short-time work allowance, the employers must be facing the circumstances explained above in bullet 1. In this case, the employer can apply for this allowance on behalf of certain employees that are eligible for this funding. In order for an employee to be eligible, (i) such employee must have worked for a minimum of sixty (60) days prior to the beginning of the short-term working period with registration to the social security institution, without any interruption and (ii) at least four hundred and fifty (450) days of unemployment insurance premium must have been paid on behalf of such employee in the last three (3) years.

As per the Law, once an employer qualifies to receive this allowance, its right to terminate employees will be significantly restricted. To elaborate, the employer in questions will only be allowed to terminate employees for behaviour which would be considered in breach of "ethics and good will" and for "similar reasons". These would usually include harassment or being under the influence of a prohibited substance in the workplace or grave violation of company policies. As such, termination based on any other reason (e.g. illness or performance) will be forbidden and will result in the employer losing its entitlement to this allowance.

What is the short-time work allowance amount?

The daily amount of short-time work allowance is 60% of the daily average of the gross income of the respective employee. This will be calculated based on the employee’s income being subject to social security premiums within the last twelve (12) months. The short-time work allowance is accrued daily but paid on a monthly basis. In any case, the monthly amount of short-time working allowance cannot exceed 150% of the monthly minimum gross salary.

What is the maximum period for the short-time work allowance to be paid to employees?

The short-term working allowance shall initially be paid for a term of maximum three (3) months. However, such period can be extended to six (6) months by the Presidency of the Republic of Turkey.

How will an employer apply?

The applications for the short-term working allowance can be made to the Turkish Employment Agency (İŞKUR) (“Agency”) via the e-mail address announced on the Agency’s website together with an application form and the list of employees to benefit from the allowance. The Agency's web address is as follows: https://www.iskur.gov.tr/isveren/kisa-calisma-odenegi/basvuru-icin-gerekli-belgeler-ve-il-iletisim-adresleri/.

For more information on the Turkish short-time work allowance please contact your regular CMS contact or our local experts Dr. Döne Yalçin, Sinan Abra or İnci Alaloğlu.