TEXTILES AND APPAREL

Employment Law Compliance at Turkish Suppliers: Subcontracting, Undeclared Work and Audit Rights

European fashion brands increasingly ask their suppliers for detailed information and assurances on working conditions in their supply chains, driven both by rules in their own countries and by their customers' expectations. At Turkish suppliers, these requests usually arrive as a code of conduct, a self-assessment questionnaire and on-site audits. To what extent the supplier can meet these requests, and what information the brand may require from the supplier, must however be assessed within the framework of Turkish employment law and data protection legislation.

A significant share of the problems identified in supplier audits often stems not from the main supplier but from working conditions at the workshops to which it passes work. The following sections address the main employment law issues that brands manufacturing in Türkiye should consider in their supplier relationships. The article is based solely on Turkish law and does not interpret European supply chain legislation.

The supplier's core obligations

Turkish employment law imposes obligations on employers such as registering employees for social security, complying with limits on working hours and overtime, paying wages on time and, in the cases provided for by law, through a bank, granting annual leave and implementing occupational health and safety measures. Prohibitions and age limits relating to child labour are also laid down by law. Breaches of these obligations can lead to administrative fines, social security debts and, in the event of a workplace accident, serious civil and criminal consequences.

For foreign employees, a work permit is also required. Employing foreign nationals without a work permit is among the breaches most frequently identified in inspections in the textile sector and leads to sanctions for both the employer and the employee.

Subcontractors and sub-workshops

A Turkish supplier passing part of the work to another employer does not in every case create a principal employer and subcontractor relationship within the meaning of the Labour Law. Whether such a relationship exists depends on where and under what conditions the work is carried out. Where the statutory conditions are met, the principal employer may be held jointly liable towards the subcontractor's employees for certain employment obligations; by contrast, placing a production order with an independent workshop does not in itself have this consequence. Nor does the European brand become an employer merely because it purchases the products.

Undeclared work or poor working conditions at sub-workshops may, however, create contractual, commercial and reputational risks for the European brand, even where they do not give rise to direct employer liability. The contract should therefore separately provide that the supplier informs the brand of the workshops to which it passes work, that sub-workshops are not used without the brand's approval and that they are open to the same audits.

Audit rights and personal data

For the brand to be able to audit the supplier, this right must be expressly granted in the contract. It should be specified by whom, how often and whether with notice audits will be carried out, which documents will be reviewed and within what period identified deficiencies must be remedied.

One point to note is that the payroll, timekeeping and social security records reviewed during an audit contain employees' personal data. Transferring this data to the brand or to the audit firm it appoints requires a legal basis under data protection legislation and, where applicable, compliance with the conditions for transfers abroad. In practice, this point is often overlooked, leaving the supplier caught between cooperating with the audit and its data protection obligations. Structuring audits as far as possible as on-site reviews with anonymised reporting reduces this risk.

In the event of breaches

Terminating the relationship immediately when an audit identifies breaches does not always produce the best result, since the employees then lose their jobs while the brand loses its influence over remedying the breach. A more balanced approach is therefore to provide first for a remediation plan with a deadline and to grant the brand a right of termination for good cause in the event of serious or repeated breaches. Stating clearly in which cases the termination right arises strengthens the brand's position in any later dispute over whether the termination was justified.

Structuring the contract

Merely attaching the code of conduct to the contract as an annex may not be sufficient. Since general terms and conditions only become part of the contract if they are expressly brought to the other party's attention and that party has the opportunity to learn of their content, it is advisable to document the brand's expectations in Turkish and have them signed by the supplier. This also ensures that the supplier actually understands its obligations.

Conclusion

Employment law compliance at Turkish suppliers is achieved not by the brand sending its code of conduct, but by reflecting its requirements, together with their counterparts in Turkish employment law, in the contract. Making the use of sub-workshops subject to notification and approval, structuring audit rights in line with data protection rules and providing for a staged system of remediation and termination in the event of breaches reduce both the legal and the commercial risks for the brand. General questions of employment law are addressed on the page of the relevant practice area.