Burden of Proof and Interest Applications in Bad Faith Compensation

What is Bad Faith Compensation?

The process of terminating the relationship between an employer and an employee is bound by various legal rules. When an employer exercises their right of termination in violation of the principles of honesty and objective good faith, bad faith compensation comes into play.

Regulated under Article 17, Paragraph 6 of the Labor Law No. 4857, this type of compensation is a punitive safeguard payable to the employee when the employer abuses their right to terminate. However, the fundamental condition to benefit from this compensation is that the employee must fall outside the scope of job security (iş güvencesi). Employees covered by job security (those with at least 6 months of seniority in workplaces with 30 or more employees) can only file a reinstatement lawsuit claiming invalid termination, and they cannot additionally claim bad faith compensation.

Who Bears the Burden of Proof in Bad Faith Compensation?

The general legal principle that "he who asserts must prove his claim" remains valid in bad faith compensation lawsuits. As a general rule, the burden of proving that the employment contract was terminated in bad faith by the employer lies with the employee. An employee claiming malicious termination must substantiate this claim with concrete facts and evidence in court.

For instance, the mere termination of an employment contract shortly before the completion of a seniority milestone cannot be considered evidence of bad faith on its own. The employee must prove that the termination was genuinely executed with the intent to deprive them of their severance rights. Courts must gather all evidence thoroughly, hear witnesses, and, if necessary, obtain expert examinations to determine the presence of bad faith.

Exceptional Cases Where the Burden of Proof Shifts to the Employer (Presumptions)

While the general rule places the burden of proof on the employee, in certain specific situations, the course of events creates a "presumption of bad faith," and the burden of proof shifts to the employer.

Terminations resulting from an employee filing a lawsuit against the employer to seek legal rights, filing complaints with official authorities, or testifying against the employer are directly presumed to be in bad faith. If the employer claims otherwise—asserting that the termination was based on another justified or valid reason—the burden to prove this falls entirely on the employer.

Instances of Bad Faith in the Light of Supreme Court (Yargıtay) Decisions

The Labor Law does not explicitly list every scenario that constitutes a bad faith termination; this has been left to the jurisprudence of the Supreme Court of Appeals (Yargıtay) and general legal principles. According to Supreme Court rulings, the primary instances of bad faith include:

a) Termination Due to Complaints and Seeking Legal Rights

An employee exercising a statutory right (such as demanding unpaid wages) or filing a complaint with the Social Security Institution (SGK) or the Regional Labor Directorate due to unpaid insurance premiums is considered a clear instance of bad faith by the Supreme Court.

Supreme Court Ruling Example: According to a decision by the 9th Civil Chamber of the Supreme Court, terminating the employment contract of an uninsured worker right after they report this to the Regional Labor Directorate and have it verified via an inspection report is a definitive example of bad faith.

b) Testifying Against the Employer

Firing an employee for honestly testifying against the workplace or employer in a lawsuit filed by another employee warrants bad faith compensation. Terminating an employee with the intent to punish them for giving a statement against the employer violates the rules of objective good faith.

c) Termination Due to Pregnancy

The termination of a female employee's contract due to pregnancy is also evaluated as a bad faith termination by the Supreme Court. Even if the female worker is not subject to job security provisions, she is entitled to claim bad faith compensation when dismissed on the grounds of pregnancy.

d) Union Activities and Discrimination

The termination of an employment contract due to the employee joining a labor union, participating in union activities, or refusing an illegal demand from the employer (e.g., being forced to resign from a union) constitutes bad faith. The Supreme Court considers the employer's act of dismissing unionized workers and hiring new ones to prevent unionization at the workplace as a strong indicator of bad faith.

How is Bad Faith Compensation Calculated?

The method for calculating the amount of bad faith compensation is explicitly stated in the law. Under Article 17/6 of the Labor Law, the compensation is calculated as three times the wage corresponding to the notice (ihbar) period.

The following criteria are considered during the calculation phase:

Base Wage for Compensation: For those working under the Labor Law No. 4857 and the Maritime Labor Law, the calculation is based on the "dressed gross wage" (giydirilmiş brüt ücret) at the date of termination. This means that, in addition to the employee's base salary, continuous payments such as travel, food, and bonuses are included in the calculation. However, for employees subject to the Turkish Code of Obligations (TBK), the calculation is based on the "plain gross wage."

Deductions: Only Income Tax and Stamp Duty are deducted from the calculated gross bad faith compensation amount. Social Security (SGK) premiums are not deducted from this compensation.

Interest Applications in Bad Faith Compensation

If an employee does not receive their rightful compensation on time, the interest rules applied to protect the value of the receivable and put the employer in default are of great importance. Interest applications in bad faith compensation claims are examined under two main headings: Type of Interest and Start Date of Interest.

Which Type of Interest is Applied?

According to the Law No. 3095 on Legal Interest and Default Interest and the provisions of the Turkish Code of Obligations; unless otherwise stipulated in the contract, "legal interest" (yasal faiz) is applied to bad faith terminations. If a special rate higher than the legal interest or a different type of interest (such as the highest deposit interest rate) is specified in the employment contract or collective bargaining agreement, that rate must be applied. If there is no such provision, the applicable rate is the legal interest rate.

When is the Start Date of the Interest?

The start date of interest is one of the most debated topics in legal disputes. In bad faith compensation, the start date of the interest is not the date the contract was terminated (date of dismissal).

- State of Default (Temerrüt): According to the Code of Obligations, interest begins to accrue from the date the employer is duly put into "default." If the employee sends a formal notice (ihtarname) to the employer after termination demanding the bad faith compensation and grants a specific period, the end of this period marks the default date.

- Date of Lawsuit and Amendment (Partial Lawsuit): If the employer is not put into default prior to the lawsuit, in partial lawsuits (kısmi dava) filed under Article 109 of the Code of Civil Procedure (HMK), the date of the lawsuit is accepted as the interest start date for the amount requested in the initial petition, and the amendment date (ıslah tarihi) is used for the increased portion requested later.

- Indefinite Claim Lawsuit (Belirsiz Alacak Davası): In an indefinite claim lawsuit filed under Article 107 of the HMK, if the employer has not been previously put into default, interest begins to accrue from the date the lawsuit is filed. Even when the plaintiff clarifies the receivable and increases the claim amount later, the initial filing date of the lawsuit will be considered the interest start date for the entire determined amount.

Conclusion and Assessment

In summary, bad faith compensation is the most crucial legal shield that protects employees lacking job security against arbitrary terminations by employers that violate the principle of good faith. While the burden of proof generally rests on the employee's shoulders, in cases that are "clear indicators of bad faith"—such as filing a complaint, seeking legal rights, or testifying against the employer—the burden of proof shifts to the employer.

It is highly important for employees seeking their rights to pay attention to technical details such as legal interest and the default date when claiming this compensation, which is calculated as three times the notice period, to ensure full and complete collection of their receivables. The consistent rulings of the Supreme Court clearly demonstrate that any employer action exceeding the boundaries of objective good faith will not go unpunished.