Insights

Since December 31, 2019, when People's Republic of China notified the World Health Organization ("WHO") for unusual number of people suffering pneumonia in Wuhan, the virus known as COVID-19 has spread around the globe and caused a "pandemic". Since January 9, 2020, when the COVID-19 caused death of its first victim, total number of deaths exceeded 4,000 so far, along with more than 110,000 infections confirmed. While the virus has only spread in China at the early stage, it has now been reported in all continents of the World, with material effects to giant developed economies, such as the US and the EU. Finally, the WHO identified the situation as a "pandemic", which means global epidemic, on March 11, 2020.

In light of these circumstances, it has become obvious that the COVID-19 Pandemic started to trigger substantial legal consequences predominantly on employment law, data protection law and contract law matters. We, therefore prepared the below Q&A for purposes of enlightening the initial queries that one can come up with upon the inconveniences due to the COVID-19 Pandemic.

1-Is there any government advice or instruction as regards to businesses in order to prevent the spread of the coronavirus?

Current announcements made by the Ministry of Health are directed to individuals rather than businesses. These advisory announcements state that (i) people who have been to abroad within last 14 days shall spend the following 14 days home and take necessary hygienic measures, (ii) Turkish individuals planning visits to China, Iraq, Italia and Mongolia shall pay due care and attention and even postpone their visits if such visits are not necessary.

Yet, with the Presidential Circular, which has been published in the Official Gazette, dated March 13, 2020, public officials' travels to abroad will be subjected to permission of the relevant authority.

In addition to that the spokesman of the Presidency has announced that the schools will be closed for 1 week and the courses will be delivered online or via the national TV.

2- In case an employer identifies an employee as high risk, does such Employer have an obligation to make any notification?

The Law on Occupational Health and Safety numbered 6331 obliges employers to inform their employees, contractors and their employers, as well as other organizations that the employer has assigned, on matters that is known to adversely affect or that carry the potential to adversely affect their health, together with the protective and preventive measures addressing the same and employees' legal rights with respect to their employment relationship. As the employer's duty to inform is directly linked with the potential risks and threats to life and health, this provision may be interpreted in a way extending the duty to inform the city/region/country in accordance with the scope of the risk and danger, at Employer's discretion.

For instance, while a coronavirus case detected in a particular workplace in a remote area may not trigger the duty to inform other employees working at other cities; in the case that there are commuting employees between different workplaces which may come into contact with an infected employee; then the duty to inform must be interpreted broadly.

As per the Regulation on Surveillance of Contagious Diseases and Control Principles, public and private health service providers are obliged to notice and announce a contagious disease to the Ministry of Health and other government authorities. Therefore, employers with more than 50 employees which are obliged to employ a company doctor may be deemed to be indirectly obliged to make notification through their company doctors.

However, in any case, all notifications shall be done in a manner compliant with data protection regulation and abstaining from disclosing the personal data to the extent possible. For example, if the other employees will be informed about the fact that there is a detected case within the enterprise, then employee(s) that (have the potential to) carry COVID-19 identification should not be named.

3- Can an employer demand its employees not to travel abroad?

Since employer is obliged to provide a healthy and safe working environment for its employees as per Law on Occupational Health and Safety numbered 6331, it may advise its employees not to travel abroad or it may advise its employees who have been to abroad within last 14 days to spend the incubation period at home either by providing such employee with paid leave or (if it is agreed upon in writing) by sending such employee to unpaid leave or (if conditions are met) by making such employee work from home.

4- Can an employer demand its employees to travel abroad?

Considering the fact that coronavirus is listed as a pandemic by World Health Organization due to the severity of its contagiousness level and current measures taken by Turkish government as regards to public sectors and taking into consideration employer's duty to protect employees' health, employees may refrain from traveling abroad and even terminate employment contract on justified grounds when such travel is insisted by employer.

5- Can an employer demand its employees to work from home?

In the event employment contract allows an employee to work in places other than the one determined in the employment contract and in the event necessary equipment and working environment is provided to employee, it is possible for employer to demand its employees to work from home. However, in such case, employer remains responsible for the accidents which may occur during the working time at home unless employer proves it fulfilled his obligations arising out of or in connection with the employment contract and the relevant laws in order not to be held responsible for such accident.

In addition, in the event an employee with high risk of having coronavirus insists on not working from home and rather coming to the work place, employer may be eligible to terminate such employee's employment contract due to their actions which jeopardize the safety of the work place and other employees under article 25/2/I of Turkish Labor Code and under employer's obligation to provide a healthy and safe working environment together with the protective and preventive measures for its other employees as per Law on Occupational Health and Safety numbered 6331.

6- Should an employer pay its employees' wages in case it temporarily shuts down its operations in order to prevent the spread of coronavirus and at its sole discretion?

As long as a temporary shut-down decision is taken at employer's sole discretion as a precautionary measure to prevent the spread of coronavirus, it shall be considered as a business decision and such employer shall pay its employees' wages in full. However, in such a case, employer may consider offering employees working from home.

7- Can an employer refrain from paying its employees' wages in case it temporarily shuts down its operations in order to prevent the spread of Coronavirus and upon a government authority's announcement or decision?

Although government authorities have not provided any announcement or decision directed to businesses as regards to prevention of the spread of coronavirus yet, once such announcement or decision is provided, it may allow certain employers to refrain from paying its employees' wages in full. For example, in case of enforcement of a quarantine in the neighborhood of the work place, the shut-down of work place may be considered as a compelling reason for employer which allows employer to pay its employees half salary for up to the first week of the quarantine. In the event such shut-down takes more than one week, then employees shall have the right the terminate their employment contract at once without considering notice periods. However, in such a case employer shall be responsible for paying employee's severance pay calculated considering such employee's length of service.

8-Can an employer terminate an employment contract due to coronavirus?

In case of a compelling reason which prevents employee from working for a period longer than a week (such as enforcement of a quarantine in the neighborhood of employee's home), employer may terminate such employee's employment contract at once without considering notice periods. However, in such a case employer shall be responsible for paying employee's severance pay calculated considering such employee's length of service.

In addition, employer may terminate an employee's employment contract based on a justified ground, if such employee cannot continue working for a period lasting for their mandatory notice period (ranging from 2 weeks to 8 weeks based on the length of service) + 6 weeks, due to sickness e.g. coronavirus. However, in such a case employer shall be responsible for paying employee's severance pay calculated considering such employee's length of service.

Lastly, in the event an employee having coronavirus and being aware of such incident insists on coming to the work place despite employer's directive not to do so, employer may be eligible to terminate such employee's employment contract due to their actions which jeopardizes the safety of the work place and other employees under article 25/2/I of Turkish Labor Code and under employer's obligation to provide a healthy and safe working environment together with the protective and preventive measures for its other employees as per Law on Occupational Health and Safety numbered 6331.

9- Can an employer implement active health monitoring measures (measuring body temperature, use of thermal cameras, request filling health related questionnaires etc.) concerning its employees or visitors to prevent contagion in the workplace?

Yes, but subject to certain conditions.

Many of such monitoring measures will necessitate processing of health data belonging to the employees/visitors. According to the Turkish Law on Protection of Personal Data numbered 6698 (DP Law), personal data is granted a aggravated level of protection and can be processed without the explicit consent of the data subject only in very limited conditions. Such conditions require fulfillment of two conditions:

• First, the health data must be processed for one of the following purposes: protection of public health, operation of preventive medicine, medical diagnosis, treatment, nursing services, planning and management of health-care services as well as their financing. The purpose of prevention of contagious disease in the workplace can be considered as under this scope.
• Second, the health data must be processed by the personal data concerning health is processed by the persons under a secrecy obligation or competent public institutions and organizations. Due to this condition, any active health monitoring measures to be implemented without the explicit consent of the employee/visitors, must be in the sole control of a health professional.

If any of the above-mentioned conditions are not met, employers must obtain explicit consent of the employee/visitors prior subjecting them to health monitoring measures.

In any case, the data processing activities to be carried out in this context must be compliant with the general principles of lawful data processing activities. For example, due to the principle of data minimization, no health data that is more than required to carry out health tests should be collected and collected health data must be immediately deleted or destroyed once the necessary tests are carried out.

10- Can an employer request data relating to employee's/visitors' family/relatives?

In some cases, employers may request from its employees or visitors visiting the workplace to disclose personal data relating to their family or relatives. However, in doing so, the questions should be structured in a way that will enable the person to disclose as little personal data about their family members as possible. For example, instead of asking "Please list the foreign countries that your family members visited in the last 14 days."; asking the following should be preferred, "Have you had any close contacts with anyone that have visited any of the following countries in the last 14 days: Hong Kong, China, Italy, Iran...".

11-Can an employer announce to its staff that one of the employees have contracted with coronavirus?

Employers have an active duty to protect the health in the workplace. In doing so, informing the employees about possible contagion risks could be a necessary step to be taken. However, such announcements must be done in a way that affect the privacy of the employees as little as possible and be done in an anonymous basis where possible.

12- Can contractual parties avoid performing their obligations due to COVID-19?

This analysis highly depends on the provisions in each contract. If there is not any provision stipulating avoidance from fulfillment of obligations under emergence of epidemics or occurrence of force majeure cases, first specific provisions with respect to pre-defined contract types under various laws should apply (for example fundamental provisions of certain major contract types such as sales, rental, service, employment etc. are stipulated under laws), if any; second, the general provisions under Turkish Code of Obligations numbered 6098 ("TCO") should apply.

13- On what grounds can parties refrain performing their contractual obligations under the TCO?

The TCO consists of the two different instruments that may enable relief of fulfillment responsibility of contracts, namely:

(I) Impossibility of Fulfillment (Articles 136 and 137 of Turkish Code of Obligations)

(II) Excessive Hardship to Fulfill (Article 138 of Turkish Code of Obligations)

14- What are the conditions to claim impossibility of fulfillment?

If performing of contractual obligations becomes impossible due to the reasons that are not attributable to the obligor, the obligor shall be fully released from performing the related obligations and cannot be held liable for damages. Indeed, the High Civil Court¹ argues that the concept of force majeure should be assessed under the scope of the impossibility provision of the TCO, since force majeure cases lead to impossibilities of performance without any fault attributable to the obligor.

In another decision² of the High Civil Court, force majeure cases are defined as "an unexpected event unavoidable by any means or person that occurs beyond the control of the obligor and prevents the performance of obligations". Other characteristics and examples of force majeure identified in the Turkish case law are as follows: "an event that does not require foreseeing of it and thereby cannot be eliminated"³, or "an event preventing performance of the obligation, which is inevitable regardless of any measures."⁴

Also, the requirements of force majeure set forth as the lack of fault of the obligor, unforeseeability, irresistibility and real coercion in the doctrine⁵.

Therefore, the unforeseen, inevitable and the unexpected nature of the COVID-19 disease would result in qualifying it as a force majeure constituting impossibility for performing obligations in principle. Moreover, although it does not provide detailed explanations regarding, such as geographic scope and timing, the Grand Chamber of High Civil Court accepted "epidemic diseases" as an example of force majeures cases.⁶ However, its preventative feature for each specific contractual obligation should be subjected to case by case analysis.

Having said that, (I) the "Pandemic" declaration of the WHO, (II) numerous cancellations or postponements of certain events convening individuals, such as sports matches, conferences, concerts, school field trips, throughout Turkey by administrative orders or recommendations and many other countries and (III) the Presidency Circular dated March 12, 2020 and numbered 2020/2 prohibiting noncompulsory abroad travels for public officials, could be assessed as valid grounds for acceptance of the COVID-19 Pandemic as a force majeure for obligations that should be performed with presence of individuals in public spaces, subject to our explanations under Q20.

According to Articles 136 and 137 of the TCO, there are two different cases of impossibility, which are Full Impossibility and Partial Impossibility. That being said, whether the preventative feature of the impossibility prevents the performance of the obligation is complete or partial, determines the applicability of legal consequences of either Full Impossibility or Partial Impossibility.

15- What are the conditions to claim excessive hardship procedure?

Pursuant to Article 138 of the TCO, excessive hardship to perform a contractual obligation may be claimed if an event, which has not been foreseen by the contracting parties and could not have been expected to be foreseen,

(1) occurs due to reasons that are not attributable to the obligor, and

(2) materially changes the circumstances of the performance that were present when the contract has been entered into, to an extent in which one cannot request the performance of the contract in good faith, and

(3) the obligor either has not fulfilled its obligation or has fulfilled by reserving its rights for occurrence of any excessive hardship to fulfil, occurs.

Furthermore, the doctrine argues that the unforeseen event causing the hardship should be civil disasters, economic disasters or extraordinary events, such as epidemic diseases⁷, but which does not reach the level of force majeure and is considered as a fortuitous event (cas fortuit)⁸. Also, according to the 13th Civil Chamber of the High Court⁹, hardship should not be confused with "impossibility of performance", since the impossibility eliminates the contractual relationship by itself and does not allow the agreement to be adapted under new circumstances.

Accordingly, subject to our explanations under Q20, certain specific cases such as rental contracts for shopping malls and international sale of goods may be subject to the Excessive Hardship instrument, provided that there would not be a governmental order restricting daily business activities, such as shutting down of malls and stores, of individuals or imposing a curfew.

16- What are the legal consequences?

a) of Full Impossibility:

1. The obligor shall refund the already performed obligations within the contract, under unjust enrichment terms of the TCO. The obligor shall also be deprived of the right to request the performance of unperformed obligations.
2. The obligor shall immediately notify the existence of impossibility to the beneficiary and mitigate the losses. If the obligor does not comply with this requirement, it would be obliged to compensate losses arisen.

b) of Partial Impossibility:

1. The obligor shall be relieved from the responsibility of the partial obligation, which has become impossible to perform. In the event that,
   1. The beneficiary consents to partial performance of the obligation, the beneficiary shall only perform its counter-obligation pro rata with the part it would benefit.
   2. The beneficiary does not consent to partial performance of the obligation or the beneficiary's counter obligation is not divisible, legal consequences of Full Impossibility shall be applied.
2. If it is clearly understood by the contracting parties that they would not have been entered into such contract, in the event they would have foreseen such partial impossibility, the obligor shall be released from the entirety of such obligation.

c) of Excessive Hardship:

1. The obligor shall request adaptation of the contract, in accordance with the updated circumstances.
2. If the first consequence is not applicable, the obligor is entitled exercise right to avoidance of contract, or right to terminate the contract if it is of the nature of continuous performance contract.

17-How should the temporariness of the COVID-19 Pandemic be interpreted?

Although the TCO does not consist of any reference to temporariness of Impossibility or Excessive Hardship of performance, there are contract law scholars differentiating temporary cases from the permanent circumstances.

Nevertheless, performances bound by certain timing or cases whereby the end of temporary impossibility is not known, should be deemed as a permanent case.

18- What are the consequences of Temporary Impossibility?

The obligor will be defaulted without fault. Therefore, due date of its performance shall be postponed until the ceasing of the impossibility. In such scenario, the beneficiary should not be able to request losses arisen from the lag of performance. However, as per some scholars' opinion, if the postponed obligation is a pecuniary obligation, the obligor shall pay an additional interest of default.

According to another assertion, the beneficiary of the postponed obligation should be entitled to exercise its right to avoidance of contract, without being able to request reliance damages.

19-Are there any exceptions to the above presented framework?

Yes. In light of the principle of genus perire non censetur, generic obligations such as payment of money, sale of a ton of iron, etc. cannot be in a situation of being impossible. Therefore, generic obligations, including pecuniary debts, cannot be subject to Full or Partial Impossible mechanisms under the TCO.

20-What are the examples that one can refrain to perform its obligations due to COVID-19 in Turkey?

By no means of asserting an indisputable argument and reserving that all cases should be evaluated with their specific circumstances, we believe that shopping mall store rental contracts, event hosting and hotel accommodation contracts, international flight and package tour bookings, sports, cultural, musical and other recreational event tickets, sales contracts concerning international sale of goods should be under the spot light.

Among these, contracts in connection with event hosting and ticketing, international flight or package tour bookings and hotel accommodations may be subject to the legal consequences of Impossibility, provided that such convention has been banned by an administrative decision or bound by a certain timing of performance.

On the other hand, rental contracts for mall stores and international sale of goods may be treated through the Excessive Hardship mechanism, as there is not, yet, an explicit governmental order restricting daily business activities, such as shutting down of malls and stores, of individuals or imposing a curfew.

Footnotes