Law No. 7036 Code of Labor Courts (‘Law’) published in the Official Gazette No. 30221 dated October 25, 2017; introduced fundamental changes in the settlement of labor disputes and abrogated the previous law on the subject Law No. 5521. The radical changes implemented with the Law No. 7036 are summarized below.

Mediation as a Pre-condition of Litigation

The most important and remarkable change brought to our system by law is the regulation of mediation as a matter of trial.

Mediation is only adopted as a preliminary condition before legal action in the selected type of issues noted in the Article 3 of the Law; ‘application to mediation is a pre-condition for cases dependent on individual or collective bargaining employment contracts or cases of employee or employer claims and compensation demands and for cases of employee reinstitution.’

Unlike other articles of the Law that are immediately enforced, this relevant Article 3, will enter into force on January 1, 2018.

Therefore as of January 1, 2018, it is compulsory to first apply for mediation before filing for a litigation regarding such employer-employee disputes.

It is also understood that mediation is not a mandatory requirement in cases of pecuniary and non-pecuniary compensation claims or the filings for their detection or recourse based on work accidents or work-related sicknesses.

Mediation Expenses

If a party fails to attend the first mediation meeting without a valid excuse, the party not participating in such meeting will be held entirely responsible for the cost of proceedings even if the issue is partially or completely resolved in that party’s favor.

If the parties agree upon at the end of the mediation, the mediation fee will be paid equally between the parties unless otherwise agreed upon. In this case, the fee may not be less than the two-hour fee set out in the Mediation Minimum Wage Tariff.

In case the parties cannot reach an agreement at the end of the mediation, the parties fail to attend the meetings or the parties fail to reach an agreement after discussions taking less than two hours, the initial two-hour fee will be paid by the State Treasury in accordance with Mediation Minimum Wage Tariff. If the parties fail to reach agreement at the end of discussions taking more than two hours, the wage for the portion exceeding the initial two hours shall be covered equally by the parties again in accordance with the Mediation Minimum Wage Tariff, unless otherwise agreed upon.

Concluding Mediation

The mediation shall be concluded within three (3) weeks; however, if compelling reasons exist, this process can be extended for a maximum of one (1) additional week.

If mediator's involvement resolves the dispute among parties, then the same dispute can no longer be litigated before Courts. In case such agreement cannot be reached via mediation, the parties’ rights to sue are reserved.

Litigation Procedures and Available Appeal

With the entry into force of the Law, the application periods for appeal are also changed and it is referred that the appellate submissions will be made in accordance with Law No. 6100 on Civil Procedure.

For this reason, the appeal time limit imposed earlier as eight (8) days is now abolished and the appeal application period to the District Court of Appeals is set forth as two (2) weeks from the date of service of notification of the First Instance Labor Courts’ decision to the relevant parties.

The application process for further appeal to Supreme Court of Appeals is also set forth as two (2) weeks from the date of service of notification of the District Court of Appeals’ decision to the relevant parties.

Another important change brought by the Law is that the appeal before Supreme Court of Appeals will not be an option for some certain decisions noted at Article 8 of the Law. The only way to apply legal remedy regarding such decisions is the District Court of Appeals. Aforementioned judgments that are not subject to appeal before Supreme Court of Appeals are listed below:

a)      Judgements regarding cases of objection to termination notification pursuant to Article 20 of Labor Law No.4857;

b)      Judgements regarding cases of cancellation of disciplinary penalties executed against the employees in accordance with collective labor agreements or workplace regulations;

c)      Judgments subject to Union and Collective Labor Law No.6356 in cases of:

d)     Judgments subject to Civil Servants Unions and Collective Bargaining Law No.4688 in cases of:

Statute of Limitations

Finally, amendments are also made in the Labor Law No. 4857 with the Article 15 of the Law. The scope of this change is the statute of limitations. Regardless of which law is applicable provided that the issue is subject to an employment contract; for paid annual leave compensations and following listed claims, the statute of limitations is set as five (5) years:

a)      Severance compensation;

b)      Notification compensation;

c)      Compensation regarding acts of bad faith;

d)     Compensations regarding employment contract termination based on the violation of the principle of equal treatment.