The employment consequences of a Turkish transaction are decided by the structure, not by the transaction documents: in a share deal nothing transfers, because the employer entity is unchanged and every historical liability simply stays inside the target; in a transfer of the business as a going concern every employment contract moves automatically under Article 6 of Labour Act No. 4857, with accrued seniority intact and without any consent mechanism; and in a merger or demerger the contracts move under Article 178 of Commercial Code No. 6102, which, unlike Article 6, gives each employee a right to object.
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Everything else in the employment workstream follows from that first choice. What the diligence has to price, whether the seller keeps a tail of liability, whether a headcount reduction is lawful, which filings fall due within days of closing, and how far the buyer can standardise terms afterwards are all downstream questions, and they are routinely asked before the structure is settled, which is how a diligence report ends up answering a question the deal is no longer asking.
Four Structures, Four Employment Outcomes
The provisions do not overlap neatly. Each route has its own transfer mechanism, its own liability allocation and its own set of things that cannot be contracted around.
| Structure | What happens to the contracts | Liability of the outgoing employer | Employee objection right |
|---|---|---|---|
| Share purchase | Nothing transfers; the employer entity is unchanged and service is continuous | Not applicable; the liability stays in the target and is acquired with the shares | None |
| Transfer of a business or part of it (Labour Act Art. 6; Commercial Code Art. 11/3) | All contracts in existence on the transfer date pass automatically with all rights and obligations; seniority runs from the start date with the transferor | Joint liability for debts arisen before transfer and due on the transfer date, limited to two years | None |
| Statutory merger (Commercial Code Art. 158/4 and Art. 178) | Contracts pass under Art. 178 unless the employee objects | Article 6 expressly disapplies the joint-liability rule where legal personality ends through merger, accession or change of type | Yes, under Art. 178 |
| Full or partial demerger (Commercial Code Art. 178) | Contracts pass to the transferee unless the employee objects; on objection the contract ends at the end of the statutory notice period | Former employer and transferee jointly liable for claims already due and those falling due until the contract ends; employees may demand security | Yes |
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Two rows repay a second reading. The first is the merger row. Article 6 sets out the two-year joint liability and then, in the very next paragraph, removes it: where the legal personality of the transferor ends through merger, accession or a change of company type, the joint-liability provisions do not apply. There is no transferor left to be liable; but the consequence is that a buyer structuring an acquisition as a merger loses the statutory recourse a business transfer would have given it, and has to build that protection contractually.
The second is the transfer row. The two-year period is the part everyone remembers; the qualifying words are the part that decides cases. The joint liability reaches debts that had arisen before the transfer and were due to be paid on the transfer date. Both limbs are required. An accrued but unmatured severance entitlement fails the second limb, which is why Article 14 of Law No. 1475, the single surviving article of the old Labour Act, deals with severance separately: seniority is calculated over the combined periods, both employers answer for accrued severance, but the transferor’s liability is capped both by the period during which it employed the person and by the wage level at the time of transfer. The mechanics of that allocation are worked through in our note on the automatic transfer of employees and the transferor’s two-year liability.
Where the deal is an asset purchase rather than a share purchase, the employment provisions sit alongside a wider set of debt-transfer rules (Article 202 of the Code of Obligations, Article 11/3 of the Commercial Code and the tax regime), which are set out in our guide to the debt that transfers with the business in a Turkish asset deal. Article 11/3 of the Commercial Code also governs the form of that transfer: the business may be transferred as a whole without separate transfer acts for each asset, and the transfer agreement must be made in writing and registered and announced in the trade registry.
What Employment Diligence Has to Price
A review that produces a list of documents and a paragraph of caveats has not done its job. The exposure is quantifiable, and the numbers belong in the price, in an escrow or in a specific indemnity.
| Item | Why it is quantifiable | Where it usually lands |
|---|---|---|
| Accrued severance across the workforce | Thirty days' pay per completed year, calculated on the broad wage definition in Art. 14 of Law No. 1475, subject to the statutory ceiling revised twice yearly | Price adjustment; the number is large and predictable |
| Untaken annual leave | A quantified balance in the payroll records; payable on termination | Completion accounts |
| Overtime and premium-pay exposure | Reconstructed from time records; the limitation position and the burden of proof both matter | Specific indemnity |
| Subcontractor arrangements (Art. 2 of the Labour Act) | Where the principal-subcontractor relationship rests on a sham, the subcontractor's employees count as the principal's from the outset | Specific indemnity; also a headcount question |
| Social security premium arrears | Ascertainable from the Institution's records | Escrow; see the joint-liability rule below |
| Pending and threatened claims | Reinstatement exposure is bounded: four to eight months' pay plus up to four months' back pay under Art. 21 | Provision or indemnity |
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Two headcount thresholds change with the transaction and should be recalculated for the post-closing employer rather than carried over from the seller’s numbers. Article 18 of the Labour Act applies job security to workplaces with thirty or more employees where the employee has at least six months’ service, and provides that where an employer has more than one workplace in the same branch of activity, the headcount is determined by the total across those workplaces. A workplace that sat below the threshold in the seller’s hands can cross it on the day it is transferred to a buyer that already operates workplaces in the same branch of activity, and the buyer’s post-closing reduction plan is then a job-security exercise rather than a free hand.
The second is the sham-subcontracting rule in Article 2. Where a principal-subcontractor relationship is found to rest on a simulated transaction, the subcontractor’s employees are treated as the principal employer’s employees from the beginning. In diligence this is not a compliance footnote; it is a headcount adjustment that can move the target across the Article 18 and Article 29 thresholds at the same time as it creates seniority liabilities that were never on the payroll.
The Data Room Is a Personal Data Problem
Personnel files, payroll runs, disciplinary records and health information are personal data, and a sizeable proportion of the last category is special-category data under Law No. 6698. Disclosure to a prospective buyer is a processing operation that needs its own lawful basis; the fact that the seller lawfully holds the file does not by itself justify handing it to a third party.
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The constraint bites hardest where the room, the buyer or its advisers sit outside Türkiye. Article 9, as replaced in March 2024, permits cross-border transfer where a condition in Article 5 or 6 is met and the Board has issued an adequacy decision for the destination. Absent an adequacy decision, the transfer needs one of the appropriate safeguards the article lists (an international administrative arrangement approved by the Board, approved binding corporate rules, the standard contract published by the Board, or a written undertaking with the Board’s permission), together with the data subject’s ability to exercise rights and seek effective remedies in the destination country. Where the standard contract is used, it must be notified to the Authority within five business days of signature, a step that is easy to miss in a transaction timetable and that leaves a dated record if it is missed.
Article 9 does contain a list of derogations, but they are expressly available only on an occasional basis and only where neither an adequacy decision nor an appropriate safeguard is available. A due diligence exercise that runs for weeks and involves a structured disclosure of an entire workforce’s records is not comfortably described as occasional. In practice the workable answers are to anonymise or pseudonymise at the outset, to disclose aggregate and role-level data in the first phase, and to reserve identified personnel files for a late-stage, tightly scoped review under an appropriate safeguard.
Headcount Reduction: What Article 6 Permits and What It Forbids
Article 6 states that neither the transferor nor the transferee may terminate an employment contract by reason of the transfer of the workplace alone, and that the transfer is not just cause for the employee to resign. The next sentence is the operative one for a restructuring: the rights of either employer to terminate for economic and technological reasons or reasons required by a change in work organisation are expressly reserved, as are both parties’ rights of immediate termination for just cause.
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The distinction is one of substance. A reduction that exists because the buyer no longer needs two finance teams is a work-organisation reason and survives; one whose only explanation is that the business changed hands does not. Because the burden of proving a valid reason falls on the employer under Article 20, that reason has to exist in contemporaneous form (the integration plan, the revised organisational chart, the board paper), not be reconstructed after a claim is filed. The same article requires an employee who challenges the termination to apply to a mediator within one month of service of the termination notice and, if no settlement is reached, allows the claim to be brought before the labour court within two weeks of the date of the final mediation record.
Scale then brings in a second layer. Where terminations under Article 17 within a one-month window reach ten employees in a workplace of 20 to 100, ten per cent in a workplace of 101 to 300, or thirty in a workplace of 301 or more, Article 29 imposes a written notification at least thirty days in advance to the workplace union representatives, the regional directorate and the Turkish Employment Agency, together with a consultation duty; the procedure and its traps are set out in our guide to collective dismissal and the thirty-day notification. Article 29 also states in terms that its provisions may not be used to prevent the application of Articles 18 to 21, so completing the procedure does not convert an unjustified reduction into a lawful one. Breach carries an administrative fine per employee under Article 100, the current amount of which is set by the annual revaluation communiqué rather than by the figure printed in the statute.
Two structuring points follow. First, a reduction carried out by the seller at the buyer’s request shortly before closing is exposed on both limbs: it is hard to explain as anything other than transfer-driven, and the seller carries the litigation. Second, sequencing a reduction so that it falls just below the Article 29 thresholds in successive months does not work, because the Act aggregates terminations across a one-month period whether they fall on the same date or on different dates.
Closing: The Filings That Run on Their Own Clocks
Completion mechanics in a Turkish deal include a set of public-law filings whose deadlines start at closing and are indifferent to the parties’ post-closing checklist.
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- Social Security Institution. Article 11 of Law No. 5510 requires a workplace declaration within ten days following the date on which the new employer takes over the work or the workplace. Where the change is a merger, a change of company type or an accession, the same ten days run from the date of announcement of the registration. The article adds that the insurance rights and obligations of the employees concerned continue: the filing changes the record, not the entitlements.
- Regional labour directorate. Article 3 of the Labour Act requires an employer who establishes, takes over in any manner whatsoever, changes the subject of, or closes a workplace to notify the regional directorate within one month, giving the trade name and address, the number of employees, the subject of the work and the employer’s details.
- Foreign employees. Work permits do not travel with a transferred business. Article 10 of Law No. 6735 grants a permit for a specified workplace of a specified employer, ties extensions to the same employer, and states that an application to work for a different employer is treated as a first application. Article 22 requires the employer to notify the Ministry within fifteen days of the start and end of work and of circumstances requiring cancellation.
Alongside these sits the liability rule that most often surprises foreign buyers. Article 89 of Law No. 5510 makes the new employer jointly and severally liable for the former employer’s premium debts, late-payment penalties, late-payment charges and ancillary amounts where a workplace is taken over with its assets or liabilities, or merges with another workplace. There is no two-year limit, and the article states expressly that contractual provisions to the contrary are invalid as against the Institution. An indemnity remains worth having, but it operates only between buyer and seller.
Tax exposure moves on its own track. Article 36 of the Law on Collection Procedure of Public Receivables No. 6183 substitutes the new or acquiring legal person for the old one in mergers, transfers, demergers and changes of type. Article 30 of the same law goes further where a restructuring is used to put assets beyond reach: unilateral transactions by a debtor whose assets are absent or insufficient, carried out with the intention of frustrating collection of a public receivable, and all transactions with persons who knew or ought to have known of that intention, are void regardless of their date. Article 26 of the same law bars an action under Article 30 only once five years have passed since the transaction, so a carve-out designed to leave the liabilities in a hollow entity stays exposed for that period, which makes it a poor idea rather than an aggressive one.
After Closing: Terms Are Contractual, Not Managerial
The instinct after completion is to standardise: one bonus scheme, one set of working hours, one benefits package. Turkish law treats inherited terms as contractual, and Article 22 sets out the only route to change them unilaterally: the employer must notify the employee of a substantial change in writing, and a change not made in that form and not accepted by the employee in writing within six working days does not bind the employee. If the employee does not accept, the employer may terminate by explaining in writing that the change rests on a valid reason or that another valid reason for termination exists, observing the notice period, and the employee may then bring a claim under Articles 17 to 21. The article adds that the parties may vary working conditions by agreement at any time, and that a change in working conditions cannot be given retroactive effect.
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Two further points close the loop. Collective agreements survive the transfer on the terms set by Article 38 of Law No. 6356: where the transferee has a collective agreement in force in the same branch of activity, the transferred workplace’s collective terms continue as individual contract terms; where it does not, they continue as collective-agreement terms until a new agreement is concluded. And an intra-group reshuffle that moves individuals rather than a business is governed not by Article 6 but by Article 429 of Code of Obligations No. 6098, under which a service contract may be permanently assigned to another employer only with the employee’s written consent. Group transfer letters issued as a management instruction rather than as an offer to be signed are, on the face of the provision, not enough to transfer the contract. Where the employee does consent in writing, the transferee becomes the employer party with all rights and obligations, and rights that depend on length of service are calculated from the date the employee started work with the transferring employer.
