The Constitutional Boundaries of Choice of Law in Employment Contracts with a Foreign Element: The Constitutional Court’s Decision No. 2024/187
Introduction
As a result of globalization, labor mobility has increased, and many Turkish citizens have started working in foreign countries for Turkish companies or international employers. This situation has inevitably led to the intersection of labor relations with different legal systems. In this regard, Article 27 of Law No. 5718 on Private International Law and Civil Procedure ("PIL") determines the applicable law for employment contracts with a foreign element. However, the extent to which this provision aligns with the constitutional guarantees related to the social state and worker rights has been the subject of legal debate. The Constitutional Court's decision No. 2024/187, with case number 2023/158 ("Decision"), significantly contributed to this discussion.
Rationale for the Request
As stated in our legal article[1] titled “Decision of the Court of Cassation General Assembly of Civil Chambers on Choice of Law in Employment Contracts with a Foreign Element” dated November 30, 2024, the Court of Cassation General Assembly of Civil Chambers has resolved The Supreme Court Civil General Assembly has accepted that the law chosen by the parties, even if it is less favorable to the employee than the mandatory provisions of the law of the employee's habitual place of employment, will still be applied. Following this approach by the Court of Cassation, the matter has been brought before the Constitutional Court. The three applications to the Constitutional Court involved the request to annulment Articles 27/1 and 27/2 of the PIL. The cases subject to these applications relate to claims by Turkish employees employed abroad. The courts submitting the requests, argued that workers employed abroad were less protected than those employed in Turkiye violated the principles of equality, property rights, and public order, and that these provisions were unconstitutional.
Article Subject to Annulment and the Rationale
To determine the applicable law for employment contracts with foreign element, Article 27 of the PIL applies as follows:
Article 27 – Employment Contracts[2]
- The law chosen by the parties shall govern employment contracts, provided that the minimum protection afforded to the employee under the mandatory provisions of the law of the employee's habitual place of employment is preserved.
- If the parties have not made a choice of law, the law of the employee's habitual place of employment shall apply. If the employee works temporarily in another country, the place of employment in that country shall not be considered the habitual place of employment.
- If the employee does not habitually work in one country but works permanently in several countries, the law of the country where the employer's main establishment is located shall apply.
- However, if there is a law more closely related to the employment contract, that law may apply instead of the law provided in paragraphs (2) and (3).
In the request for the annulment of the first and second paragraphs of the above provision, it has been argued that Turkish workers employed in foreign branches of Turkish registered companies were deprived of rights granted to employees in Türkiye due to the application of foreign law, which violated the principle of equality. It is also argued that the rules are incompatible with the state’s obligation to raise workers' standard of living, especially considering that the law of the habitual place of employment may not be sufficiently developed. The lack of an obligation for employers to inform employees about the applicable law violates property rights and the principle of equality of arms. It is also argued that the variability of foreign law, which could lead to different decisions by labor courts, violated the principle of legal certainty, and that this situation violated the right to a fair trial and the state’s obligation to protect workers.
Unconstitutionality of the First Paragraph
According to the first paragraph, the employer and employee can choose the law of any country; however, this law must protect at least equivalent to the mandatory provisions of the employee’s habitual place of employment. The legal provision does not allow the application of a law more closely related to the contract. A more closely related law may offer much higher protection to the employee. However, if the parties choose a law, the employee is deprived of this higher level of protection. The employee, as the weaker party in the contract, has no bargaining power regarding the choice of law. Additionally, the employee’s lack of familiarity with the content of the chosen foreign law hinders fair adjudication. For these reasons, the Constitutional Court found that the inability to apply a law more closely related to the contract violated the right to work under Article 49 of the Constitution and annulled the first paragraph by a majority vote. The decision is set to come into force six months after the ruling.
Constitutionality of the Second Paragraph
The second paragraph provides that if the parties have not made a choice of law, the law of the employee’s habitual place of employment shall apply, and if the employee temporarily works in another country, this place shall not be considered the habitual place of employment. The Constitutional Court does not find this provision unconstitutional. If the parties have not made a choice of law, determining the applicable law, or the connecting factor, is within the discretion of the legislator. The fourth paragraph provides an explicit regulation that if there is a law more closely related to the employment contract, that law may apply instead of the law foreseen in the provision. Therefore, in cases where the parties have not made a choice of law, the judge is authorized to determine whether a more closely related law should be applied. Considering that the judge must decide by law and fairness, the Constitutional Court concluded by a majority vote that the regulation did not contradict the state's positive obligation to protect workers.
Dissenting Opinion
Members dissenting to the decision argued that the annulled first paragraph of Article 27 was not unconstitutional. According to them, the possibility of choosing the applicable law is consistent with international practices, and the employee is already provided with the minimum protection under the law of the habitual place of employment. Additionally, they argued that Turkish law could apply in cases where public order is violated. In dissenting to the second paragraph, it was argued that subjecting Turkish workers employed abroad to foreign law could deprive them of their fundamental rights, which would violate the principles of equality and the social state.
Conclusion
The Constitutional Court’s decision No. 2024/187 evaluates the claim of the unconstitutionality of the conflict-of-laws rules[3] determining the applicable law for employment contracts with a foreign element. This decision marks an important turning point in strengthening worker protection in international labor law. The principles that the employee, as the weaker party, cannot freely choose the law, and that even when the law is chosen, the employee cannot be deprived of higher protection, have been constitutionally safeguarded through this ruling. Accordingly, the annulment of Article 27/1 of the PIL is resolved, and the ruling will enter into force six months after the decision. The judge's discretion in determining the applicable law provides flexibility for worker protection, and as such, the second paragraph does not conflict with workers' rights or the principle of the social state and is not annulled.
- Erdem, Piraye: Decision of the Court of Cassation General Assembly of Civil Chambers on Choice of Law in Employment Contracts with a Foreign Element www.erdem-erdem.av.tr (Date of Access 03/04/2025)
- Translated by the author
- Şanlı, Cemal / Esen, Emre / Ataman- Figanmeşe, İnci: Milletlerarası Özel Hukuk (Private International Law), 7th Edition, İstanbul, Beta, 2019, p. 104.
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