Like other labor claims, outstanding wages are claimed by filing a lawsuit with labor courts and can only be claimed by employees working under a fixed-term contract. An employee working under a fixed-term contract can claim outstanding wages if their employer wrongfully terminates their employment contract before the end of that term.
Expensive wages are undesirable for employers. In other words, if the employee terminates a fixed-term contract, whether justified or unjustified, the employer cannot file a lawsuit against the employee and claim the outstanding wages from the employee. In such cases, the employer can only claim this if there is a penalty clause stipulated in the employment contract.
How to Be Entitled to Outstanding Wages?
If a fixed-term employment contract exists between the employee and employer, the parties are deemed to have suspended their intention to terminate until the end of the contract. Indeed, the Supreme Court also holds this view and has ruled in this direction. The key point here is that “an employee working under a fixed-term contract signed the employment contract relying on the parties’ consent.” Because an employer’s unjust termination of this contract would disrupt the employee’s financial situation and cause them distress. The residual wage is designed to mitigate this distress, even if only to a certain extent.
What Happens If a Fixed-Term Employment Contract is Terminated for a Valid Reason?
While the concept of valid reason in fixed-term employment contracts is controversial, an employer cannot terminate a fixed-term employment contract based on a valid reason. Indeed, as stated above, the Supreme Court of Appeals recognizes that in fixed-term employment contracts, the parties postpone their termination until the end of the contract term, and its decisions are in line with this. Therefore, if the employer terminates a fixed-term employment contract solely based on valid reason without just cause, the employer is obligated to pay the employee the residual wage.
Remaining Term Wage Calculation
When calculating the residual wage, the employee’s losses and earnings are taken into account, and the calculation is made accordingly. Although the employee may suffer a financial loss due to termination, they will incur certain expenses during the period they continue their employment. These and similar balances of income and expense are calculated, including the pros and cons, to determine the employee’s entitled residual wage.
The final gross salary is the salary taken into account when calculating residual wages. If the terminated employee has another job, this salary will be deducted from the residual wages.
Interest on Residual Wages
Residual wages are considered compensation rather than wages. Because they are considered compensation, legal interest will be applied to the residual wages.
Statute of Limitations on Residual Wages
Because residual wages are considered compensation, the statute of limitation s is generally 10 years.