Assessment of the Release Agreement Between Employee and Employer

One of the most significant developments introduced by the Turkish Code of Obligations No. 6098 concerns release protocols between employees and employers — a matter that had frequently become the subject of disputes in practice, yet was regulated in neither the Labour Act nor the former Code of Obligations No. 818. With the aim of filling this gap, Article 420 of the new Turkish Code of Obligations (TCO) has subjected release agreements regarding the employee's receivables from the employer to certain validity conditions, seeking to protect the employee and safeguard their rights. Through these conditions, release agreements that were arbitrarily prepared and devoid of legal basis have been prevented.

What Is a Release Agreement?

A release agreement is generally a protocol signed by the parties, based on their mutual declarations of will, stating that the employee has no remaining employment receivables from the employer after the termination of the employment contract.

Official form involves the document being drawn up by official institutions such as a notary or the certification of an already prepared document. A document drawn up in ordinary written form is one where it does not matter by whom or how it was written; only the signature of the party making the declaration of will is important. This protocol may be in official form or in ordinary written form, i.e. on a simple piece of paper. The intended result of the release agreement is to prevent the employee from making a financial claim against the employer at a later date. Therefore, preparing a release agreement without obtaining legal assistance generally produces negative consequences for the employee in practice.

Validity Conditions of the Release Agreement

According to Article 420 of the Turkish Code of Obligations (TCO), the following conditions are required for a release agreement to be valid:

The release agreement to be drawn up regarding employee receivables that the employer is obliged to pay must be in writing. The release agreement must be concluded at least 1 month after the date of termination of the employment contract; in other words, the date of the release agreement must be at least 1 month after the termination date. The type and amount of the receivable that is the subject of the release must be clearly and in detail specified in the release agreement. Finally, the amount stated in the release agreement must be deposited in full into a bank account.

Release agreements that do not contain the payment of the right in its actual amount, or other payment documents containing a release declaration, have the force of a receipt limited to the amount they contain. Even in this case, payments must have been made through a bank.

Decision of the General Assembly of the Court of Cassation

In the decision of the General Assembly of the Court of Cassation dated 20.01.2022, Case No. 2019/9-761, Decision No. 2022/24, it was noted that the release agreement has found widespread application in employment relations under the name "ibraname" (release document). The issue of the validity of release agreements has been assessed within the framework of the "interpretation in favour of the employee" principle in labour law and has primarily developed in the light of Court of Cassation decisions.

The employee provides for their own and their family's livelihood through the wages and other monetary rights received in exchange for their labour. From this perspective, the employee's release of the employer without cause does not conform to the ordinary course of life. The Court of Cassation emphasised that release agreements drawn up while the employment relationship is still ongoing are invalid. The employee is entirely dependent on the employer during this period and, despite employment security provisions, should be deemed to have been directed towards signing a release agreement against their will in order to maintain the employment relationship or to obtain certain employment receivables as soon as possible.

Furthermore, it was stated that a release agreement cannot be given validity if it does not contain a date and it cannot be clearly understood from its content that it was drawn up after the termination date.

Voluntary Mediation in Place of the Release Agreement

In recent times, a frequently encountered practice has been employers arranging a settlement text through voluntary mediation instead of a release agreement. Through this method, employers attempt to prevent employees from filing lawsuits again by means of mediation. However, if the settlement document drawn up as a result of mediation activity has been prepared by vitiating the employee's will, the annulment of this settlement document may be pursued through litigation.

Furthermore, the 9th Civil Chamber of the Court of Cassation reversed its earlier decision that assessed the validity of mediation settlement texts within the scope of Article 420 of the Turkish Code of Obligations. Since it is stipulated that the parties cannot file lawsuits regarding matters agreed upon (Article 18/5 of the Mediation in Civil Disputes Act), the Court decided that the validity of the mediation settlement minutes cannot be assessed on the basis of provisions relating to release.

Conclusion

Particularly in all payment, release and settlement documents drawn up after the termination of the employment contract, the content of the text, date, payment method, receivable items and the manner in which the parties' wills were formed must be assessed in detail. Otherwise, consequences that are difficult to remedy may arise for one of the parties.

For the assessment of your specific legal situation regarding employment receivables, validity of release agreements, mediation settlement documents and employee-employer disputes, you may contact MCG Law Office and receive careful, technical and result-oriented legal support from the outset of the process.