Late Payment and Interest
ENTRANCE
In employer-employee relations, wages are the most fundamental element of the employment contract. The timely and complete payment of wages, which are the compensation for the worker's labor, is guaranteed by both labor law and the constitutional order. Article 55 of the Constitution states that "Wages are the compensation for labor," thus ensuring the protection of this right within the framework of social justice principles. However, in practice, many employers fail to pay workers' wages regularly, delaying or underpaying salaries. This situation constitutes not only an economic hardship for the worker but also a legal violation that undermines the foundation of trust in the employment relationship. The Turkish Labor Law grants significant rights to workers in cases of delayed wage payment, even regulating this situation a valid reason for immediate termination of the employment contract.
1. Legal Nature of Wages and Employer's Obligation to Pay
According to Article 32 of the Labor Law No. 4857, "Wages are the amount paid in money by the employer or third parties to a person in return for work." With this provision, the law clearly establishes that wages are the most fundamental right of the worker. The same article further states that wages at least once a month ; this period can be shortened through collective or individual labor agreements in favor of the worker. Therefore, the employer's obligation to pay wages is a continuous obligation that recurs at regular intervals.
Wages must be paid in cash. The employer cannot pay wages in kind (goods, services, promissory notes, etc.); otherwise, the payment is considered invalid. Furthermore, employers employing more than 10 workers make payments through a bank . This requirement aims to prevent undeclared payments and make it easier for workers to prove their wage claims. In bank transactions, receipts constitute the strongest evidence for the worker.
When an employer fails to fulfill its obligation to pay wages, the employee not only suffers a monetary loss but also faces a threat to their social security due to the loss of their livelihood. Therefore, the legislator has considered the timely payment of wages not only as a matter of individual contractual relationship but also as an obligation related to public order.
2. Late Payment and Interest Charges
There is a specific penalty that comes into effect if wages are not paid on time. According to Article 34 of Law No. 4857, "An employee whose wages are not paid within twenty days of the payment date, except for a force majeure reason, may refrain from performing their work." This provision is a type of to stop work (retention right) . After this period, the employee can exercise their right not to work until the wages are paid, and this cannot be considered "absence from work." Therefore, if the employer terminates the employment contract for this reason, the termination would be unfair.
The article further states, "In this case, the employer cannot deduct wages for the unworked period and cannot hire new workers to replace them," thus establishing clear provisions to protect the worker. Furthermore, in case of late payment of wages, the employer is obligated to pay interest for each day the highest interest rate applied to deposits . This interest rate is determined annually according to the rates announced by the Central Bank of the Republic of Turkey.
According to the established jurisprudence of the Supreme Court, interest begins to accrue from the due date of the wage payment. For example, if it has been agreed that the employee's wages will be paid on the 5th of each month, and the employer fails to make the payment within 20 days of the 5th, interest will begin to accrue from the 6th day. Since this interest the highest interest rate applied to deposits , it has a protective nature in favor of the employee and is higher than the legal interest rate.
As is frequently observed in practice, some employers do not pay their employees' wages regularly, making lump sum payments after a few months or consistently delaying payments. The 9th Civil Chamber of the Supreme Court distinguishes between "one-off delays" and "systematic delays" in such cases; it accepts that systematic delays constitute a valid reason for termination of employment for the employee
3. Persistent Delay in Payment and the Right to Justifiable Termination
According to clause (e) of the second paragraph of Article 24 of Law No. 4857, "If the employer fails to calculate or pay the employee's wages in accordance with the provisions of the law or the terms of the contract, the employee may terminate the employment contract immediately for just cause." This provision allows the employee to unilaterally and immediately terminate their employment contract if the employer violates the obligation to pay wages.
Termination for just cause entitles the employee to severance pay ; however, notice pay cannot be claimed. This is because termination for just cause is a form of immediate termination resulting from the employer's fault. Although the termination is legally "immediate," in practice, the employee may wait a reasonable period if the late payment of wages has become a recurring issue. The Supreme Court has stated that "the continuous late payment of wages constitutes an ongoing breach," and therefore the statute of limitations does not begin to apply.
For example, the 9th Civil Chamber of the Supreme Court of Appeals, in its decision numbered 2020/31418 E., 2021/9321 K., included the following statement:
"Constantly paying wages late constitutes behavior by the employer that disrupts the economic and psychological balance of the employee, and as long as this situation continues, it does not eliminate the justifiable ground for termination of employment for the employee."
Such decisions protect workers in situations where they lose their livelihood and prevent arbitrary behavior by employers. The persistent delay in wage payment is sufficient grounds for justified termination, as it makes the employment relationship unbearable for the worker.
4. Principles for Determining and Calculating Interest Rates
The interest rate is determined according to the nature of the employee's claim. Article 34 of the Labor Law explicitly stipulates "the highest interest rate applied to deposits." This phrase should be interpreted in favor of the employee. Therefore, the applicable interest rate the highest interest rate announced by the Central Bank of the Republic of Turkey for one-year Turkish Lira deposits .
Interest begins on the day the wage is due and continues until payment is made. This interest also continues to accrue for the period after the employee's termination date, as the debt has arisen and become due.
The interest rate to be applied to severance pay the highest bank deposit interest rateHowever, it is important to note that interest on severance pay accrues from the "date of termination," because severance pay becomes due and payable upon termination.
In practice, courts different types of labor claims separately . For example, a 4857/34 interest rate is applied to wage claims; a 1475/14 interest rate to severance pay; and legal interest to annual leave pay or overtime. These differences are of great importance to lawyers in terms of formulating accurate claims.
5. Employee Termination Process and Implementation Stages
An employee can directly exercise their right to terminate their employment for just cause if their wages are consistently paid late. However, in practice, following these steps before termination facilitates proof:
-
Sending a Written Notice: The employee must put the employer in default by sending a notice regarding the non-payment of wages. This notice can be sent via registered electronic mail (KEP), notary public, or registered mail with return receipt requested.
-
Waiting Period: Although not legally required, waiting a reasonable period (e.g., a few days) demonstrates the worker's good faith.
-
Termination Notice: The employee they are immediately terminating the employment contract for just cause . The date and content of this notice are extremely important.
-
Mediation Application: According to Law No. 7036, it is mandatory to apply for mediation before filing a lawsuit regarding labor claims.
-
Litigation Process: If no agreement is reached at the end of the mediation process, the employee can file a lawsuit in the labor court for severance pay, wages, interest, and other labor-related entitlements.
While the burden of proof largely rests with the employee in this process, the employer also has the obligation to submit payroll and bank records. Signed payroll documents, in particular, constitute strong evidence against the employee; however, a reservation has been made on the payroll or if it can be proven that the actual wage was paid differently, the payroll loses its evidentiary value.
6. Examples from Supreme Court Decisions
The Supreme Court has interpreted the issue of late wage payments in favor of the worker in many of its decisions
-
Supreme Court, 9th Civil Chamber, Case No. 2017/22304 E., Decision No. 2019/14022 K.: “The consistent late payment of wages constitutes a breach of trust by the employer and is a valid reason for termination of employment by the employee.”
-
The 22nd Civil Chamber of the Court of Cassation, Case No. 2016/14598, Decision No. 2018/2681: “A delay of a few days in payment does not constitute a valid reason for termination; however, if this situation becomes recurring, the employee may terminate the contract for just cause.”
-
Court of Appeals, 9th Civil Chamber, Case No. 2015/35778, Decision No. 2017/5631: “When an employer fails to pay an employee's wages within the legal period, they are liable for the highest interest rate applied to deposits, in accordance with Article 34 of Law No. 4857.”
-
Supreme Court, 7th Civil Chamber, Case No. 2021/4456 E., Decision No. 2022/8121 K.: “Systematic delays in salary payments undermine the foundation of the employment relationship; they eliminate the element of trust for the employee.”
These decisions demonstrate that the Supreme Court has adopted the principle of interpretation in favor of the worker and highlight the serious consequences of an employer's violation of payment discipline.
7. Points to Consider During Mediation and Litigation Processes
During mediation, the employee should demand payment of severance pay and accrued wages with interest due to justified termination. The minutes prepared during this stage can be used as evidence in future court proceedings. If no agreement is reached through mediation, the employee must file a lawsuit in the labor court within two weeks.
The lawsuit petition must clearly state which periods the wage claims relate to, the due date for each, the date on which they were actually paid, and the commencement date for interest accrual. The lawsuit must be supported by payroll records, bank statements, and witness testimonies for the relevant period.
Employers' claims of "force majeure," such as economic crises, cash flow problems, or pandemics, are generally not considered legally valid. This is because non-payment of wages is the employer's own operational risk, and this risk cannot be passed on to the employee.
8. Distinction Between Interest Claims and Types of Interest
Interest is a rather technical subject in labor-related claims. In practice, there are three basic types of interest:
-
Legal Interest: This is the interest rate determined in accordance with Article 88 of the Turkish Code of Obligations.
-
Commercial Interest: According to Law No. 3095, this applies to commercial transactions.
-
The highest deposit interest rate is regulated in Article 34 of the Labor Law and Article 14 of Law No. 1475.
The highest deposit interest rate applies to wage claims , while legal interest applies to other items (e.g., annual leave pay, overtime, etc.) . However, if the plaintiff's attorney does not explicitly state the type of interest and its commencement date in the petition, the court may sometimes award "legal interest." Therefore, technically accurate preparation of petitions is extremely important.
9. Statute of Limitations and Forfeiture Periods
The statute of limitations for labor claims is set at 5 years by Law No. 7036. All monetary rights, such as wages, overtime pay, bonuses, incentives, and annual leave pay, are subject to this period. However, of continued violations, i.e., persistent late payment of wages, the statute of limitations restarts each month.
The "6 working days" rule specified in Article 26 of Law No. 4857 regarding the right to terminate employment for just cause does not apply to ongoing violations such as late payment of wages. This is because the violation is an act repeated every month. Therefore, the employee can exercise their right to terminate employment at any time (within a reasonable period).
10. Conclusion and Evaluation
Late payment of wages is not only a financial problem but also a breach of trust that fundamentally undermines the employment relationship. When a worker does not receive payment for their labor on time, both their standard of living and legal security are damaged. For this reason, the Turkish legal system has introduced regulations to protect workers.
When an employer fails to fulfill its obligation to pay wages, the employee not only has to pay interest, but can also terminate the contract for just cause and claim severance pay. If the employer makes this situation a regular occurrence, it is interpreted by the employee as "the employment relationship becoming unbearable.".
The Supreme Court's practice is consistent in this direction: "The continuous or systematic delay in payment of wages constitutes a valid reason for termination by the employee." Therefore, in such cases, employees can claim not only interest but also severance pay, annual leave, overtime pay, bonuses, and all other entitlements.
In conclusion, late payment of wages is one of the most common violations of labor law. However, with the right legal strategy, a well-documented application, and a conscious employee, their rights can be fully protected. For employers, this is an area of liability that carries significant risks of compensation claims. Discipline in wage payments is not only an ethical obligation but also a legal one.
SEO-Friendly Tags (Hashtags):
About Post Author
