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Employees
As a general rule under Turkish labor law, the employees of a busi-
ness place are automatically transferred when such business place is
transferred to a new owner who keeps the business operational. In this
regard, no special assignment contract or transaction must be entered
into. However, it must be taken into consideration that for an automat-
ic transfer to be effective and binding for the employees, the working
conditions of the employees must remain as they were prior to the
transfer. Otherwise, the employees may object to an automatic transfer
and terminate their employment contracts. On a final note, an auto-
matic transfer of the employees brings with it a transfer of rights of the
employees with retrospective effect;
i.e.
for calculation of severance
payments and annual leave payments, the date when the relevant
employee commenced working for the target company will be taken
into account, and not the date of the business transfer, whereby the
employees are transferred.
As to a share deal, there will be no difference as compared to an
asset deal, unless otherwise agreed to with the transferring party of the
deal, and the employees of such target company are automatically
transferred.
Exposure for Past Practices
Although it is much less likely for a buyer to inherit tax liabilities
and penalties in the event of an asset deal when compared to a share
deal, one cannot fully assert that in an asset deal, the buyer will not in
any way be affected by the above-mentioned liabilities, which the tar-
get company may be exposed to due to their past practices, especially
from a theoretical point of view.
Albeit a lack of reference with respect to the liabilities of the busi-
ness under Art. 11/3 TCC, unless otherwise specifically provided for
under the contract, the transfer of a business shall also be considered
to cover the liabilities of such business as well, since Art. 202 TCO reg-
ulates that a transfer shall cover both the assets and the liabilities of a
business.
According to Art. 202 TCO, if a business is transferred in its
entirety, with all of its assets and liabilities, the transferee automatical-
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