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LABOR LAW

331

Validity of Penal Clauses in Employment Agreements

The Court of Cassation has adopted in its decisions some limitations

with regards to penal clauses stipulated against the employee and

considers penal clauses that do not respect these limitations partially

or wholly null and void. The basic requirement sought by the Court of

Cassation to validate penal clauses is ‘reciprocity’. Reciprocity in penal

clauses means: stipulating a penal clause for both parties and this penal

clause should be equal or equivalent for both parties. The decision of the

9th Civil Chamber of Court of Cassation dated 07.05.2002 and numbered

2002/2161 E., 2002/7195 K.

states that: “

According to our Chamber’s

opinion, in the event it is determined that there is no equivalence in the

penal clauses for the employee and the employer, in other words in case

there is a more severe penal clause against the employee, the liability of

the employee cannot be heavier than that of the employer’s.

”

Accordingly, the lawmaker has adopted the reciprocity principle

with regards to penal clauses, and Article 420 of the Code of Obligations

regulating the penal clause in service agreements states that any penal

clause stipulated only against the employee is null.

Another condition along with the reciprocity principle for an

employment agreement containing a penal clause is that the agreement

between the employer and the employee should be a fixed term

employment agreement. The expiration date of an indefinite term

employment agreement cannot be determined, and it is not possible to

include a penal clause which is forever binding.

Conclusion

Penal clauses may be stipulated in employment agreements to limit

the termination rights of both employer and employee. However, the

penal clause shall remain valid unless it violates the personal rights of

the debtor, law or morality. Within this scope, the purpose is to prevent

working conditions from being determined solely by the employer, since

the employee is economically dependent on the employer. As a result,

it can be stated that the freedom of contract is restricted in favor of the

employee who is economically the weakest party to the agreement.