Employment Contracts of Foreign Senior Executives and General Managers in Turkey

When a foreign company appoints an experienced general manager or CEO to lead its Turkish subsidiary, that person's legal position differs sharply from that of an ordinary employee. Turkish labour law classifies senior managers who run the enterprise as an "employer's representative" (işveren vekili), and this status shapes outcomes ranging from termination to taxation. For foreign executives and the companies that appoint them, structuring this distinction correctly is the first step toward avoiding costly disputes down the line.

Employer's Representative versus Ordinary Employee

Under Article 2 of Labour Law No. 4857, an employer's representative is a person "who acts on behalf of the employer and takes part in the management of the work, the workplace and the enterprise." Titles such as general manager, CEO or country manager usually fall within this definition. Yet the title itself is not decisive; what matters is the actual scope of authority the manager holds.

An important distinction must be drawn. If a foreign executive is appointed only as a board member of a joint-stock company, the relationship is not an employment contract but a corporate (agency-like) relationship governed by company law, and the Labour Law does not apply at all. By contrast, if the general manager works under an employment contract, they retain employee status; rights granted by the Labour Law such as wages, annual leave and severance pay continue to apply. Article 2 states expressly that the status of employer's representative does not eliminate the rights and obligations granted to employees.

Why Job Security Does Not Apply

The most critical consequence for foreign executives concerns the job-security (reinstatement) provisions. Articles 18-21 of the Labour Law give a qualifying employee the right to file a reinstatement lawsuit where a dismissal is made without a valid reason. However, the final paragraph of Article 18 expressly disapplies this protection to an important group of managers: "This article, Articles 19 and 21, and the last paragraph of Article 25 shall not apply to the employer's representative who manages the entire enterprise and their assistants, nor to the employer's representative who manages the entire workplace and holds the authority to hire and dismiss employees."

This covers two groups: (1) managers who direct the whole enterprise, together with their deputies; and (2) managers who run an entire workplace and at the same time hold the authority to hire and dismiss staff. For the second group, both powers must be present together; managing a workplace without independent hiring-and-firing authority is not enough for the exemption.

In practice this is a frequently litigated question of fact. Courts examine, through concrete evidence (powers of attorney, signature circulars, organisational charts, board minutes), whether the manager genuinely directed the whole enterprise and truly held independent hiring and firing authority. The word "general manager" in a contract does not suffice on its own; the actual exercise of authority must be shown. Clarifying the executive's real position at the documentary level therefore serves both parties.

Terms to Negotiate in the Contract

A senior executive who cannot benefit from job-security protection should secure their position through the contract. Key points include:

• Severance / "golden parachute" clauses: With no reinstatement right, any additional compensation payable on unfair dismissal (over and above statutory severance and notice pay) should be clearly agreed in the contract.
• Notice periods: The statutory minimum notice periods can be extended by contract; longer notice is common for senior positions.
• Non-compete: A post-employment non-compete is valid under Articles 444-447 of the Turkish Code of Obligations; it must stay within reasonable limits of duration (as a rule, a maximum of two years), geography and subject matter, otherwise a judge may narrow its scope.
• Stock options / equity awards: Where share options or performance shares are granted, their legal basis must be structured correctly under the Turkish Commercial Code (for example the registered-capital system, or general assembly / board resolutions); vesting and the fate of unvested awards on departure should be set out clearly.

Work Permits, Tax and Social Security

If the foreign executive is to work in Turkey, they must obtain a work permit under the International Labour Force Law No. 6735; this permit also covers residence. For senior roles and qualified investments, facilitated regimes such as the Turquoise Card may come into play. Assessment criteria on company capital, employment levels and the number of managers affect the application.

For tax, an executive who spends more than six months in a calendar year in Turkey is generally treated as a full taxpayer and may be taxed on worldwide income; those who do not exceed that period are limited taxpayers, taxed only on Turkey-sourced income. Double-taxation treaties are decisive in most scenarios. On social security, bilateral social security agreements to which Turkey is a party may allow a seconded executive to remain within their home-country system; otherwise an SGK obligation arises under Law No. 5510.

Frequently Asked Questions

I am a general manager; do I really have no job security? The title alone is not looked at. If you manage the entire enterprise and actually hold hiring-and-firing authority, the job-security (reinstatement) provisions do not apply. If your authority is limited, protection may continue; this is a question of fact determined by concrete evidence.

If I have no reinstatement right, do I also lose severance pay? No, these are separate matters. Even as an employer's representative you remain an employee; when the conditions are met you are entitled to severance and notice pay. The exemption concerns only the reinstatement lawsuit.

If I am only a board member, does the Labour Law apply? If you are solely a board member with no employment contract, the relationship is governed by company law and the Labour Law does not apply. If you also have an employment contract, the two relationships may coexist.

How long does a work permit for a foreign executive take? The timeframe depends on the nature of the application and the completeness of the documents. Complete applications may conclude within a few weeks; the company meeting the capital and employment criteria is important for a smooth process.

How Mona Hukuk Can Help

Foreign senior-executive appointments require labour law, company law, work permits and tax to be structured together. At Mona Hukuk we support foreign companies and executives with drafting executive contracts, assessing job-security and termination risk, work permit applications, and structuring non-compete and stock-option terms.

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