In the twentieth paragraph of Article 88 of Law No. 5510, the following provision is included "If the insurance premiums and other receivables of the institution are not paid within periods specified in this Law and without a justifiable reason, public officials in charge of accrual and disbursement of public administrations, senior executives or officials of other employers with legal personality, including members of the company board of directors, and their legal representatives are jointly and severally liable to the Institution together with their employers."
According to this regulation; for premiums and receivables related to premiums not paid in due time, the assets of the legal person, as well as the senior executives and officials of the legal entities, including the members of the board of directors and their legal representatives, are jointly and severally liable with their assets and their employers.
In SSI procedures, the follow-up and collection of premiums and receivables related to premiums are also carried out against the legal person, its senior executives, officials, and legal representatives simultaneously. Senior executives and officials of legal persons are responsible for the entire debt accrued and unpaid during the period they are in office. Even if their duties have been terminated, they remain liable for the debt accrued and unpaid during the period they were in office. Senior executives cannot be held responsible for the debt accrued after the termination of their duties.
The members of the board of directors, whether or not they are authorized to represent and bind, are also held jointly and severally liable together with the employer under Law No. 5510. To determine liability for premium debts, it is sufficient to be a member of the board of directors of a legal person in the month the premiums are due. Therefore, the members of the board of directors of legal persons are liable for the premiums and debts related to premiums due for the periods when they were members of the board of directors, even as of the last day when the premiums are due.
The decisions of the Court of Cassation have established a precedent that the announcement published in the Turkish Trade Registry Gazette regarding the termination of the senior executive's duty is not intended for the legal existence of the transaction, but to notify third parties of this matter, and therefore it is a declaratory transaction, not a constitutive one. Therefore, if the manager is dismissed by the legal person (general assembly, board of directors, general assembly of shareholders, etc.), the date of the dismissal decision is taken as the basis, not the date of publication of this decision in the Turkish Trade Registry Gazette.
Resignation is a unilateral legal act that is voluntary and does not depend on the acceptance of any organ and has a detrimental effect. Therefore, if the manager resigns, the date on which the resignation decision reaches the legal person through a notary public shall be taken as the basis, and if the resignation is submitted directly to the legal person, the date of this decision shall be taken as the basis if there is a decision taken by the management body regarding the registration of this resignation and if this issue is proved by a document that is not necessarily editable.
What is meant by the “senior executive” mentioned above? Considering the judicial decisions and SSI procedures, we can make the following explanations on this issue.
Clarification on Senior Executive
When we look at the meaning of the word “senior executive”; it refers to the employees who are hierarchically at a higher level than the workers working in a managerial position in a workplace. According to the Court of Cassation, a senior executive is an employee who is paid the remuneration required by their duties and responsibilities, who does not have another executive or company partner who assigns and instructs them in the same place, and who determines their own working days and hours.
In one of its decisions, the Supreme Court emphasized that it should thoroughly investigate whether the person is a senior manager and authorized officer of the company and decide accordingly. From the examination of the decision, it was understood from the signature circulars that two partners of the company were the directors of the company, while the other partner was only the partner. The other partner who is not a director should not be considered a senior executive and authorized person. In the case of employers with legal personality, the general director, members of the board of directors, company partners and company managers are considered as senior executives and officials.[1]
In one of its decisions, the Supreme Court ruled that the shareholders of the company are authorized to manage and represent the company together as directors. From the examination of the decision; since it is determined that one of the company partners is the business director, the other is the general business director, and the other is the deputy general business director, it is concluded that they are senior executives.[2]
In the SSI procedures of the period; the Social Insurance Institution, upon encountering difficulties in the collection of premium receivables of companies operating in the private or public sector, ruled with Circular No. 1-73 Annex that the debt notices shall be made to the legal person of the company as well as to the senior executives and officials of the company such as board members, executive directors, general directors, directors, partners authorized to represent the company, responsible accountants and that the receivables shall be collected from these persons.[3]
In the determination of the senior executive, the Court of Cassation considers it necessary to take the trade registry file, the letters sent to the trade registry, and the decisions of the board of directors published in the trade registry gazette as the basis.[4]
If the company management has decided that a person is authorized to represent and manage the company, this person is considered a senior executive. Persons who are not authorized to make transactions in the financial matters of the company are not considered senior executives.[5]
For a member of the board of directors of a joint stock company to be considered a senior executive, the person must hold a title such as chairperson or vice-chairperson in the board of directors, or be a member authorized to sign or hold a senior responsibility in the management of the company, such as general director or finance manager authorized in financial matters.[6]
In a limited liability company, if the responsibility for the payment of premiums is assigned to the partner who is the business director by the decision of the board of partners, it is not possible for the other partners of the company to be responsible as senior executives.[7]
Persons who have the initiative in the management and payment of the Company's debts and the execution of current affairs are considered senior executives.[8]
It is emphasized in the Supreme Court decisions that for the shareholders of a joint stock company to be held jointly liable for premium debts, that person must hold a title such as chairperson or vice-chairperson in the board of directors, or be a member with signature authority, or be an officer with a high level of responsibility in the management of the company, such as general director, finance or accounting manager, who is authorized in financial matters.[9]
Title, remuneration and authority play an important role in determining whether an employee is a senior executive.
According to judicial decisions, the following titles are considered as senior executives.
- Chairperson of the board of directors and general director[10]
- Regional representative[11]
- Business manager[12]
- Construction real estate director[13]
- Production manager[14]
- Director of administrative affairs[15]
- Export manager[16]
According to judicial decisions, the following titles are not considered senior executives.
- Sales representative[17]
- Kitchen chef[18]
The remuneration of the senior manager is also a determining factor. The monthly salary is determined according to this title and is approximately 13 times the minimum wage. According to the well-established opinion of our Chamber, the senior manager of this type of workplace cannot demand overtime wages since their salary is determined accordingly.[19]
[1]Court of Cassation 10th Civil Chamber, Date: 29.09.1997, Basis No.: 1997/5463, Decision No.: 1997/6327
[2]Court of Cassation 10th Civil Chamber, Date: 24.03.1997, Basis No.: 1997/2287, Decision No.: 1997/2262
[3]Circular dated 09.03.1994 and numbered 1-73 Annex issued by the Legal Counseling Office of the Social Insurance Institution on “senior executives of companies”
[4]Court of Cassation 10th Civil Chamber, Date: 18.12.1997, Basis No.: 10513, Decision No.: 902
[5]Court of Cassation 21st Civil Chamber, Date: 17.06.2003, Basis No.: 2003/4801, Decision No.: 2003/5741
[6]Court of Cassation 21st Civil Chamber, Date: 21.12.2002, Basis No.: 2002/9012, Decision No.: 2002/9985
[7]Court of Cassation 10th Civil Chamber, Date: 24.03.1997, Basis No.: 2287, Decision No.: 2262
[8]Court of Cassation 21st Civil Chamber, Date: 17.06.2002, Basis and Decision No.: 4264/5767
[9]Court of Cassation 21st Civil Chamber, Date: 07.06.1999, Basis and Decision No.: 3875/4011; Court of Cassation 21st Civil Chamber, Date: 26.09.2000, Basis and Decision No.: 5121/6113
[10]Court of Cassation 9th Civil Chamber, Date: 28.06.2005, Basis No.: 2004/28346, Decision No.: 2005/22954
[11]Court of Cassation 9th Civil Chamber, Date: 23.05.2006, Basis No.: 2006/6816, Decision No.: 2006/15190
[12]Court of Cassation 9th Civil Chamber, Date: 27.06.2006, Basis No.: 2006/13671, Decision No.: 2006/18967
[13]Court of Cassation 9th Civil Chamber, Date: 06.10.2004, Basis No.: 2004/5887, Decision No.: 2004/22153
[14]Court of Cassation 9th Civil Chamber, Date: 09.10.2003, Basis No.: 2003/3737, Decision No.: 2003/16432
[15]Court of Cassation 9th Civil Chamber, Date: 19.06.2001, Basis No.: 2001/6100, Decision No.: 2001/10524
[16]Court of Cassation 9th Civil Chamber, Date: 27.06.2011, Basis No.: 2011/21293, Decision No.: 2011/18982
[17]Court of Cassation General Assembly of Civil Chambers, Date: 05.10.2011, Basis No.: 2011/9-479, Decision No.: 2011/592
[18]Court of Cassation General Assembly of Civil Chambers, Date: 24.12.2008, Basis No.: 2008/9-774, Decision No.: 2008/785
[19]Court of Cassation 9th Civil Chamber, Date: 27.06.2006, Basis No.: 2006/13671, Decision No.: 2006/18967; Court of Cassation 9th Civil Chamber, Date: 14.03.2005, Basis No.: 2004/19804, Decision No.: 2005/8199