A mutual agreement is an agreement executed by employer and employee to terminate the employment mutually.

Mutual agreements are not regulated in Turkish Law; therefore, validity conditions of mutual agreements should be evaluated based on (i) freedom of contract principle and (ii) related Supreme Court decisions.

This article sets forth the conditions that a mutual agreement must meet in order to be considered valid.  The validity conditions are as follows:

a. Form Requirement:

There is no form requirement for a mutual agreement to be valid. Therefore, it does not have to be in writing and may even be concluded verbally. However, for evidencing purposes, it is highly advisable to execute the agreement in writing.

b. Free Will:

The employee must execute the agreement without duress and with his/her free will.

c. Additional Payment:

In addition to the statutory termination entitlements (such as unpaid salary and benefits, statutory severance pay, payment in lieu of notice, unused annual leave pay when applicable), in order to make the mutual agreement valid, employer should provide a reasonable benefit to the employee (in cases where offer for mutual agreement comes from the employer).  

As per the established practice, such reasonable benefit should be in the form of additional payment.

Without a reasonable additional pay, the risk of mutual agreement being deemed invalid, and therefore the risks associated with a re-employment lawsuit, will greatly increase.

d. Informing the Employee of Potential Consequences:

The employer must inform the employee about the consequences of the mutual agreement, especially regarding the rights the employee gives up with such agreement, such as unemployment benefit.

If the mutual agreement is executed in accordance with the aforementioned conditions, risks of the employer in case of a re-employment lawsuit will be greatly reduced.

Batuhan Şahmay
Partner | [email protected]
Öykü Eyüboğlu
Associate | [email protected]