PENAL CLAUSE IN LABOUR LAW
(Y22HD-K.2020/4019)
One of the most widely used areas of penal clause is labour law. Both the Labour Law No. 1475 and the Labour Law No. 4857 do not contain a provision on penal clauses. However, since the TCO No. 6098 is a general law, the provisions of the Turkish Code of Obligations shall apply to the extent appropriate to its nature in cases where there is no provision in the Labour Laws, and the provisions of the TCO No. 6098 shall apply in labour law as a rule.
At this point, it should be noted that the Court of Cassation has produced solutions specific to labour law in some aspects through established case law. As a result of the ‘Principle of Interpretation for the Benefit of the Employee’ in labour law, penal clauses that stipulate obligations only against the employee are deemed invalid and the established case law in this direction has been adopted in the doctrine. While there is no explicit provision in the Code of Obligations numbered 818 regarding the penalty clause in terms of service contracts, Article 420 of the Turkish Code of Obligations numbered 6098 stipulates that ‘The penalty clause included in the service contracts only against the employee is invalid. In this respect, penal clauses included in service contracts only against the employee shall be deemed invalid, while penal clauses included in favour of the employee shall be deemed valid.
The necessity of the penal clause to be regulated bilaterally against the employee and the employer also reveals that the penal clause agreed against the employee should not be more than the one agreed against the employer. In other words, it is unthinkable that the penal clause determined against the employee exceeds the responsibility of the employer in terms of its conditions and the amount of the penalty. In the event of an inequality against the employee in the bilateral penalty clause, although the penalty clause is not completely invalid, the liability of the employee cannot exceed the amount and conditions for which the employer is responsible.
It is seen that the penalty clause agreed in labour law is generally introduced in order to prevent the termination of the employment contract for a certain period of time without just cause, to claim back the training expenses in case of non-compliance with the minimum working conditions of the trained employee, or to ensure compliance with the non-competition agreement. In all these cases, the parties undertake a contractual obligation and the penal clause ensures the effectiveness of these commitments (Canbolat/Erener, p. 230).
In the concrete dispute subject to the application, the penal clause regulation of a similar nature in the employment contracts is as follows: ‘In the event of termination of the contract by the employer with or without notice, the employer will pay the employee compensation equal to 6 (six) months net wages in addition to the compensation and all other rights required by the Turkish labour legislation’. In the first of the decisions of the regional court of appeal, it was concluded that the penal clause in question was invalid on the grounds that it was not reciprocal, while in the other decision, it was concluded that the penal clause was valid only in favour of the employee, since reciprocity was not required in terms of the penal clause.
As explained in detail above, in labour law, a penal clause stipulated only against the employee is invalid, whereas a penal clause stipulated only in favour of the employee is valid. In this respect, in the concrete dispute, the penalty clause stipulated in the employment contracts is valid only because it is regulated in favour of the employee.
REDUCTION OF PENALTY CLAUSE
(Y3HD-K.2020/2033)
Article 179/1 of the TCO (158/1 of the Code of Obligations) regulating the penalty clause; ‘If a penalty has been agreed for non-performance or improper performance of a contract, the creditor may demand the performance of either the debt or the penalty, unless otherwise agreed in the contract.’ Although Article 182/1 of the same law (161/1 of the Code of Obligations) states that ‘The parties may freely determine the amount of the penalty’, this freedom is not unlimited. In the last paragraph of the article; ‘The judge shall automatically reduce the penalty condition that he deems excessive.’
As can be seen, the first paragraph of the above-mentioned article establishes the principle of freedom in determining the amount of the penalty clause; on the other hand, the last paragraph draws a special limit to this freedom by means of the right of reduction.
While investigating whether the penalty is excessive or not, the judge shall take into account the damage suffered by the creditor due to the breach of the obligation, the degree of fault of the debtor, the common fault of the creditor and the economic situation of the parties (especially the debtor). When these factors are taken into consideration, if there is a clear disproportion between the damage suffered by the creditor and the agreed penalty that is incompatible with the measures of equity, the penalty shall be reduced. When assessing whether the penalty clause is excessive, it should be taken into account that the purpose of the penalty clause is to improve the creditor’s situation. While reducing the agreed penalty, in any case, the amount of compensation that the creditor may request according to the general rules in order to compensate for the positive damage should be exceeded. The possibility to reduce an excessive penalty is a rule of public order to prevent the exploitation of the debtor who is in a weak position. Therefore, the debtor’s ‘prior waiver of the possibility of reduction’ is invalid (Reisoğlu, S: Obligations Law General Provisions, Istanbul, 2004, p:391,392, with reference to Oser-Schönenberger, Tunçomağ, Becker, von Tuhr).
On the other hand, pursuant to Article 24 of the TCC, although the debtor who has the title of merchant cannot request the reduction of the penal clause, if the penal clause is (heavy) and (high) to the extent that it will cause the economic ruin of the debtor merchant and will not allow him to continue his commercial activity as before, then it is possible to consider such a (penal clause) as a clause contrary to morality and decency, and it is possible to (partially) or (completely) cancel it. This is because the (nullity) of the (penal clause) included in the contract due to breach of morality and decency is a general principle of law. It is not possible to think that the provision of Article 24 of the TCC is outside of this general sanction. Any (penal clause) that reaches such a level that the economic and commercial activities and existence of a debtor are jeopardised or destroyed is contrary to morality and decency.
While deciding on this matter, the court, if the debtor is a company, must investigate whether it is possible for the company to continue its commercial life as before, if the debtor is a company, by subpoenaing the (articles of association) of this company in the trade registry, with what amount of capital it operates commercially, what its assets amount to, and whether it is possible for the company to continue its commercial life as before in case of the collection of the agreed penal clause, by taking the opinion of an expert, if necessary, and it must also carry out the same examination for the real person (merchant) (Doğanay, 237). It should be noted that in order for Article 24 of the TCC to be applicable, the debtor must have the title of a merchant or be in a position to be liable as a merchant at the time the penal clause or the fee or the interest is determined and determined. Furthermore, the debtor must have undertaken the penal clause, interest or fee in the course of his/her commercial enterprise (Doğanay, p:238).
It is important to emphasise that the moment to be taken as a basis when investigating the existence of merchant status is not the moment of the penal clause’s due date, but the moment of its commitment. In this respect, if the promisor became a merchant after undertaking the penal clause, he is authorised to request a reduction. On the other hand, a person who loses his/her merchant status after undertaking the penal clause shall not be entitled to claim a reduction, nor shall a person who undertakes the penal clause obligation and who is not a merchant be entitled to claim a reduction.
In the concrete case, although the defendants claimed that they are not merchants and requested that the right to discretionary reduction be taken into consideration within the scope of Article 182 of the TCO, it is understood from the scope of the file that whether the defendants … and … are merchants or not has not been investigated and whether the penal clause can be accepted as excessive and therefore whether it should be reduced or not has not been discussed by the court based on sufficient concrete data. A judgement cannot be established with incomplete examination, grounds that are not suitable for inspection, subjective statements and abstract statements. In this case, within the framework of Articles 14, 17, 1463 of the TCC and Article 3 of the Law No. 5362 on Tradesmen and Craftsmen Professional Organisations. Within the framework of Article 3 of the Law No. 5362 on Tradesmen and Craftsmen Professional Organisations, it should be investigated whether the defendants are merchants or not, and if they are merchants, it should be determined whether the penalty clause will cause the defendants to suffer economic collapse, and if it is determined that they are not merchants, the amount of the receivable should be determined and a decision should be made according to the result, taking into account that the judge may make a discount from the penalty clause amount that the judge deems excessive in accordance with Article 182/last of the TCO, while ignoring the aforementioned issues, it was not deemed correct to make a judgement with incomplete examination, abstract and insufficient justification, and it required a reversal.
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