Failure to Pay Annual Leave Pay in Advance Recognized as Grounds for Termination for Just Cause by Employees

With its decision dated March 10, 2025 and numbered E. 2025/2024, K. 2025/2487, the 9th Civil Chamber of the Court of Cassation resolved a divergence in judicial practice regarding whether an employer’s failure to pay an employee’s annual leave pay before the commencement of annual paid leave, or to provide it as an advance payment, constitutes grounds for termination by the employee for just cause. The Court of Cassation clearly established that this obligation, regulated under Article 57 of the Labor Law No. 4857, is mandatory statutory obligation and that non-compliance by the employer entitles the employee to terminate the employment contract for just cause.

The key points of the decision are summarized below:

• The Court of Cassation emphasized that employers are legally obliged to pay annual leave pay before the commencement of annual paid leave or to provide such amount as an advance payment.
• The Court further held that employees are not required to specifically request such payment.
• Failure to pay annual leave pay before the commencement of annual leave was deemed to constitute non-compliance with the statutory wage payment obligations and working conditions under Articles 24/II-(e) and (f) of the Labor Law. Accordingly, employees may terminate their employment contracts for just cause on this basis.
• The Court also stated that granting annual leave in excess of an employee’s statutory entitlement does not eliminate the employer’s obligation to pay annual leave pay in advance.

This decision highlights the importance for employers of reviewing their annual leave practices and ensuring that payments relating to annual leave periods are made in advance or provided as an advance payment in compliance with applicable legislation. Failure to do so may expose employers to termination for just cause claims and related severance payment liabilities.