Mutual Rescission (İkale) of Employment Contracts in Turkey

In the Turkish labor market, employment relationships can end through several channels: the expiration of a fixed-term contract, the death of an employee, or a unilateral termination (resignation or dismissal). However, a fourth and increasingly vital method is Mutual Rescission, known in Turkish legal practice as “İkale.”

What is İkale (Mutual Rescission)?

İkale is a bilateral agreement where the employer and the employee mutually decide to terminate the employment relationship. Unlike a unilateral termination, which is a formative right exercised by one party, İkale is a contract based on the “Freedom of Contract” principle (Article 48 of the Constitution and Article 26 of the Turkish Code of Obligations).

Why is İkale Preferred?

Under the Labor Law (No. 4857), “Job Security” provisions allow employees to file re-employment lawsuits if they believe their termination was unjustified. An İkale agreement serves as a strategic tool to:

• Prevent future litigation regarding re-employment.
• Provide a “clean break” through mutual consent.
• Allow for a customized settlement package that satisfies both parties.

Validity and the “Reasonable Benefit” Criterion

Since İkale is not explicitly regulated in the Labor Law, its validity is determined by Supreme Court precedents. The most critical factor is the Reasonable Benefit (Makul Yarar) criterion.

Because an employee who signs an İkale agreement waives their right to file a re-employment lawsuit and generally loses eligibility for state unemployment insurance, the agreement must offer them an “additional benefit” beyond their statutory rights.

• The Test:Simply paying severance and notice pay is often considered insufficient by courts. To be deemed valid, the employer should offer a “Mutual Rescission Fee” (İkale Tazminatı) or an extra payment to justify the employee’s loss of job security rights.

Key Characteristics of the Agreement

• Parties:The agreement must be signed between the employee (or their authorized representative) and the employer.
• Requirement as to Form:While Turkish law does not strictly require a written form, it is highly recommended to execute a written protocol for evidentiary purposes.
• Unification of Intention:There must be a clear offer and acceptance. If the employee can prove they signed the agreement under pressure or duress, the court may declare the İkale null and void.
• Moment of Termination:The contract usually ends on the date the protocol is signed, though parties may agree on a future date.

Consequences of Mutual Rescission

1. Severance and Notice Pay:Technically, these are not legally required in a rescission. However, in practice, they are calculated and included in the settlement package to satisfy the “Reasonable Benefit” requirement.
2. Job Security:The employee cannot file a re-employment lawsuit.
3. Unemployment Insurance:Because the contract is ended by mutual agreement (not by the employer’s unilateral act), the employee is usually ineligible for unemployment benefits from İŞKUR.
4. Accrued Rights:All earned rights, such as unused annual leave and outstanding bonuses, must be paid in full.

Expert Guidance from Atlas Global Audit & Accounting

Navigating the complexities of İkale requires a deep understanding of both the Code of Obligations and Labor Law precedents. At Atlas Global Audit & Accounting, we assist our clients in:

• Drafting legally sound İkale protocols.
• Calculating the “Reasonable Benefit” to minimize litigation risk.
• Advising on the correct Social Security (SGK) notification codes to ensure compliance.