The effect of merging, division and re-registartion on labor contracts

Economic developments and increasing competition may lead employers to transferring of undertakings permanently or for a length of time. In commercial companies, the transferring of undertakings can be achieved through legal processes such as sale, rent, merging, division or re-registartion. There are legal arrengements that protect employees in Turkish Labor Code and Turkish Commercial Code, because transferring of undertakings that considered as freedom of enterprise of employers' can jeopardize job security. In terms of Turkish legislation, transferring of undertakings has not been identified as a cause of termination of labor contract. On the contrary, employment relationships devolve on transferee ipso iure. In spite of this general rule there are some differecences causing unjust and redundant discrimination between employees in article 6 of Turkish Labor Code and article 178 of Turkish Commercial Code. Some terms in article of 178 of Turkish Commercial Code are different from article 6 of Turkish Labor Code such as the right of opposition, joint liability and security interest. In this study the effect of structural changes that is carried out through merging, division and re-registartion on employment relationships is examined. In this context the foregoing articles are handled comparatively and the article that must be applied is determined. In the first stage of the study, terms and conditions of merging, division and re-registartion are explained. Then, definition, types, terms and conditions of transferring of undertakings is explained in this stage. Also which structural changes in commercial companies are considered as transferring of undertakings is identified in the first stage. In the second stage, the effect of structural changes that is carried out through merging, division and re-registartion on employment relationships is explained. Within this scope not only the common rules in article 6 of Turkish Labor Code and article 178 of Turkish Commercial Code but also the different issues in these articles are tackled in consideration of comparative law.