“Bad Faith Compensation” is a legal practice regulated in the Article 17 of the Turkish Labour Code No. 4857. This practice was introduced to protect workers who are outside the scope of application of Articles 18, 19, 20 and 21 of the Labour Code, in other words, “who cannot benefit from job security provisions”. In cases where the employment contract of workers in this situation is terminated by abusing the right of termination, it is possible for the judge of the labor court to order compensation to be paid to the worker up to three times the wage for the notice period.
Bad Faith Compensation can be applied to indefinite-term employment contracts. Bad faith compensation cannot be claimed in fixed-term contracts.
The first and main condition of the bad faith compensation is that the worker is not covered by job security. Workers who are covered by job security are not entitled to bad faith compensation. The fact that the worker is not covered by job security means the following: The worker works in a workplace where fewer than 30 workers work, or is a worker who has worked for less than 6 months, even if there are more than 30 workers in the workplace.
The reasons that require the award of Bad Faith Compensation are the determination that the employee’s employment contract has been terminated with ill intentions such as the following reasons: Due to the employee complaining about the employer to the legal authorities, due to filing a lawsuit against the employer and seeking his/her legal rights before court, due to testifying against the employer in a lawsuit, due to the employee’s pregnancy or personal characteristics which are unrelated to work, due to the worker’s language, religion, race and gender, etc.
The immediate termination of the employment contract by paying the notice compensation by the employer does not invalidate the claim for “bad faith compensation”.
In order to be entitled to compensation for bad faith, it is necessary to prove before the court that the employer abused his/her right to terminate the employment contract. In so, the employer who abuses the right of termination may be sentenced to pay compensation in the amount of three times the wage for the notice period.
Since the Bad Faith Compensation is related to notice periods, it should be subjected to income tax and stamp duty deductions, as in notice compensation.
