A remarkable decision from the 9th Civil Chamber of the Court of Appeal

Does a mutual termination agreement truly protect the employer? Can an employee who leaves through a mutual termination agreement upon their own request later claim a differential notice compensation? Do “additional leave entitlements” granted under company policy convert into monetary claims upon termination?

The decision of the 9th Civil Chamber of the Court of Appeal dated 23.12.2025 and numbered 2025/8999 E., 2025/10255 K. provides important answers to these frequently encountered questions in employer practice.

In this case; the claimant employee worked as a sales supervisor at the defendant company, and the employment contract was later terminated through a mutual termination agreement. Despite this, the employee alleged that receivables related to overtime, weekly rest days, public holidays, annual leave, and residual notice compensation were underpaid. Additionally, the employee argued that the “bonus leave” entitlements included in the company’s annual leave procedure should also be taken into account in the calculation of annual leave receivables. The employer, on the other hand, stated that the mutual termination agreement was concluded upon the employee’s request, that various payments had been made to the employee under different headings, and that the company procedure clearly stipulated that bonus leave would not carry over.

So, what did the Court of Appeal say on this matter? 

1. If the mutual termination agreement was proposed by the employee, differential notice compensation cannot always be claimed: After accepting that the mutual termination agreement was signed upon the claimant’s proposal and is valid, the Court of Appeal emphasized that, in such a case, whether notice and severance payments will be made arises not from the law but from the agreement of the parties. Therefore, it did not find it legally appropriate to claim an additional “differential notice compensation” beyond what was stipulated in the mutual termination agreement.
2. A valid mutual termination agreement terminates the employment contract with prospective effect; however, it does not automatically eliminate previously accrued employee receivables: The Court of Appeal clearly stated that the employee may continue to claim unpaid wages, wage supplements, overtime receivables, and unused annual leave. The employer may only be released from these past receivables through a valid release agreement. The Chamber also reminded that release statements not meeting the conditions set forth under Article 420 of the Turkish Code of Obligations cannot be deemed valid.
3. “Bonus leave” granted by the company is not the same as statutory annual leave: The claimant argued that both statutory annual leave entitlements and additional leave granted through company practice should be included in the calculation. The Court of Appeal made a clear distinction between these two types of leave. According to the Chamber, annual paid leave under the Labor Law No. 4857 can certainly be claimed. However, with respect to “bonus leave” granted through company policy or workplace practice, which extends beyond statutory leave, the rules set by the employer through internal procedures may be valid. In the present case, the provision stating that “bonus leave not used within the year in which it is earned shall not be carried over to the following year” was deemed binding by the Court of Appeal. Therefore, it was found incorrect to include unused bonus leave in the calculation of annual leave receivables.

What should employers take from this decision and what should they pay attention to?

• First, it should be clearly documented, in writing and beyond any doubt, from whom the mutual termination proposal originated. An explicit and signed request from the employee may be decisive in case of a dispute.
• Second, the mutual termination agreement is not the same as the settlement of past receivables. Employers should not assume that standard waiver/release clauses will always provide sufficient protection.

Third, internal company policies regarding leave and fringe benefits should be carefully drafted. The transferability, use, and whether additional leave will convert into monetary claims upon termination should be explicitly regulated. The examined decision demonstrates that properly drafted internal procedures may lead to outcomes in favor of the employer.