The Constitutional Court Annuls Regulation on Choice of Law in Employment Contracts

Introduction

The 27th Civil Chamber of the Istanbul Regional Court of Appeal, the 10th Labor Court of Istanbul, and the 11th Labor Court of Ankara applied to the Constitutional Court of Türkiye (“Constitutional Court”) through concrete norm review, arguing that paragraphs (1) and (2) of Article 27 of the Act on Private International and Procedural Law No. 5718 (“Act”) were unconstitutional in lawsuits concerning claims arising from employment contracts.

In its decision numbered 2023/158 E., 2024/187 K., the Constitutional Court ruled that paragraph (1) of Article 27 of the Act was unconstitutional as it violated Article 49 of the Constitution, which safeguards the freedom to work, and annulled the provision.[1] The annulment decision was published in the Official Gazette No. 32837 and will take effect six months after its publication date, meaning it will enter into force on September 10, 2025.

Provisions Annulled

Paragraph (1) of Article 27 of the Act provided that employment contracts would be governed by the law chosen by the parties, provided that the mandatory minimum protection of the employee’s habitual workplace law was preserved. Paragraph (2) of the same article stipulated that, in the absence of a choice of law in employment contracts involving a foreign element, the law of the country where the employee habitually performed their work would apply. It further stated that if the employee was temporarily assigned to work in another country, such assignment would not alter the habitual workplace.

Content Of the Decision

The Constitutional Court conducted a thorough examination of the limits of freedom in choosing the applicable law in employment contracts and the principle of employee protection. It concluded that allowing the choice of law in employment contracts does not provide sufficient safeguards against outcomes that may be detrimental to employees.

However, the Court did not find paragraph (2) of Article 27 unconstitutional under Article 49 of the Constitution. It reasoned that determining the applicable law in cases where no choice is made falls within the legislative discretion of the lawmaker and that judges can fairly establish the habitual workplace law.

The key reasons for declaring paragraph (1) of Article 27 unconstitutional are as follows:

1. Restriction of the Employee’s Access to a More Closely Connected Legal System

Under the current regulation, when parties choose a governing law, the legal system more closely connected to the employment relationship becomes inapplicable. The Constitutional Court emphasized that this could disadvantage employees. It noted that, in the absence of a choice of law, there may be a legal system that is more closely linked to the contract and provides higher protection for the employee.

2.  Limited Bargaining Power of the Employee

The Constitutional Court found that the employee, as the weaker party in the employment contract, generally has limited bargaining power in negotiations concerning the choice of law. As a result, employees often lose access to the protections offered by the legal system more closely connected to the employment relationship, which may provide higher protection standards.

3. Difficulty in Determining the Content of Foreign Law

The Court also highlighted that employees often lack sufficient knowledge of the content of foreign law and cannot foresee whether its application would be in their favor. This increases the risk of adverse consequences resulting from a choice of law. Even judges may face difficulties in determining the content of foreign law, making it highly unlikely that employees would have adequate access to such information. Consequently, an employee unable to anticipate the legal implications of the chosen law may be deprived of the rights they would have otherwise enjoyed had no choice of law been made.

Conclusion

The Constitutional Court underscored the state's positive obligation to protect employees and the necessity of maintaining a fair balance in employer-employee relationships. It ruled that employees could be deprived of the protection provided by a more closely connected legal system when a choice of law is made. On this basis, the Court annulled paragraph (1) of Article 27 of the Act. The annulment decision will take effect on September 10, 2025.

On the other hand, paragraph (2) of Article 27 of the Act, which stipulates that in the absence of a choice of law, the law of the habitual workplace shall apply, was not annulled. The Court reasoned that determining the applicable law in such cases falls within the discretion of the legislature and that judges can fairly determine the habitual workplace law.