A Significant Decision from the Court of Appeal on Claims for Severance and Notice Compensation Filed During Ongoing Reinstatement Proceedings

In its decision dated 10 December 2025 and numbered 2025/7723 E., 2025/9733 K. (“Decision”), the 9th Civil Chamber of the Court of Appeal provided a detailed assessment of the legal status of claims related to termination-based receivables—such as severance and notice compensation—filed either together with a reinstatement lawsuit or while such a lawsuit is still pending.

In this case, the employee filed a reinstatement lawsuit on 30.09.2016; while the proceedings were ongoing, the employee also filed a separate employment receivables lawsuit on 18.01.2017, claiming severance and notice compensation. The reinstatement lawsuit became final on 26.07.2018, and the employee applied to the employer on 14.11.2018 within the statutory period to be reinstated; however, the employer did not reinstate the employee on 21.01.2019.

The Court of Appeal held that, following a timely application by the employee, the employment relationship continues, and the employer’s refusal to reinstate constitutes a new termination. Accordingly, the employment contract should be deemed terminated as of 21.01.2019. For this reason, the Court concluded that the employment receivables lawsuit filed on 18.01.2017, which included claims for severance and notice compensation, had been filed before the termination had occurred and therefore qualified as a “premature action.” Since there was no legal interest as of the date of filing, the Court held that the claims should be dismissed.

The Decision appears to be of guiding nature in practice, particularly with respect to the concepts of termination date, legal interest, and preliminary issue (stay of proceedings). Accordingly, in order to avoid the risk of dismissal of claims due to lack of legal interest, it may be considered a safer approach to first initiate a reinstatement lawsuit and then, depending on the outcome of that case, pursue claims related to termination-based receivables. Although each case must be evaluated based on its own circumstances, the Decision highlights the importance of carefully assessing litigation strategy and the timing of claims in cases involving ongoing reinstatement proceedings as well as claims for reinstatement and employment receivables.

The key principles set forth in the Decision may be summarized as follows:

(i)        The employment contract is not deemed to have definitively terminated upon the filing of a reinstatement lawsuit

According to the Court of Appeal, when an employee files a reinstatement lawsuit seeking a determination of invalid termination, it cannot yet be said that the employment contract has ended, as the validity of the termination will be examined in that lawsuit. Therefore, if termination-based receivables are claimed separately, the reinstatement lawsuit should be treated as a preliminary issue in the receivables case.

(ii)       The employee’s application following the reinstatement decision is decisive

If the court rules that the termination is invalid:

• If the employee does not apply for reinstatement within the statutory period, the termination becomes valid.
• If the employee applies within the statutory period, the termination becomes null and void, and the employment contract is deemed never to have been terminated.

Accordingly, the employee’s conduct following the reinstatement decision determines the fate of the employment contract.

(iii)      The employer’s failure to reinstate constitutes a new termination

As explicitly stated in the Decision, where the employee applies for reinstatement within the prescribed time, the employment relationship is deemed to continue. In such a case, the employer’s failure to reinstate the employee must be regarded as a termination by the employer.