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Court of Appeal Decision Regarding The Request For The Collection of The Penalty Clause Due to The Worker’s Violation of The Ban Competition
The subject of the case concerns the collection of the penalty arising from the contract with the breach of the prohibition of competition by the worker. The plaintiff claims that the defendant signed the contract and notified all conditions. The defendant working in the company violated the prohibition of competition with the contract duly concluded and started working for another company immediately.
On the other hand, the defendant party stated that the contract was signed after a while and that it was not with a wet signature. Therefore it does not have the quality of a document. At the same time, the non-competition agreement made between the parties in accordance with the mandatory provision of the Turkish Code of Obligations Article 420/1 should be deemed invalid. As stated in the contract, it has been argued that the statement “Collection of 5 months’ salary…” is unfair.
Since the Trial Court instance decided in favour of the plaintiff, the case was taken to the Court of Appeal, and this authority reversed the decision. The Court of Appeal decided to dismiss the case and send the file to the Trial Court instance, which made the decision.
Legal Advice to The Employer in The Context of Penalty Condition and Provision Under The Decision
Although the Turkish Code of Obligations is based on the freedom of contract, the regulation in article 420/1, whose implementation is discussed in the concrete case, reflects the liberal understanding of the law.
With this regulation, the legislator/law-maker wanted to protect the worker who is weak before the employer, who sustains her/his life with her/his work and labour, and has ruled that only the penalty condition imposed against the employee in service contracts is invalid.
It is aimed to protect the freedom of work and contract guaranteed by Article 48 of the Constitution. While the law states that the unilateral penalty clause is invalid, it does not distinguish between the term of the contract or the period after the termination of the contract.
Article 445 of the Turkish Code of Obligations, the non-competition agreement must be made within the legal limits in terms of location, duration, and type of work. Excessive regulations are limited to the intervention of the judge.
According to article 446/2 of the Turkish Code of Obligations, if an act contrary to the prohibition is subject to a penalty condition and there is no contrary provision in the contract, the employee can get rid of the debt related to the prohibition of competition by paying the stipulated amount; however, the worker has to recover the damage exceeding this amount.
According to article 446/3 of the Turkish Code of Obligations, the employer may also request an end to the act contrary to the prohibition if it justifies the behaviour of the worker by the importance of his/her violated or threatened interests, except for the penalty and the payment of additional damages that may arise.
The employee and employer can impose a penalty clause on the non-competition agreement. However, the validity of this penalty condition depends on article 420/1 of the Turkish Code of Obligations. In other words, a penalty condition to be imposed here should not only be a penalty condition against the employee, and the employer should have undertaken an action in return.
Article Keywords: Worker’s Violation, The Penalty Clause Due to The Worker’s Violation of The Ban Competition, Court of Appeal Decision Regarding The Request For The Collection of The Penalty Clause Due to The Worker’s Violation of The Ban Competition, Turkish Code of Obligations, The Trial Court, The Court of Appeal.
Here is another article for further reading: Obtaining a Work Permit in Turkey.
