The Constitutional Court recently handed down judgment concerning the parties’ choice of law in employment contracts with a foreign element. In the judgment published in the Official Gazette on 10 March 2025, the Court examined the constitutionality of Article 27 of the International Private and Procedural Law (“IPPL”) which regulates the law applicable to employment contracts.

1. Application for Annulment

The applicants challenged the constitutionality of the first and second paragraphs of Article 27 of the IPPL, arguing that they create an imbalance between employees based on whether they made a choice of law in their employment contracts.

• The First Paragraph

This provision allows the parties to an employment contract to choose the applicable law, provided that the chosen law preserves the minimum protection afforded by the mandatory provisions of the law of the employee’s habitual workplace.

The applicants seeking annulment argued that allowing the parties to choose the applicable law may put employees at a disadvantage, as they are typically not in a position to negotiate the applicable law on equal terms with their employers.

• The Second Paragraph

This provision stipulates that in the absence of a choice of law, the contract shall be governed by the law of the country where the employee habitually works.

The applicants contended that this provision resulted in unequal treatment by subjecting Turkish employees working at workplaces abroad of Turkish companies to a foreign law, thereby depriving them of the same rights as employees working in Turkey under the same company. They argued that this violated the principle of equality and the state's obligation to protect employees, rendering the provision unconstitutional.

2. The Constitutional Court’s Ruling

The Constitutional Court noted that under the first paragraph of Article 27, when parties to an employment contract choose the applicable law, the judge has two options:

• 1. Apply the chosen law, or

• 2. Apply the law of the employee’s habitual workplace where the chosen law fails to provide the mandatory minimum protection.

However, the Court noted that the fourth paragraph of Article 27 permits the application of a law more closely connected to the contract in cases where the parties did not select an applicable law, potentially providing greater protection to the employee. The Court ruled that restricting this option for employees who made a choice of law could create inequalities between those who did and did not make such a selection.

Accordingly, the Court annulled the first paragraph, finding that it constituted a breach of the state’s constitutional obligation to protect employees.

With respect to the second paragraph which regulates the applicable law in cases where the parties have not chosen the applicable law, the Constitutional Court noted that the judge should determine which law offers greater protection to the employee—the law of the habitual workplace or the law most closely connected to the employment contract. Since this ensures that employees are not placed at a disadvantage, the Court found no constitutional violation and dismissed the application, thereby ruling that the second paragraph remains in force.

Conclusion

By virtue of the annulment of the first paragraph of Article 27, the Constitutional Court eliminated the ability of employers and employees to choose the applicable law in employment contracts even in cases where there exists a foreign element. The practical consequence will be that even if the contract includes a choice-of-law clause, Turkish courts will disregard it and instead apply either the law of the employee’s habitual workplace or, if applicable, the law most closely connected to the employment contract.

The annulment of the first paragraph will enter into force after 6 months from the judgment’s date of publication in the Official Gazette. The government is expected to introduce an alternative provision into Article 27 by 10 September 2025 to reinstate the rights of the parties of an employment contract with a foreign element to agree on the application of a foreign law in a way ensures compliance with the Constitutional Court’s judgment.

Please contact us for further guidance on the potential impacts of this ruling on your employment contracts.