Article · Tax & Incentives

Employment law at foreign-invested companies: the 7 most common mistakes

HR run on translations of group policies, undocumented performance, poorly structured mutual termination agreements: the employment-law mistakes foreign-invested companies most often make in Türkiye, and their solutions.

30 March 20264 dk okumaBy Sven Köksal · Tax & Incentives
Köksal Attorney Partnership — meeting room for litigation, arbitration and dispute resolution
Summary · At a glance
  • Mandatory Turkish labour law prevails over group policies; translation is not compliance.
  • Overtime approval and pay structure are the two topics that most frequently generate litigation.
  • A performance-based dismissal does not hold up without a documented process.
  • A mutual termination agreement should be structured against the reasonable-benefit criterion.

Why do these mistakes recur?

At foreign-invested companies, HR is often managed through translations of head-office policies. Yet Turkish employment law is woven from mandatory rules and operates on the principle of interpretation in favour of the employee. The following seven mistakes are the risks we see most often in our files — and all of them are preventable.

Practical guidance

In Türkiye, mediation is the first stage in reinstatement actions and the deadlines are short: the dismissal file must be ready according to the mediation timeline, not the litigation one.

Let us set up your HR framework in line with Turkish law

From the contract suite to termination management, we build the employment-law framework of foreign-capital companies end to end.

Employment law advisory

1. Settling for a translation of the group policy

Disciplinary, bonus, remote-work, and ethics policies are not binding unless they are adapted to the formal and substantive requirements of Turkish law. The policy set must be built on the triad of “translation + localisation + notification.”

2. Failing to structure overtime

Written consent for overtime work, and the limits of “overtime is included” clauses in the pay structure, are of critical importance. If timesheets and clock-in/clock-out records are not kept, overtime lawsuits proven by witness testimony are lost.

3. Not documenting performance

A dismissal based on poor performance is not valid unless the chain of communicating the targets, evaluation, defence, and an opportunity to improve is documented. What is required is a properly kept HR file, not CRM records.

4. Structuring the mutual termination agreement incorrectly

A mutual termination agreement (ikale) is the cleanest way to close off reinstatement risk; however, the courts look for a “reasonable benefit” being provided to the employee. A mutual termination agreement made with the standard severance-and-notice package may be held invalid in litigation.

5. Skipping KVKK when sharing employee data with head office

Transferring payroll and performance data to group systems abroad requires a privacy notice, an appropriate transfer mechanism, and a regime for notifying the Board. The choice of HR software is a data-law decision.

6. Failing to audit the subcontractor relationship

A finding of a sham arrangement in security, cleaning, and support services turns subcontractor employees into the company’s own employees from the outset. The contract and the on-site practice must be audited together.

7. Treating occupational health as paperwork

OHS obligations must actually be operated through a risk assessment, training, and a committee structure. In a workplace accident, an inconsistency between the paperwork and actual practice turns against you on both the compensation and the criminal fronts.

Mediation and the reality of litigation

In Turkish employment law, mandatory mediation as a precondition to litigation is the first stage in disputes over employee claims and reinstatement, and the deadlines are short: the intent to seek reinstatement must be expressed by applying to a mediator within one month of the notice of termination. This means that the termination file must be ready according to the mediation calendar, not the litigation calendar. Equipping the person who will represent the company in mediation with genuine authority, the binding effect of the minutes in any later litigation, and the release-document arrangement all determine the quality of the outcome. For the whole of dispute management, our mediation and litigation management services are the continuation of this guide.

The lasting questions of remote and hybrid work

Remote work is no longer the exception but the model: a written remote-work contract, expense reimbursement, data-security measures, and occupational-health obligations are expressly regulated in the legislation. In foreign groups, the additional layer is cross-border remote work: for staff working from Türkiye for a German company, the tax, social-security, and employer obligations must be assessed in both countries at once — an arrangement to the contrary may unwittingly give rise to the risk of a permanent establishment in Türkiye; in the mirror scenario, staff working from Germany for a Turkish company create a Betriebsstätte risk in Germany. We structure these scenarios together with our Germany Desk, in coordination with residence-and-permit planning.

The Köksal approach

Our Employment Law focus area manages the documentation regime from hiring to exit, employee data, and restructuring processes on the employer side with a results-oriented approach. In localising group HR policies it builds bilingual contract sets; with our payroll service we ensure that the implementation also works correctly on the ground.

Conclusion

The common solution to employment-law mistakes at foreign-invested companies is the same: to manage the Türkiye operation at the intersection of group standards and Turkish law, with a documented and living framework. Once this framework is in place, employment law ceases to be a risk item and becomes part of the employer brand.

This content is for general information purposes only and does not constitute legal advice. Please get in touch with our team for an assessment relating to your specific situation.
Sven Köksal

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Sven Köksal

Legal Engineer

Advisory on legal technology, process design and digital business models.

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Unless it is communicated to the employee in a language they understand and adapted to Turkish law, its binding force is questionable; localisation is essential.

It depends on the role; hybrid structures can be set up for those holding director status. The choice of status changes the severance and social security consequences.

No; this is general information. Contact our team for your specific matter.

Knowledge Centre

Let us set up your HR framework in line with Turkish law

From the contract suite to termination management, we build the employment-law framework of foreign-capital companies end to end.