Employers are required to report employees whose insurance coverage has ended to the Social Security Institution (SSI) within 10 days at the latest following the termination date. Pursuant to the Regulation on Social Insurance Procedures, the termination of insured status must be reported electronically to the SSI via e-insurance, using the Employment Termination Notification Form (“Notification Form”) found in Annex-5 of the Regulation.
The “reason for termination of employment (code)” field of the Notification Form must contain the code corresponding to the reason for termination. A total of 38 different codes are provided; code number 29 (“Code No. 29”) was used for employer-initiated terminations based on the employee’s “conduct contrary to the rules of morality and good faith”. This single code covered nine justifiable grounds for termination for just-cause under Article 25/II of the Turkish Labor Law.
By its decision dated 14 October 2024[1], the 10th Chamber of the Council of State annulled the code “29 - Termination by the employer due to the employee’s conduct contrary to morality and good faith" in the Notification Form. The grounds for annulment were the protection of personal data and the right to work.
How Does the Termination Code Affect Recruitment Processes?
During recruitment processes, candidates are asked to provide SSI documents (such as registration and service records, the 4A entry-exit notification, etc.) via e-Government portal. These documents included not only the employee’s employment history but also the employment termination code. Therefore, information regarding the reason for termination could be accessed by prospective employers without the employee’s consent.
In its decision, the Council of State noted that although the SSI did not directly share termination reasons with employers through its system, the inclusion of this information in social security records requested during job applications resulted in the employee’s termination data being indirectly disclosed to third parties and without the employee’s will.
Council of State: Personal Data Protection and the Right to Work Are Being Violated
In the case before the Council of State, the claimant employee's employment contract was terminated under Article 25/II of the Turkish Labor Law and reported to the SSI using Code No. 29. The claimant argued that this record made it nearly impossible to find new employment, that a lawsuit challenging the termination was pending before the Labor Court, and that therefore the stated ground for termination had not yet been definitively established.
On this basis, the claimant sought annulment of the relevant provision of the Regulation on Social Insurance Procedures, arguing that it violated provisions safeguarding the presumption of innocence, the right to privacy, freedom to work, and the protection of personal data.
On the other hand, the SSI argued that termination codes not only indicate the reason for termination but also directly affect employee’s entitlement to severance pay, notice compensation, and unemployment benefits. Therefore, entering the correct code was argued to be essential both for legal certainty and for determining statutory rights.
The Council of State first determined that information concerning the reason for termination constitutes personal data within the meaning of the Constitution and the Personal Data Protection Law (PDPL). The Court then noted that personal data may only be processed in accordance with the procedures and principles set forth by law, and found that neither the Social Security and General Health Insurance Law nor the Regulation on Social Insurance Procedures contained any provision ensuring that this data would be processed within the safeguards, principles, and conditions set out in the PDPL.
The absence of a legal basis gives rise to two primary consequences. First, in the absence of a specific regulation, the reason for termination cannot lawfully be shared with third parties without satisfying the conditions stipulated under the PDPL. The Council of State found that none of these conditions had been met in the case at hand and held that the relevant provision was contrary to the PDPL.
Second, due to the same regulatory gap, there is no mechanism ensuring that termination-related data are processed in accordance with the principles of legality, accuracy, specificity, and proportionality.
The Council of State also made two additional key findings. The reason for termination stated in the Notification Form is based solely on the employer’s declaration and has not yet been subject to judicial review. Furthermore, the consolidation of the nine distinct justifiable grounds for termination listed in Article 25/II of the Turkish Labor Law under a single code creates uncertainty as to which specific act is being attributed to the employee and exposes the employee to an unjust risk of stigmatization.
Pursuant to Article 13 of the Constitution, fundamental rights may only be restricted by law. According to the Council of State, the fact that a regulation restricting freedom to work so severely was enacted merely at the level of a regulation (rather than a law) constitutes, in and of itself, a violation of law. On this basis, the Council of State also ruled that the regulation violated Articles 13, 48, and 49 of the Constitution.
The Council of State additionally took into account that, through its Circular numbered 2021/9 and dated 1 April 2021, the SSI had already removed Code No. 29 and replaced it with new codes numbered 42 through 50, each corresponding separately to the termination grounds listed in Article 25/II of the Labor Law. This step was regarded as an implicit acknowledgment, even by the SSI itself, that the broad scope of Code No. 29 was incompatible with its intended purpose.
Consequently, the Council of State ruled to annul Code No. 29 in the “reason for termination of employment” field of the Notification Form.
How Did the Council of State’s Decision Change Practice?
Following the decision, the SSI implemented a significant update to its system. SSI documents obtained via the e-Government portal (including registration and service records and 4A employment entry-exit notifications) no longer display the termination code and its description to employers or third parties. Insured individuals may still access this information in their own queries; however, the code no longer appears in documents obtained for submission to an employer or an institution. This has prevented the disclosure of employees' reasons for termination with third parties without their consent and the entry-exit notification practice has been updated accordingly. Th Council of State’s decision represents an important milestone for both the protection of personal data and the safeguarding of the freedom to work.
[1] Decision of the 10th Chamber of the Council of State, Case No. 2020/2598, Decision No. 2024/3991, dated 14 October 2024.