CORPORATE NEWSLETTER – JULY 2026
CHANGES TO LEGISLATION
Amendments to Cyber Security Legislation Under Law No. 7590
The Law No. 7590 on Amendments to Certain Laws and Decrees with the Force of Law, which was adopted by the Grand National Assembly of Turkey and entered into force upon its publication in the Official Gazette dated 31 July 2026,has introduced significant amendments to the Cyber Security Law and the Law No. 5651 on the Regulation of Publications Made via the Internet.
As we also highlighted in our July KVKK Bulletin, the Act has reorganised the institutional framework in the field of cyber security, and certain duties and powers previously exercised by the Information and Communications Technologies Authority (“BTK”) have been transferred to the Cyber Security Presidency (“SGB”). Within this framework, the management of internet domain names, regulatory activities relating to internet infrastructure and certain administrative powers under Law No. 5651 will be carried out within the SGB. Furthermore, the authority to determine strategies and policies regarding internet domain names and to regulate this area has also been included within the SGB’s remit.
The regulation also includes transitional provisions regarding the transfer of responsibilities. Accordingly, existing legislation will continue to apply until the necessary secondary regulations are brought into force by the SGB; references in the relevant legislation to the BTK, the Telecommunications and Communications Authority and their decision-making bodies shall be deemed to refer to the SGB and the President of the Cyber Security Authority, in accordance with the scope of the transfer of responsibilities.
Furthermore, the existing transitional provisions regarding the transfer to the SGB of movable property, IT infrastructure, data centres, technical equipment, records and documents used in the performance of the duties and powers transferred from within the BTK, as well as the rights, receivables, liabilities and obligations relating to these activities, have been retained; it has been stated that the provisions concerning the transition of relevant staff to the Presidency will continue to apply.
Furthermore, Law No. 7590 has also updated various provisions concerning the implementation procedures and transitional provisions of the Cyber Security Act, as well as the scope of duties and powers of the Cyber Security Presidency; these amendments came into force on 31 July 2026.
Comprehensive Regulations Aimed at the Effective and Efficient Functioning of the Judiciary Have Come into Force
Published in the Official Gazette No. 33326 dated 31 July 2026Law No. 7589 on Amendments to Certain Laws Aimed at the Effective and Efficient Functioning of the Judiciary has brought into force numerous important regulations covering enforcement law, procedures for civil and administrative litigation, criminal procedure, the law of obligations and notarial practice. The Act provides for various changes aimed at enhancing the efficiency of proceedings, restructuring legal remedies and digitising judicial processes. To briefly summarise the regulations introduced in various areas:
Regulations Concerning Enforcement and the Dissolution of Joint Ownership
The amendments made to the Enforcement and Bankruptcy Code have updated the provisions relating to the electronic sales system. Accordingly, where a decision is made to dissolve joint ownership through sale in respect of immovable property belonging solely to heirs, the first public auction shall be conducted exclusively amongst the heirs who are owners. Furthermore, the bidding conditions on the electronic auction portal have been revised; provisions concerning the creditor’s obligation to provide security and the penalties applicable in the event of failure to pay the auction price within the prescribed time limit have been amended.
Digitalisation of Notarial Procedures
Amendments to the Notarial Code now permit notarial documents requested by courts, Public Prosecutors’ Offices and authorised public bodies to be sent electronically using a secure electronic signature. The aim is to reduce the circulation of physical documents in notarial procedures and to expedite document procurement processes.
Legal Remedies and the Single-Judge System in Administrative Justice
The legislation has raised the monetary threshold for cases that may be heard by a single judge and has redefined the circumstances under which a case may be referred back to the court of first instance following a review by a Regional Administrative Court. Furthermore, the appeal system relating to the review by the Council of State of certain decisions of Regional Administrative Courts has been updated.
Significant Amendments to the Code of Civil Procedure
Under the Act, various amendments have been made to the Code of Civil Procedure that will directly affect practice. In this context, Article 107, which governs claims for an unspecified amount, has been repealed; in its place, provision has been made to allow the amount claimed in partial claims to be increased on a one-off basis until the conclusion of the investigation. Furthermore, it has been stipulated that the interval between hearings may not, as a rule, exceed three months, and amendments have also been made to the provisions concerning joinder, separation and appeals in proceedings involving remote participation.
Contract Law and Interest Calculations
The system for determining the statutory interest rate has been reorganised; it is provided that, where the interest rate has not been agreed in the contract, the applicable interest rate shall be determined on the basis of the discount rate of the Central Bank of the Republic of Turkey. Furthermore, the commencement of interest and the principles of set-off in compensation for loss of support and permanent incapacity to work have been regulated at the level of the Act.
Amendments to the Code of Criminal Procedure and Criminal Law
In the Code of Criminal Procedure, the procedures for the storage and destruction of biometric data have been reorganised, and the conditions and legal remedies relating to the institution of the suspension of the pronouncement of sentence have been amended. Furthermore, the provisions concerning the prosecution of fugitive defendants and the right of appeal of the Chief Public Prosecutor of the Court of Cassation have also been updated.
Meanwhile, following amendments to the Turkish Penal Code, the reduction in sentence applicable in cases of complicity in the offence of fraud (commonly known as IBAN fraud), where bank accounts, payment instruments or crypto-asset accounts are provided to third parties for the purpose of obtaining unlawful gain, has been revised.
Significant Amendments to the Regulation on Insurance Support Services
Published in the Official Gazette dated 23 July 2026 and numbered 33318Regulation Amending the Regulation on Insurance Support Services has brought into force significant changes concerning support service providers operating in the insurance sector. Under the new regulations, the licensing, organisational and supervisory mechanisms pertaining specifically to claims management, assistance services and loss adjustment activities have been restructured.
Under the Regulation, organisations providing claims management and assistance services are required to obtain a licence from the Insurance and Private Pension Regulation and Supervision Authority (“SEDDK”) in order to operate; requiring such organisations to be public limited companies, to be incorporated in Turkey, to possess adequate technical and administrative infrastructure, and to have a minimum share capital of 250 million TL. Furthermore, support service providers are prohibited from carrying out insurance brokerage activities.
Furthermore, the field of loss adjustment has been regulated in detail for the first time; conditions regarding authorisation, training, professional experience and reliability have been set out for natural and legal persons to operate in this field. Whilst obligations regarding impartiality and objectivity have been strengthened, provision has been made for the revocation of operating licences in the event of non-compliance.
The Regulation also provides for a phased compliance period until 31 December 2026, 31 December 2028 and 31 December 2030, respectively, for support service providers and loss adjusters currently in operation.
With these amendments, the aim is to strengthen the authorisation and supervision mechanisms for organisations providing support services in the insurance sector, to improve service quality and to establish a more institutionalised structure within the sector.
COURT DECISIONS
Supreme Court Decision on the Application of a Contractual Provision Stating that Overtime Pay is Included in the Monthly Wage
The decision of the 9th Civil Chamber of the Supreme Court, dated 23 February 2026 and numbered E.2026/107, K.2026/1570, concerns the conditions for the application of a clause in an employment contract stating that overtime pay is included in the monthly salary, and the effect of this provision on claims for overtime pay.
The dispute centres on whether the provision in the employment contract signed between the parties, stating that “overtime pay for up to 270 hours per year is included in the monthly wage”, should be taken into account in the calculation, and on the determination of the defendant company’s period of liability, in a case brought by the claimant seeking the recovery of various employment-related claims, primarily overtime pay. The Court of First Instance, having concluded that the claimant had worked overtime, awarded the overtime claim; it ruled to partially uphold the claim without taking into account the provision in the contract stating that overtime pay is included in the monthly wage. The Regional Court of Appeal also found the decision of the Court of First Instance to be in accordance with the law in terms of both procedure and substance, and dismissed the defendant employer’s appeal on the merits.
The Court of Cassation, however, emphasised that, in accordance with the principle of freedom of contract, provisions in employment contracts stating that overtime pay is included in the monthly wage are, as a rule, valid; however, this validity can only be accepted in respect of overtime up to 270 hours per year and provided that the employee’s wage is above the minimum wage. Furthermore, it stated that the inclusion of overtime pay within the basic wage does not imply that the employee has waived their entitlement to overtime pay, but is merely a provision determining the method of remuneration for overtime. In the specific case in question, taking into account that the claimant’s wage was at a level sufficient to cover 270 hours of overtime per year, the Regional Court of Appeal’s decision was set aside and the First Instance Court’s judgment was quashed on the grounds that the period of overtime deemed to be covered by the wage should have been deducted from the calculated entitlement to overtime pay, and that failure to do so constituted an error.
The decision is significant in that it establishes that provisions in employment contracts stating that overtime pay is included in the monthly wage are valid under certain conditions; that such a provision does not imply that the employee has waived their entitlement to overtime pay; and that the annual limit of 270 hours must be strictly observed in calculations.
Supreme Court Ruling on the Inclusion of Seniority from the Initial Period of Employment in the Calculation of Annual Leave Entitlement for Intermittent Work
The dispute centres on whether the two separate periods of employment with the same employer should be considered together when calculating annual leave entitlement, and the effect of the first period of employment having been terminated on the annual leave entitlement accrued during the second period. The Court of First Instance ruled that the claimant’s first and second periods of employment should be assessed as a whole and, in this context, accepted that the claim for annual leave pay was well-founded, thereby partially upholding the claim. The Regional Court of Appeal, however, ruled that the claim for annual leave pay should be dismissed on the grounds that the first period of employment had been settled and that annual leave had been taken during the second period of employment.
The Court of Cassation, however, stated that the fact that annual leave had been taken or that remuneration for unused leave had been paid during the first period of employment did not preclude the seniority from the first period from being taken into account when determining the duration of annual leave accrued during the second period of employment. In this context, the Court of Appeal quashed the Regional Court of Appeal’s decision, stating that the duration of annual leave to which the claimant was entitled during the second period of employment must be calculated by taking the first period of employment into account, and that rendering a judgement without assessing the calculations prepared in accordance with these principles set out in the expert report was contrary to law.
The decision is significant in that it establishes that, in cases of intermittent employment, the fact that annual leave entitlements relating to the first period of employment have been settled does not prevent the length of service during the first period from being taken into account when calculating the annual leave entitlement to be acquired during the subsequent period of employment; furthermore, it emphasises that total length of service must be taken as the basis for determining the duration of annual leave.
Supreme Court Decision on Proving the Existence of an Organic Link Between Companies
The decision of the General Assembly of the Court of Cassation dated 1 April 2026, No. E.2025/428, K.2026/199, concerns the criteria for assessing the proof of an organic link and collusion between the debtor and a third-party company in cases where a claim for retention of title is rejected.
The dispute centres on whether a claim of ownership raised by the third-party company during the attachment proceedings can be rejected on the grounds that there is an organic link and collusive transactions between the debtor company and the third-party company, and whether the creditor has been able to rebut the presumption of ownership. The Court of First Instance ruled to dismiss the case on the grounds that it had been established by expert reports and the evidence in the file that the seized goods belonged to the third-party company, and that an organic link between the debtor company and the third-party company had not been proven. The Regional Court of Appeal also upheld the decision of the Court of First Instance as lawful, noting that the attachment had been carried out at the third party’s address as registered in the commercial register, that expert examinations had confirmed the seized goods belonged to the third party, and that the creditor had failed to produce strong evidence to rebut the presumption of ownership.
The General Assembly of the Court of Cassation, however, noted that the third-party company had been established prior to the debtor company and before the debt in question arose; that the share transfers could not be proven to have been made in bad faith; that operating in similar fields of activity and the fact that some employees had worked for both companies did not, in themselves, demonstrate the existence of an organic link; and that expert reports had established that the seized assets belonged to the third party. Consequently, the Court of Cassation’s General Assembly of Civil Chambers has accepted that the creditor failed to prove the allegations of collusion and an organic link. In this context, emphasising that the existence of an organic link can only be established with concrete and strong evidence, and that similar fields of activity, partnership or personnel relationships are not sufficient on their own, it decided to uphold the decision to dismiss the appeal.
The decision is significant in that it establishes that, in cases involving the rejection of a claim to ownership, allegations of an organic link and collusion must be proven by concrete, strong and convincing evidence; that similar fields of activity, partnership relationships or staff transfers between companies do not, on their own, demonstrate the existence of an organic link; and that the presumption of ownership cannot be rebutted by such facts.
Important Ruling from the Constitutional Court Regarding an Error in the Parties to a Mediation Application
The Constitutional Court’s decision dated 18 February 2026, Case No. 2022/52228, concerns whether the dismissal of a case on procedural grounds due to the absence of a condition precedent, following a mediation application filed against the wrong legal entity instead of the actual employer in a reinstatement case and despite the mediation process being completed with the actual employer after a change of party, constitutes a violation of the right of access to the courts.
The dispute arises from a case brought seeking reinstatement, in which the claimant initiated mediation against another company with which they believed there to be an organic link, rather than the actual employer; during the proceedings, however, the mediation process was completed with the actual employer following a change of party under Article 124 and the mediation process was completed with the actual employer, the case was nevertheless dismissed on procedural grounds on the basis that mediation had not been sought against the actual employer prior to the filing of the action.
The Constitutional Court assessed that, in the specific case, the court of first instance had found the change of party to be based on the claimant’s excusable mistake, thereby allowing the mediation process to be completed with regard to the actual employer, and had ruled after examining the merits of the case; whereas the Regional Court of Appeal dismissed the case on procedural grounds, on the basis that the change of party could not remedy the failure to undergo mediation, which was a condition for bringing the action.
The Court found that an excessively rigid and formalistic interpretation of procedural rules could disproportionately restrict the right of access to the courts; and that, in the present case, taking into account the claimant’s reasonable mistake, the allegation of an organic link between the companies, and the fact that the mediation process had also been completed with the actual employer, the decision to dismiss the case on procedural grounds imposed an excessive burden on the applicant.
Consequently, the Constitutional Court ruled that the applicant’s right of access to the courts, guaranteed under Article 36 of the Constitution, had been violated; it ordered a retrial to remedy the consequences of the violation. The decision is significant in that it sets out the constitutional approach regarding the assessment of the relationship between a change of party in reinstatement cases and mandatory mediation as a condition for bringing proceedings, and that procedural rules cannot be interpreted in a formalistic manner to the extent that they undermine the right of access to the courts.
NEWS FROM AROUND THE WORLD
Important Ruling from a French Court on Companies’ Duty of Care Regarding Human Rights
The Paris Court’s ruling of 12 March 2026, contains significant assessments regarding the scope of the duty of care (devoir de vigilance) applicable to French companies’ overseas subsidiaries.
In the dispute, former employees of Flormar, together with the Petrol-İş Trade Union and two civil society organisations, claimed compensation on the grounds that the French parent company, Laboratoires de Biologie Végétale Yves Rocher, had failed to fulfil its duty of care as provided for under the French Commercial Code.
The court, recognising that the provisions of French law on the duty of care constitute directly applicable rules, applied French law despite the dispute having arisen in Turkey. In its examination of the merits of the case, the court concluded that the due diligence plans drawn up by the company did not adequately cover the human rights risks arising from the activities of the group’s subsidiaries; in particular, it found that the failure to draw up a risk map that included the subsidiaries constituted a breach of the duty of care.
The court also accepted that it had been proven that workers had been subjected to pressure due to trade union activities and that their employment contracts had been terminated for this reason, and therefore awarded compensation for material and non-material damages in favour of six former employees. Conversely, the claims of some claimants who had signed the collective settlement agreement were dismissed due to the release clauses contained in the agreement.
This ruling is significant in that it establishes that parent companies must assess human rights risks arising not only from their own activities but also from those of their overseas subsidiaries within the scope of their duty of care. The ruling also indicates that the scope of compliance programmes and risk maps prepared for group companies needs to be reviewed.
Swiss Federal Supreme Court Ruling on the Content of a Reference Letter
In its ruling of 12 January 2026, the Swiss Federal Supreme Courtmade significant assessments regarding the content of the reference letter (Arbeitszeugnis) issued upon the termination of an employment contract.
In the dispute, the employee requested that the behavioural assessment and closing remarks in the employment reference be amended in a more positive manner; the court of first instance ordered only limited corrections. The employee appealed to the Federal Court, arguing that these corrections were insufficient.
The Federal Court emphasised that the employment reference must be accurate, truthful and balanced; it stated that it was not mandatory to use the exact wording requested by the employee. The Court further noted that, whilst the entire duration of the employment relationship must be taken into account when preparing the employment reference, the employee’s performance and conduct during the final period may carry greater weight for a prospective employer.
The judgement stated that the reference letter must be drawn up on the basis of objective records and performance appraisals contained in the personnel file, rather than in accordance with the employee’s request; the limited amendments made by the lower court were deemed sufficient, and the appeal was dismissed.
This ruling is significant in that it clarifies the limits of the employer’s authority to make objective assessments when determining the content of employment certificates and confirms that employees do not have an absolute right to demand the inclusion of specific statements.
Important Ruling from the French Court of Cassation for Employers: The Use of an Employee’s Image Following the Termination of the Employment Relationship
The French Court of Cassation (Cour de cassation, Social Chamber), in its decision dated 13 May 2026 (No. 24-19.117), made significant findings regarding the continued use by an employer of an employee’s photograph after the employment contract has ended.
In the dispute, the employer had obtained the employee’s consent to the use of their image whilst the employment contract was in force; however, this consent did not explicitly and specifically limit the duration of use. The employee’s photograph continued to be used on the company’s website even after the employment contract had ended.
The Court of Cassation stated that consent regarding the use of an image must contain clear limits in terms of duration, geographical scope and area of use, and that consent granted for an indefinite period ceases to be valid upon the termination of the employment relationship. Consequently, the continued use of the employee’s photograph after the employment contract had ended was deemed a violation of the employee’s right to their own image, and compensation was awarded.
The ruling highlights the need for employers, in particular, to review the consents they have obtained from employees regarding the use of their image. Consent forms relating to the use of an employee’s image must clearly specify the duration, scope and purpose of such use; furthermore, there must be a valid legal basis for any use following the termination of the employment relationship.
Ruling by the High Court of Justice of the Basque Country, Spain, on Microsoft Teams Recordings
In its ruling dated 11 May 2026, the High Court of Justice of the Basque Country, Spain, ruled that the employer’s use of post-meeting conversations, which were inadvertently recorded via Microsoft Teams, against the employee constituted a breach of the employee’s right to privacy.
In the dispute, private conversations held after the meeting were recorded by the Teams system because a company manager had forgotten to stop the meeting recording; the employer then used these recordings to assess the employee’s performance and to justify changes to their duties.
The court emphasised that employees continue to have a reasonable expectation of privacy after the meeting has ended, and that the mere presence of the recordings on the company’s system does not in itself imply that they may be used lawfully. In this context, it was held that the employer’s use of recordings obtained unlawfully constituted a breach of the employee’s fundamental rights; it was ruled that the employee was entitled to terminate the employment contract on just cause and that the employer was liable to pay compensation.
The ruling is significant in that it serves as a reminder of employers’ obligations regarding data protection and respect for employees’ private lives, particularly in the use of online meeting platforms. It also highlights that the use of records inadvertently obtained in digital environments as evidence in disciplinary or performance processes, without a legal basis, may give rise to serious legal consequences.
COMPLIANCE CORNER
Legal Limits on the Use of Biometric Data in Working Hours Monitoring
The use of biometric systems, such as fingerprint, facial recognition or palm scanning, by employers to monitor staff attendance is becoming increasingly common in practice. However, biometric data is classified as ‘special category personal data’ under the Personal Data Protection Act No. 6698, and the processing of such data is subject to far stricter conditions than that of other personal data.
In its decision on the principles governing the processing of biometric data, the Personal Data Protection Board has emphasised that the use of biometric data is of an exceptional nature. The Board states that data processing must comply with the principles of proportionality, necessity and relevance to the purpose; it further notes that where the same result can be achieved through less intrusive methods, such as a card-based access system, staff ID cards or similar, the processing of biometric data cannot be deemed lawful.
In this context, the processing of biometric data solely for the purpose of recording staff arrival and departure times may give rise to significant legal risks. It is important for employers to assess alternative methods that could achieve the same objective before resorting to the use of biometric data, and to document this assessment.
Compliance Recommendations for Employers
- An assessment should be carried out to determine whether alternative systems, such as card-based access, PIN codes or similar methods, could be preferred over biometric data for staff attendance monitoring.
- If it is argued that the processing of biometric data is mandatory, the specific grounds for this necessity must be demonstrated.
- The principles of data minimisation, proportionality and purpose limitation must be observed; biometric data must only be processed to the extent necessary.
- Technical and organisational measures must be taken to ensure the security of biometric data, and data processing activities must be reviewed on a regular basis.
HR CORNER
Penal Clause Provisions in Employment Contracts: Points to Consider in Practice
Whilst penal clause provisions included in employment contracts are one of the key tools for protecting the employer’s interests, it is of the utmost importance that these provisions are drafted in accordance with the law. Otherwise, the penal clause provisions in the contract may be deemed invalid or subject to reduction by the courts.
In particular, penalty clauses unilaterally imposed to the detriment of the employee are not deemed valid due to the protective nature of employment law towards the employee. It is important that the penalty clause is drafted in such a way as to create reciprocal obligations for both parties, or that it provides for less severe consequences in favour of the employee.
Furthermore, the amount of the penalty clause must be proportionate. Penalty clauses set at exorbitant levels may be reduced by the judge in accordance with the Turkish Code of Obligations. In particular, in provisions relating to training costs, a commitment to work for a specific period, or a non-competition clause, the scope and amount of the penalty clause must be determined in a manner appropriate to the specific circumstances of the case.
When drafting penalty clause provisions to be included in employment contracts, employers must take into account not only the principle of contractual freedom but also the restrictions imposed under labour law and the Turkish Code of Obligations; it is important, in order to prevent potential future disputes, that they draw up provisions tailored to the specific nature of the relationship rather than relying on standardised templates.