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Covid-19

Legislative changes in view of the Covid-19 pandemic (in some countries there are changes to insolvency law, tenancy law, law on consumer contracts and corporate law)

In addition to the administrative measures taken by the governmental authorities and economic support packages announced by the Presidency and ministries in order to combat COVID-19 outbreak and mitigate its negative financial effects, on 25 March 2020 Turkish Grand National Assembly passed the Law No. 7226 on Amendment of Some Laws (“Law No. 7226”) which also includes amendments in certain laws due to COVID-19 pandemic. The details of those amendments are summarized as follows:

Amendments Regarding Tenancy Law:

  • In accordance with the provisional article 2 of the Law No. 7226, the lease contracts cannot be terminated and the tenants cannot be evicted due to the non-payment of the rental costs of their business places between 1 March 2020 and 30 June 2020.

Amendments Regarding Execution and Bankruptcy Law:

  • As per the Presidential Decree dated 21 March 2020 and numbered 2279 on Suspension of the Enforcement and Bankruptcy Proceedings, which entered into force upon publication in the Official Gazette dated 22 March 2020 and numbered 31076, Execution and Bankruptcy proceedings across the country were paused to a large extent. Accordingly, from 22 March 2020 to 30 April 2020, no execution and bankruptcy proceedings other than those related to maintenance receivables will be performed, no new request for execution or bankruptcy proceedings will be accepted nor will the interim attachment decisions be enforced.
  • Moreover, with the Law no. 7226, the terms determined under the Execution and Bankruptcy Code and under other laws containing procedural provisions along with the terms appointed by the judges or execution and bankruptcy offices in this respect will be suspended as of 22 March 2020 until 30 April 2020. The suspended terms will resume on 1 May 2020. If there are 15 or less days for the expiry of a term as of the beginning of the suspension period, that term will be deemed extended for further 15 days starting from the day following the end of the suspension period.
  • The President is entitled to extend the terms under this title (related to insolvency law) once, for no longer than 6 months, in case the causes remain by the end of the suspension period.

Amendments Regarding Check Law:

  • The records regarding bad checks, protested bills, credit cards and other credit debts held by the Risk Center of The Banks Association of Turkey of real persons and legal entities who disrupts the principal, interest and/or accessory payments of the cash and non-cash loans and whose principal and/or installment payment date is before 24 March 2020 shall not be taken into account by the credit institutions and financial institutions in the financial transactions with those persons and entities if the overdue part of the payment of such debts is to be fully paid or restructured by 31 December 2020.
  • The execution of sentences for those convicted of a crime under Checks Law by 24 March 2020 will be suspended. The convict shall pay one tenth of the unpaid portion of the check to the creditor within 3 months at the latest from the date of release. If he/she pays the remaining part in 15 equal installments with 2 months apart beginning from the end of the three-month period, the court will decide that the criminal conviction to be cancelled with all its consequences.

Amendments Regarding Social Security Law and Labor Law:

  • With Article 41 of Law No. 7226, a new article (Provisional Article 23) has been added to the Unemployment Insurance Law No. 4447 and more flexible conditions have been provided for benefitting from short-time working allowance. In this vein, the employee benefiting from short-time allowance must have been working for the last 60 days under an employment contract prior to the beginning of short-time working instead of 90 days, and unemployment insurance premium for at least 450 days must have been paid for the employee within the last three years instead of 600 days. 
  • In order to benefit from the short-time working allowance within this context, employers shall not terminate any employees during the short-time working period, except for the reasons mentioned in the of Article 25/1-II of the Labor Law No. 4857 (cases that do not comply with the rules of morality and good faith).
  • Applications for short-time working will be finalized within 60 days from the date of applications.
  • The facilitated conditions to benefit from the short-time working allowance will apply until 30 June 2020. The President is authorized to extend the application period until 31/12/2020 or to change the above-mentioned periods.

Article 43 of the Law No. 7226 has amended Article 64 of the Labor Law No. 4857 regarding the compensatory work. Accordingly, the employer may request the employees to perform compensatory work for the terms that they could not work within the following 4 months instead of 2 months.