In general terms, an outsourcing involves the use of external resources of goods or services necessary for a business, or seeking support in order to gain a competitive advantage or operate more easily in areas that are not within an organisation's field of expertise.

In Turkey, subcontracting is the main labour law means of managing an outsourcing involving workers. In an outsourcing, the subcontracting relationship would be regulated under:

The Subcontracting Regulation sets out the conditions necessary for establishing a subcontracting relationship, the rights and obligations of the primary/original employer (that is, the outsourcing customer) and the subcontractor (that is, the third-party supplier, providing the external labour resources), and the essential elements of the subcontracting agreement to be made in writing.

Accordingly, a subcontractor is defined as a third party who enters into an agreement with the original employer for the provision of services consisting of:

In addition, a temporary employment relationship may also be used as a method of outsourcing (see Question 10).

An outsourcing relationship may be established where the customer, in addition to its internal workforce, needs and uses employees of a supplier for either:

Although the supplier's employees are performing their work for the customer, they remain employed by the supplier and are not transferred to the customer, except in the case of collusion (that is, an agreement made for the purpose of deceiving third parties that does not reflect the parties' genuine intention). For example, an outsourcing agreement may be deemed collusive when the customer assigns some of its main activities that do not require expertise to an external supplier. In the case of collusion, the supplier's employees will be considered as the customer's employees from the commencement of the outsourcing relationship.

Even in the absence of collusion, the customer will be responsible for due payment of the supplier's employees' wages and for the fulfilment of the supplier's obligations as employer (for example, payment of social security premiums and income taxes on employees' salaries). In that case, although employees appear under payroll of the subcontractor, in practice there is co-employment of employees. However, the customer and supplier can execute a contract to allocate these liabilities and obligations among themselves, and set out recourse and indemnification mechanisms.

However, under the TLC, where a workplace or part of a workplace (which must constitute an economic unity) is transferred to a third party, the related employees are automatically transferred to the transferee. Therefore, the transferee must both:

The courts consider the following key factors when assessing whether a workplace transfer has occurred:

A transfer of employees that results from a merger, spin-off or change in company type, requires the consent of the transferred employees.

In the case of a transfer within a group of companies, case law indicates that the employees' consent is not necessary if there is a transfer clause in the employment agreement and the terms and conditions of employment do not differ after the transfer.

The same rules apply as for an initial outsourcing (see above, Initial Outsourcing of Service Provision).

It should be noted, however, that where the same employees are continuously outsourced from different suppliers or service providers, the courts are likely to conclude that this relationship is a collusion, and these outsourced employees would in fact be deemed recruited by the primary employer/customer from the beginning of the relationship.

As explained above, under Turkish law, an outsourcing arrangement does not legally require a transfer of employees. Therefore, on termination of an outsourcing arrangement, the workers would not need to be transferred back to any initial employer. Instead, the customer's responsibilities with regard to the rights of the workers engaged as part of an outsourcing agreement would cease as the de facto co-employment of the customer and service provider ends.

If an employee has been outsourced to the customer as part of a transfer of an individual employee or as part of a business transfer, then such employee would be transferred back to the service provider when the service provision is to return in-house.

Where employees do not transfer by operation of law, the customer and the supplier are jointly and severally liable for the payment of employee's wages for as long as the employees' work is dedicated to the customer.

If the outsourcing results in a workplace transfer, the employment agreements are transferred to the transferee, along with all rights and obligations arising from the transfer. The transferee therefore assumes the transferor's obligations to the employees under the law and in accordance with the employment agreements. The transferor and transferee are jointly liable for all due employment benefits accrued before the transfer date. However, the transferor's liability is limited to two years from the transfer date.

The term of the employment agreement remains the same unless otherwise is agreed by the parties.

If there are certain rights which depend on the years of service of the employee (such as rights regarding severance payment, payment in lieu of notice and so on) the transferee is required to take the date on which the employee started working with the transferor into account.

In general, employment agreements can be categorised as:

Consecutive fixed-term agreements can only be granted where there is a substantial reason for doing so (for example, where the project for the basis of employment has overrun and has lasted longer than planned).

As all terms under the transferred employee's employment agreement are transferred to the transferee, the term of any fixed-term employment agreement would remain the same, unless otherwise is agreed by the parties. Accordingly, if the employment agreement of the transferred employees is executed for a definite term, those initial terms will expire at the end of the determined period.

All the employment benefits of the transferred employees are transferred to the transferee.

The transferee is responsible for the registration of transferred employees under its payroll and for the payment of social security premiums to the Turkish Social Security Institution. There is currently no mandatory pension scheme under the TLC. However, if the transferred employees benefited from a pension scheme granted by the transferor, the transferee must maintain the scheme.

In a subcontractor relationship, the outsourcing customer is jointly responsible for the provisions of any collective bargaining agreements that the service provider (the subcontractor) will be party to. However, in such a scenario, the subcontracted employees will do not benefit from the provisions of any collective bargaining agreement already in place with the customer and its own employees.

Where employees are not automatically transferred by operation of law but rather by commercial agreement, the situation is governed by the agreement itself subject to certain restrictions. An employment agreement may be transferred on condition that:

An employment agreement can be transferred to another employer on a permanent basis by obtaining the written consent of the employee (Article 429, Turkish Code of Obligations). Therefore, once the written consent has been obtained, the employment agreements are legally transferred on the signing of a transfer agreement.

The term of the employment agreement remains the same unless otherwise is agreed by the parties.

In relation to rights which depend on the years of service of the employee (such as rights regarding severance payment), the liability of the transferor and the transferee regarding these rights has been highly debated in legal doctrine and the Turkish Court of Appeals has not developed a uniform approach to their application. It is generally accepted that in the calculation of seniority of the employee, the time spent while working both for the transferor and the transferee will be taken into account. Two different approaches have been taken regarding responsibility of the transferor and transferee: under the first approach, the transferor remains responsible for the portion of the severance payment accrued until the date of transfer, while with the second approach, the portion of severance accrued after the transfer together with the portion of the severance payment accrued until the date of transfer should be borne by the transferee.

With regards to other termination receivables (such as rights to payment in lieu of notice and payment for the unused annual leave), the transferor remains entirely responsible. In relation to other debts accrued until the date of transfer (such as overwork payment), the transferor and the transferee are jointly responsible for two-year period following the transfer.

See Question 3, Employee Benefits.

See Question 3, Pensions.

The terms and conditions of employment agreements remain the same on the transfer of an employee unless otherwise is agreed with the employee. A transferee wishing to make changes that are disadvantageous to the transferred employees must obtain the consent of those affected employees before implementing the disadvantageous amendments. It is important to ensure that terms and conditions of current employees of the transferee and transferred employees are harmonised. If provisions under the employment agreement of one group substantially differ from the other, then the employer would be in breach of its obligation to treat its employees equally, which would result in an administrative fine of TRY398 as of 2022 for each employee subjected to the discrimination.

The transferee can also make changes to the transferring employee's working conditions if the working conditions of the transferee's existing workforce differ to that of the transferring employee's prior working conditions. Accordingly, if the transferee makes a substantial change, the employees' written consent must be obtained within six days of the employer sending notice of the proposed changes.

If an employee does not consent to the changes, the transferee may terminate the employment agreement with such person. However, in this scenario, the transferee may face employment-related claims for termination of the agreement (such as reinstatement) due to alleged unfair dismissal.

See Question 5.

If the outsourcing results in a workplace transfer, the transferor or the transferee cannot terminate the employment relationship before or after the transfer if the main reason for termination is the transfer itself (transfer does not constitute a valid cause for termination).

However, the TLC recognises termination due to reasons necessitated by economic, technological or organisational (ETO) changes, or due to the employer's right to terminate with a valid reason such as employee's performance or behaviours. However, given that dismissal of employees should be considered a last resort for the transferor and transferee, the applicability of these options may be quite limited.

Furthermore, where a workplace transfer is due to a merger, spin-off or change in company type, a transferred employee is entitled to terminate the employment agreement.

The transfer itself does not constitute a valid cause for termination. Therefore, general employment rules apply (even if the cases necessitated by ETO changes are evaluated within this scope). If the dismissal is not based on a valid reason, an employee may assert that their termination was not made for a valid reason and should therefore be null and void. The most common form of employment-related claim is a claim by employees for reinstatement due to alleged unfair dismissal.

A valid reason for termination is a reason that arises either due to the needs of the business (ETO reason) or due to the employee's performance or behavior. In this regard, the employer will need to prove that the termination was based on a valid reason and if the employee claims otherwise, the burden of proof lies with the employee.

If the Employment Court decides in the employee's favor, the transferor would be required to:

In relation to rights which depend on the years of service of the employee (such as rights regarding severance payment), the liability of the transferor and the transferee regarding these rights has been highly debated in legal doctrine and the Turkish Court of Appeals has not developed a uniform approach to their application. It is generally argued that the transferee is responsible for the whole severance payment while the transferor remains responsible for the portion of the severance payment accrued until the date of transfer. With regards to other termination receivables (such as rights to payment in lieu of notice and payment for the unused annual leave), the transferor remains entirely responsible. In relation to other debts accrued until the date of transfer (such as overwork payment), the transferor and the transferee are jointly responsible for two-year period following the transfer.

Under the TLC, redundancy pay generally comprises severance pay, payment in lieu of notice, and payments for any accrued but unused allowances (such as any unused annual leave or any deserved but unpaid bonuses). For details of how these payments are allocated between the transferor and transferee, see Question 9.

Employees whose length of service is longer than one year are entitled to severance pay if their employment agreement is terminated:

In these cases, the severance pay would be for an amount corresponding to their last monthly gross salary multiplied by the number of years of their employment. However, the monthly gross salary amount considered for the calculation of severance pay is currently capped at TRY15,371.40 (for the second half of 2022).

On termination, permanent employees working under an indefinite term contract must be notified in writing within the following notice periods:

Alternatively, the employer can make a payment to the employee in lieu of notice, which corresponds to the salary of the employee for the relevant notice period.

Except in the case of a workplace transfer, in an outsourcing arrangement the supplier's employees are not transferred to the customer. Therefore, in such a scenario it is possible to structure the outsourcing of employees as a secondment.

However, if the customer chooses to structure the outsourcing of employees as a secondee, it may open itself up to employment-related claims even though the supplier remains as the original employer.

In its precedents, the Court of Appeals has previously held the customer responsible in relation to employer obligations for the secondee. In practice, to mitigate risks, the supplier and the customer can enter into a separate agreement stipulating that the supplier will not hold the customer responsible for any claims raised by the employee or by any third parties regarding the secondee's employment rights.

There are no mandatory information requirements in relation to employees. In practice, the transferor provides the transferee with employees' data relating to their existing and accrued rights. However, to transfer sensitive or health data, the transferor must obtain the consent of employees. To avoid this situation, the transferee may choose to collect the necessary data directly from its employees.

In this regard, the Law on Protection of Personal data stipulates that the explicit consent must be:

The "freely given" element of obtaining explicit consent within the scope of employee-employer relationship is questionable. Similar to the application of the EU General Data Protection Regulation ((EU) 2016/679) (GDPR), the Personal Data Protection Board's approach underlines that the power imbalance between the employer and employees may affect the validity of explicit consent (Personal Data Protection Board's Decision No. 2020/404, www.kvkk.gov.tr/Icerik/6913/2020-404; Personal Data Protection Authority 's Data Protection in Türkiye Guide, page 12, www.kvkk.gov.tr/SharedFolderServer/CMSFiles/2f6c83f6-de4f-4843-9d50-d0cdef5512c1.pdf). Accordingly, it is crucial to ensure that the employees' consent is given voluntarily and no detrimental effect would result for the employees if consent was not given.

There is no direct restriction or limitation for the transfer of employees' personal data (the sharing of the personal data of employees is subject to the general data transfer rules of the Turkish personal data protection laws, see Question 10, Country Q&A: Outsourcing: Turkey Overview).

The employee and the transferee will enter into an employment relationship where the transferee will be required by law to process employee's certain personal data. The transferor may share employee's personal data with the transferee to the extent that it has legal grounds for doing so (that is, to the extent necessary).

For special categories of personal data (such as health data or information regarding membership of any trade unions), if any, the explicit consent of the employee would be required in most cases.

There are no notice, information or consultation obligations that arise for the transferor and the transferee in relation to employees or employees' representatives. However, in practice, employers choose to notify employees before the transfer, especially if the transfer will result in changes to their employment conditions. Employees have six days to accept any changes, so employers usually arrange notifications to fit within this timeline.

In addition, the transferor must notify the Social Security Institution regarding the termination of the employment agreement, while the transferee must notify the Social Security Institution regarding the commencement of the employment agreement.

If the transfer as part of an outsourcing constitutes a substantial change to the employees' working conditions, the employer will need to ensure that the changes are binding on the employees. To be binding on the employees:

If the employee does not consent, transferor may terminate the employment agreement by establishing that the amendment was made based on a valid reason. In such case, transferor may face the employment related claims due to termination of the agreement such as reinstatement due to alleged unfair dismissal.

It should be noted that there are Court of Appeals decisions which state that implementing the change without consent of the employee would mean not honouring working conditions of the employee (which is stated as a valid reason for employee to terminate the employment agreement under Article 24 of the TLC). Therefore, in the case where the amendment is implemented on an employee who did not accept it, the employee may terminate the employment agreement. In that case, the employer would be required to provide severance pay (whereas it would not be required to make payment in lieu of notice, as employee is the party who terminates the agreement). Additionally, the employer would also be required to pay any vested, but uncovered allowances (if any), such as any applicable unused annual leave entitlement, unpaid wage, or bonus.