Liability in Primary Employer and Sub-Employer Relationship

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Introduction

Under labor and social security law, it is essential for the employer to carry out business with its employees. However, in the legislation, the sub-employer concept has been regulated by providing the opportunity to gain support from another employer and its employees in some parts of the work, wherein the employer and, therefore, its employees are insufficient. Pursuant to Article 2 of Labor Code numbered 4857 (“Labor Code”), an employer may assign its auxiliary works related to the production of goods or services carried out in the workplace, or a part of the main work that requires expertise due to technological reasons and the operation, to another employer who takes the job and assigns its employees solely for this work. As is understood from this regulation, the establishment of the primary employer and sub-employer relationship is subject to certain rules.

In addition, some regulations have been stipulated in the legislation in terms of the results of this relationship and the liabilities imposed on the parties. Accordingly, due to the possibility that sub-employers who have more limited financial opportunities and smaller capital than the primary employer, cannot meet their debts to their employees and the Social Security Institution (“SSI“), the primary employers with a stronger financial structure and capital have been held jointly liable together with the sub-employer for these debts. In this article, the cases of joint liability regulated under the legislation, and the recourse relationship of the parties, will be evaluated.

Legal Grounds and the Scope of Joint Liability

Pursuant to Turkish Code of Obligations numbered 6098 (“TCO”), joint liability means that each of more than one debtor is responsible for the entire debt to the creditor. Below, the legal regulations under which the primary employer and the sub-employer are legally jointly liable and the scope of these regulations will be examined.

Labor Law

The responsibility of an employer to its employees arises from the employment contract between them or the mandatory provisions of the law-governed by this employment contract. Therefore, the primary employer has various responsibilities and obligations to its employees, both contractually and legally, due to the employment contract between them. There is no contractual relationship between the primary employer and the employees of the sub-employer. Nevertheless, pursuant to Article 2/7 of the Labor Code, the primary employer, together with the sub-employer, are liable for the obligations arising from the Labor Code, the employment contract, or the collective labor agreement to which the sub-employer is a party, to the employees of the sub-employer. With this regulation, the legislator has stipulated joint liability arising from the law to protect the sub-employer’s employees as the employees of the primary employer. As a result of this obligation, the sub-employer’s employee may apply to both the sub-employer and the primary employer separately or together for the performance of his/her receivables.

Pursuant to the Supreme Court, with respect to the scope of the joint liability in terms of individual labor law, notice, severance, bad faith, and reinstatement compensations, and all labor receivables, such as wages, overtime work, week holidays, general holidays, annual leave, bonus, premium, meals and road allowances are included.[1] On the other hand, there are different opinions in the doctrine regarding the calculation of the primary employer’s obligation arising from the receivables which are dependent as to the period of service, such as severance pay and annual leave. In terms of collective labor law, the responsibility of the primary employer comes into question for the rights arising from the collective labor agreement to which the sub-employer is subject.

In accordance with the established doctrine and the Supreme Court opinions, within the framework of the job security granted to the employees with Article 18 of the Labor Code, the primary employer is not jointly liable for the invalidity of termination nor reinstatement of the employee; however, it is accepted that the joint liability exists in terms of non-reinstatement and idle time compensations arising from the sub-employer’s non-reinstatement of the employee to the work after a court decision.

It should be emphasized that this joint liability is limited to the time that the employee works at the primary employer’s workplace.[2]

Occupational Health and Safety Law

Pursuant to Article 4 of Occupational Health and Safety Code numbered 6331 (“OHSC”), which is based on the obligation to take care of the employees, which is one of the fundamental obligations of the employer, the employer is obliged to take necessary measures to ensure and protect the health and safety of the employees employed in the workplace. In addition, as per Article 22 of the OHSC, an obligation to establish an occupational health and safety committee is regulated for the primary employer and sub-employer relations that last more than six months. Since the basis of these regulations is the employer’s obligation to taking care of its employees, it is considered that the material and moral compensation claims arising from a work accident suffered, or occupational disease acquired, by the sub-employer’s employees that occurs in or from the workplace, are within the scope of the joint liability of the primary employer.

Social Security Law

Joint liability for the primary employer and the sub-employer is also foreseen under Social Insurance and General Health Insurance Code numbered 5510 (“SIGHIC“), which regulates the social security legislation. According to Article 12/6 of the SIGHIC, even if the insured are employed through a third party and have made a contract with them, the primary employer is responsible, together with the sub-employer, for the obligations this law imposes on the employer. In accordance with the precedents of the Council of State and the Supreme Court, the primary employer is jointly liable with the sub-employer for the obligations imposed by the SIGHIC on the employers, such as the obligation to submit the statement of employment and the leave of the insured, the obligation to notify the workplace, the obligation to report workplace accidents, the obligation to give the monthly premium and the service documents, the obligation to pay the insurance premiums, etc. On the other hand, there are differing practices between the opinions of the SSI, the Supreme Court, and the Council of State, in terms of whether or not this joint liability exists for administrative fines. In one of its decisions, the Supreme Court is of the opinion that administrative fines are the result and sanction of the failure to comply with the duties imposed on the employer, the main employer shall also be responsible for the consequences of the subcontractor’s failure to comply with its duties, and the primary employer will be liable for the administrative fines imposed on the sub-employer in accordance with this joint liability.[3] On the other hand, in a recent decision, the Council of State has decided that since there is no explicit provision in the law stating that the principal employer will be liable for administrative fines in the case of failure to fulfill the specified obligations, and the responsibility of the primary employer solely exists financially and legally; therefore, the party who acts contrary to the relevant obligations should be held subject to the penalties. Accordingly, the Council of State considered that the primary employer shall not be held responsible for the administrative fines imposed by the SSI against the sub-employer, as per the rule of the personality of the penalties.[4]

Right of Recourse

Under Article 167, which is one of the general provisions of the TCO regulating joint liability, unless otherwise agreed to, or understood from, the nature of the legal relationship between the debtors, each of the debtors is responsible for the performance that shall be made to the creditor with equal shares between/amongst each other. Therefore, as per the internal relationship between the primary employer and the sub-employer, the rule is that both employers are responsible equally to the employee of the sub-employer. On the other hand, this equal liability existing in the internal relationship can be eliminated by the sub-employer agreement concluded between the parties. According to precedents of the Supreme Court, it is stated that in a recourse case between the primary employer and the sub-employer, the liability should be resolved according to the provisions of the sub-employer contract.[5] Accordingly, the primary employer may demand the entire amount from the sub-employer, which is paid to the sub-employer’s employee, if it is stipulated in the contract.

Conclusion

In the legislation, various results are foreseen in terms of the primary employer and sub-employer relationship. One of these consequences is the joint liability of the primary employer to the creditors of the sub-employer for some debts. The joint liability of the primary employer takes place not only in labor law, but also in occupational health and safety law and social security law. Accordingly, the primary employer is jointly liable with the sub-employer in terms of liabilities arising from the law and the contract to the employees of the sub-employer. In addition, it is accepted that this joint liability exists in terms of the compensation to be claimed as a result of a work accident or occupational disease in the workplace. Unlike the labor law and occupational health and safety law, the scope of the joint liability of the primary employer in social security law is controversial in case law and doctrine views.

Legal joint liability stipulates that both employers are equally responsible to the employee and SSI. On the other hand, in the internal relationship between the primary employer and the sub-employer, this responsibility can be eliminated, or the liability ratios can be changed, if the parties agree. It should be noted that this agreement in internal relations cannot be claimed against third parties.


(Authored by Idil Uz and first published by Erdem & Erdem on May 2021)

[1] Decision numbered 2008/23429 E., 2008/20721 K. and dated 21.07.2008 of 9th Civil Chamber of the Supreme Court.

[2] Justification of Labor Code numbered 4857 dated 07.03.2003.

[3] Decision numbered 1991/10-277 E, 1991/359 K and dated 12.06.1991 of the General Assembly of the Supreme Court.

[4] Decision numbered 2015/10087 E., 2018/7937 K. and dated 28.11.2018 of the 15th Civil Chamber of the Council of State.

[5] Decision numbered 2012/8729 E., 2012/15064 K. and dated 11.06.2012 of the 13th Civil Chamber of the Supreme Court; Decision numbered 2004/11-254 E., 2004/295 K and dated 12.05.2004 of the General Assembly of the Supreme Court.

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