COVID-19: THE OMNIBUS BILL NUMBERED 7244
There are several measures taken related to social and economic life in Turkey in order to reduce the effects of Covid – 19 pandemic as in many countries. In this scope, “Law on the Reduction of Coronavirus (Covid-19) Pandemic’s Effects on Economic and Social Life and Law on Amendments of Certain Laws” (“Omnibus Bill”) numbered 7244 has been published in the Official Gazette dated 17 April 2020 and numbered 31102. The Omnibus Bill includes various measures and regulations and some of the provisions, which are significant in terms of their legal effects, are as follows:
1. PROHIBITION OF EMPLOYMENT AGREEMENT TERMINATION, SALARY SUPPORT AND IMMEDIATE BENEFITING FROM THE SHORT TIME WORKING PAYMENT:
- Prohibition of Termination:In accordance with the provisional clause titled “provisional employment assurance” added to the Labor Law numbered 4857, any employment or service agreement whether included within the scope of Labor Law or not, cannot be terminated by the employer except for terminations arising from the employee’s behavior contrary to the rules of ethics and goodwill and similar cases stated in subparagraph (II) of the first paragraph of Article 25 of the Labor Law and in the relevant provisions of other laws, for three months as of the effective date of the Omnibus Bill.
The employer can completely or partially put the employee on unpaid leave for a maximum period of three months starting from the effective date of this provision. Being put on unpaid leave within the scope of this clause would not give the employee the right to terminate the employment agreement based on just cause.
In case the employer or the employer representative terminates an employment agreement contrary to this provision, an administrative fine will be imposed on the employer, in the amount of minimum monthly gross wage on the date of the termination/ per employee.
The President can extend the three month periods stated in the first and second paragraphs of this provision to six months.
- Salary Support:In accordance with the provisional clause added to the Unemployment Insurance Law numbered 4447, on condition that there is a valid employment agreement on the effective date of this Omnibus Bill; employees who were put on unpaid leave in accordance with the provisional clause numbered 10 of the Labor Law and who cannot benefit from the short time working payment, and employees whose employments have been terminated within the scope of article 51 of the Unemployment Insurance Law after 15.03.2020 and who cannot benefit from unemployment insurance benefits will be provided with salary support in the amount of 39,24 TRY per day by the Unemployment Insurance Fund for the period that they are on unpaid leave or are unemployed provided that they do not receive a pension pay from any social security organization and such payment term does not exceed the prohibition period stated in provisional clause numbered 10 of the Labor Law. No deduction, except for stamp duty, will be made from these payments.
If it is determined that the employee on unpaid leave, benefiting from the salary support is de facto employed by the employer, such employer will be imposed to an administrative fine by the provincial directorates of labor and employment agency, in the amount of minimum monthly gross wage on the date of de facto employment/ per employee and per month. The paid salary support will be collected from the employer along with the legal interest accruing from the date of payment.
The ones who benefit from the salary support but are not included within the scope of general health insurance or dependent of the general health insurance as per the Social Security and General Health Insurance Law numbered 5510, will be considered within general health insurance under article 60/1/(g) of the mentioned law, and the general health insurance premiums will be covered from Unemployment Insurance Fund.
- The benefiting from the short time working payment without waiting for the determination of eligibility: In accordance with another provisional clause added to the Unemployment Insurance Law numbered 4447, for the short time working applications made by the employers due to compelling reasons as a result of Covid-19, the short time working payment will be made as per the employer’s statement without waiting for the completion of the eligibility determination. The overpayments and the unjustified payments made due to the wrong information and documents submitted by the employer, will be collected from the employer along with the legal interest. This clause has entered into force on the publishing date however will be applicable starting from 20.02.2020.
2. LIMITS IMPOSED ON COMPANIES RELATED TO DIVIDEND DISTRIBUTION:
- Limits on dividend distribution:In accordance with the provisional clause added to the Turkish Commercial Code numbered 6102, companies, except for the ones, in which the state, provincial special administration, municipality, village and other public legal persons and funds whose more than 50% shares belong to state; hold more than 50% shares directly or indirectly; it will only be possible to decide on the distribution of maximum 25% of the net profit for the year of 2019 until 30.09.2020, it will not be possible to decide on the distribution of the profits of the previous years and the free capital reserve and it will not be possible to grant the board of directors the power to distribute advance dividend.
Furthermore, if it has been decided to distribute dividend for the 2019 financial year in the general assembly meeting but the payment has not been made to the shareholders or a partial payment has been made, the payments exceeding the 25% of the net profit for the year 2019 will be postponed until 30.09.2020.
The period stated in this clause can be extended or shortened for three months by the President.
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