Choice of Law in Employment Contracts with Foreign Elements

Constitutional Court and Court of Cassation Decisions in Light of MÖHUK Article 27
Türeli & Ceylan Law Firm – International Employment & Private Law Practice

With the increasing international mobility of the workforce, cross-border employment relationships have become more common. Consequently, legal questions concerning employment contracts involving foreign elements—especially regarding which law governs the relationship—have gained significant importance.

This article explores how Turkish law addresses choice of law in employment contracts, with reference to the International Private and Procedural Law Code (MÖHUK), recent rulings by the Court of Cassation (Yargıtay), and the Constitutional Court (AYM).

1. What Constitutes a Foreign Element in an Employment Contract?

An employment contract is considered to contain a foreign element if any of the following applies:

• One of the parties is a foreign national,
• The contract is executed abroad,
• The work is performed outside of Turkey,
• The contract is governed by a foreign legal system.

In such cases, whether Turkish law applies directly or whether a chosen foreign law is valid is assessed under MÖHUK (Law No. 5718).

2. Legal Framework: Article 27 of MÖHUK

Under Article 27 of MÖHUK:

• Parties may freely choose the law applicable to their employment contract.
• However, the chosen law may not deprive the employee of the minimum protections provided by the law of the country where the habitual place of work is located.
• If no law is chosen, the law of the habitual workplace applies; if that cannot be determined, then the law of the employer’s domicile governs the contract.
• Protection of employee rights constitutes a matter of public policy.

3. Court of Cassation General Assembly Decision – May 10, 2023

In its decision 2023/424, the Court of Cassation General Assembly affirmed the following principles:

• If the parties have explicitly chosen a governing law, such choice should be respected.
• This choice is valid only if it does not place the employee at a disadvantage compared to the applicable mandatory labor standards.
• Even standard-form (boilerplate) clauses regarding choice of law are valid if the employee was properly informed.
• When the employee works in multiple countries, the place where the substantial part of the work is performed is deemed the habitual workplace.

In the case examined, the employee had worked in both Russia and Oman, and the Court upheld the validity of the chosen foreign law, finding no significant loss of rights compared to Turkish labor law.

4. Constitutional Court Decision – March 31, 2025

In case no. 2025/187, the Turkish Constitutional Court stated:

• The freedom to choose applicable law under MÖHUK Article 27 does not contradict the constitutional protection of labor rights.
• However, if the chosen law seriously undermines the fundamental rights of the employee, limitations may apply.
• Courts must assess whether the protections offered by the chosen law meet objective criteria and do not conflict with public order.

This decision reinforced the approach of the Court of Cassation, granting it a constitutional foundation, and clarified the limits of party autonomy in employment contracts.

5. Key Takeaways for Practice

• Choice of law must be explicit and in writing to be enforceable.
• The chosen law must not result in fewer rights for the employee than those provided under the law of the habitual workplace.
• Employers should document compliance with minimum labor protections when drafting multi-jurisdictional contracts.
• Standard-form contracts containing choice-of-law clauses may be invalidated if the employee was not properly informed.