Business Transfer and the Protection of Employee Rights in Turkey: Labour Code Article 6

When you acquire a Turkish company, a production facility or a single department, you take on more than the assets — you take on the people who work there. Under Turkish labour law this scenario is governed by the "workplace transfer" regime in Article 6 of Labour Code No. 4857, which protects employees' accrued rights robustly. Whether the deal is a share purchase, an asset sale, an outsourcing arrangement or the transfer of one business unit to another company, understanding these provisions is critical for employees and, above all, for foreign companies buying into a Turkish business.

Article 6 and the Principle of Automatic Continuation

Article 6 sets a clear rule: where a workplace, or part of a workplace, is transferred to another person on the basis of a legal transaction, the employment contracts existing on the transfer date pass to the transferee together with all their rights and obligations. This is the principle of automatic continuation. There is no need to re-hire employees, sign new contracts or obtain each employee's separate consent; the employment relationship carries on seamlessly with the new employer.

The most concrete consequence concerns seniority. Under the Code, the transferee employer must, for rights based on length of service, act by reference to the date the employee started work with the transferor. In other words, the employee cannot be treated as a fresh hire starting from zero: severance calculation, annual leave entitlement and notice periods continue to accrue from the original start date. Unused annual leave also passes to the new employer as a liability.

Joint Liability of Transferor and Transferee

Employee claims that accrued before the transfer are a critical negotiation point in most acquisitions. Article 6 provides that the transferor and the transferee are jointly liable for debts that arose before the transfer and became payable on the transfer date. There is, however, an important limit: the transferor's liability is capped at two years from the transfer date.

In practice this means the acquiring company assumes liability for employment debts existing at the moment of transfer. The two-year period protects only the former employer; there is no equivalent time limit for the buyer. For that reason, share and asset purchase agreements should separately allocate this risk through indemnity and warranty clauses. The Code also states that the joint-liability rules do not apply where a legal entity ceases to exist through merger, accession or a change of type, and that Article 6 does not apply where a workplace is transferred as a result of the liquidation of assets in bankruptcy.

Transfer Alone Is Not a Ground for Termination

Article 6 expressly provides that neither the transferor nor the transferee may terminate an employment contract merely because of the transfer of the workplace. Equally, the transfer does not constitute just cause for the employee to resign. The buyer cannot dismiss staff on the basis that "new management has arrived," nor can the employee resign with severance entitlement simply because the employer has changed.

Two exceptions are reserved, however. First, the employer's right to a valid-reason dismissal required by economic or technological grounds, or by a change in work organisation, remains intact. Second, the parties' right to immediate termination for just cause is preserved. Where the transfer causes a material change in the employee's working conditions — for example, a worsening of location, pay or status to the employee's detriment — Article 22 comes into play: the employer may only make a material change by written notice, and if the employee does not accept it in writing within six working days, the change does not bind the employee. Where conditions are seriously breached, the employee may acquire the right to immediate termination for just cause under Article 24, and may then claim severance pay. The decisive test is not the transfer itself, but whether it has actually worsened the employee's conditions.

Due Diligence and Transfer for Foreign Companies

For a foreign company acquiring a Turkish business, or part of one, through an asset or business transfer, the workforce is one of the most significant "hidden liabilities" it inherits. In the intellectual-property due diligence and general M&A review process, personnel files deserve the same scrutiny as trademarks, patents and contracts. In practice, the following steps stand out:

• Map employment debts: Identify severance, unused annual leave, overtime and bonus claims before closing; because of the joint liability in Article 6, these pass to the buyer.
• Verify seniority dates: Confirm each employee's true start date; the transfer preserves it, and it determines future indemnity cost.
• Add warranty and indemnity clauses: Include seller warranties and indemnities for pre-transfer debts in the purchase agreement.
• Avoid material changes: Do not unilaterally worsen pay, duties or status after the transfer; doing so triggers the risk of a severance-bearing termination under Articles 22 and 24.
• Assess IP and employment together: The contracts, non-compete and confidentiality records of key technical staff should be reviewed alongside the IP due diligence process.

Frequently Asked Questions

Is employee consent required for a workplace transfer? No. Under Article 6, employment contracts pass automatically to the transferee on the transfer date; no separate employee consent or new contract is needed. If the employee does not wish to continue with the new employer, the general termination rules apply.

Who is liable for severance accrued before the transfer? The transferor and the transferee are jointly liable for debts that arose before, and became payable on, the transfer date. The transferor's (former employer's) liability is, however, limited to two years from the transfer date; there is no such limit for the transferee.

Can an employee resign with severance simply because the employer has changed? As a rule, no. The transfer alone is not just cause for the employee. But if the transfer causes a material adverse change in working conditions such as pay or duties, a just-cause termination and severance claim may arise under Articles 22 and 24.

As a foreign company, what is the biggest employment risk when buying a Turkish business? That pre-transfer employee claims pass to the buyer through the joint liability in Article 6. This risk should be managed through pre-closing due diligence and warranty–indemnity clauses in the purchase agreement.

How Mona Hukuk Can Help

Workplace transfer is a technical field where labour law and M&A law intersect. At Mona Hukuk, we advise foreign companies acquiring a Turkish business or part of one, as well as employers navigating a transfer, on employment due diligence, identifying pre-transfer employee debts, drafting warranty–indemnity clauses in purchase agreements, and providing support in any employment litigation that follows.

To arrange a consultation in Antalya, write to us at contact@monahukuk.com or call +90 (242) 606 14 32.