Background
Between 1 October 1998 and 31 December 2007, the plaintiff company (a principal employer) entered into a series of service procurement contracts with several subcontractor firms. Under those contracts the subcontractors supplied and employed the on-site workforce. When the subcontractors terminated the employment of 23 workers, those workers sued the plaintiff as principal employer and, applying the joint-and-several liability scheme of Turkish labor law, labor courts ordered the plaintiff to pay severance pay, notice pay, annual leave pay, and related entitlements totaling 297,058.97 TL (later amended by the plaintiff to the same figure after an early partial amendment to 297,058.97 TL). Having satisfied those judgments, the plaintiff brought this recourse action in the Ankara 8th Commercial Court of First Instance against the subcontractor defendants, seeking recovery of what it had paid, apportioned across each defendant in proportion to the period during which each had employed the workers.
The defendants contested liability on various grounds: one argued it bore no employment relationship with the workers at all and was responsible only for wages; another contended the workers were the plaintiff’s own employees whose working conditions were set by the plaintiff, and that the minimum one-year tenure needed to trigger severance had not been met. Two rounds of expert reports were commissioned. The first report (22 May 2014) allocated liability by percentage shares of the total 297,058.97 TL. The second report (17 July 2017) applied different legal principles and found only 269,566.63 TL reclaimable in total, partly because — for cases in which the subcontractors had not been formally notified (ihbar) of the underlying labor litigation — their liability was capped at the principal amounts and accessories as of the date the underlying judgment became final, and partly because the plaintiff had made some overpayments contrary to the terms of the labor court judgments and could not recover those excesses from the defendants.
The first instance court adopted the second expert report and partially accepted the claim accordingly. The plaintiff appealed, arguing that the adopted expert report was legally erroneous.
The Court’s Holding
The Ankara Regional Court of Appeals, 23rd Civil Chamber, unanimously allowed the appeal, vacated the first instance judgment under Article 353(1)(a)(6) of the Code of Civil Procedure (HMK), and remanded the case to the Ankara 8th Commercial Court of First Instance for a fresh hearing and new judgment. Because the vacatur rested on a procedural ground under Article 353(1)(a), the appellate court did not itself resolve the merits; those are for the trial court to determine on remand. The appellate court’s decision is final and not subject to further appeal pursuant to HMK Articles 353/1(a) and 362/1(g).
The chamber identified a decisive legal error in the expert report that the trial court had adopted: the expert had computed the defendants’ recourse liability on a net (after-tax) basis for certain payments even though the plaintiff had actually disbursed gross amounts to the workers. The court held that the principal employer’s right of recourse extends to the full gross amounts actually paid, together with all accessories. Accordingly, liability must be recalculated on a gross-pay footing, not on notional net figures.
The chamber also set out the governing substantive rules for the retrial: (1) severance pay — all subcontractors are jointly liable in proportion to the period each employed the worker, calculated on the worker’s dressed gross wage at the date of termination; (2) annual leave pay — falls entirely on the last subcontractor, because unused annual leave converts to a monetary entitlement only upon termination of the employment contract; (3) notice pay — is borne exclusively by the last subcontractor, as the party that effected the termination; (4) other entitlements (overtime, weekly rest pay, wage arrears) — each subcontractor is liable only for the period during which it employed the worker. These principles were stated to be consistent with established Court of Cassation (Yargıtay) guidance from the 23rd and 6th Civil Chambers.
Key Takeaways
- A principal employer that satisfies labor court judgments on behalf of subcontractors’ workers may reclaim the full gross amounts it paid — not merely the net sums after statutory deductions — from the subcontractors responsible for those workers.
- Where successive subcontractors employed the same workers, liability for severance pay is apportioned among all subcontractors in proportion to each one’s employment period; liability for notice pay and annual leave pay falls exclusively on the last subcontractor that terminated the contract.
- An expert report that calculates recourse liability on a net basis when gross payments were actually made is legally flawed and cannot serve as the basis for judgment; its adoption by the trial court constitutes reversible error warranting vacatur and remand.
- For labor suits in which the subcontractor was not formally notified (ihbar) during the proceedings, the subcontractor’s recourse exposure is capped at the principal judgment amount and accessories accrued up to the date the judgment became final — but this cap does not permit a downward adjustment from gross to net amounts actually disbursed.
Why It Matters
This decision reinforces the Turkish appellate courts’ consistent position — affirmed in multiple Court of Cassation rulings — that service procurement contracts transfer the real economic burden of worker entitlements to the subcontractor-employer, leaving the principal employer with a full recourse right for whatever it actually pays out. By insisting that recourse calculations track gross disbursements rather than net figures, the chamber closes a gap that would otherwise let subcontractors benefit from the principal employer’s overpayment error while escaping part of the labor cost they contractually assumed.
For in-house and employment counsel advising companies that engage contractors under public or private service procurement frameworks, the ruling is a practical reminder that principal employers should monitor enforcement proceedings closely — protesting improper gross-amount levies in execution proceedings rather than paying and trying to recover the excess later — and that any expert evidence in subsequent recourse litigation must be grounded in the actual gross sums disbursed, as accepted by Turkish appellate authority.