Employment Law Series · 3 of 8
Contract manufacturing is central to textile production. A commercial order may be a genuine independent production contract, while another arrangement may establish a principal-employer/subcontractor relationship. Actual operations, rather than the agreement's title, determine the applicable responsibilities.
1. The statutory relationship
Article 2 of Labour Law No. 4857 covers another employer undertaking auxiliary work related to production at the principal employer's workplace, or a qualifying part of the principal work requiring specialisation for operational and technological reasons, and assigning its workers exclusively to the work undertaken there.
- The principal employer must also have its own employees in the relevant production activity.
- The outsourced activity must meet the workplace and production relationship requirements.
- Splitting the principal work requires the statutory operational and technological specialisation conditions; a commercial preference for lower cost is not enough.
- The subcontractor must assign the relevant employees to the work undertaken at that workplace.
The Subcontracting Regulation further addresses the written agreement, its content, registration and examination of sham arrangements. Social-security and occupational-safety duties have their own legal rules and should not be assumed identical in every respect to labour-law classification.
2. Joint liability
Where the statutory relationship exists, the principal employer is jointly liable with the subcontractor for obligations towards the subcontractor's employees relating to that workplace under the Labour Law, their employment contracts and the collective labour agreement to which the subcontractor is a party. Unpaid wages and qualifying severance or notice claims can therefore involve the principal employer too.
This is not unlimited liability for every worker and every period in a supplier's business. Establish the relationship, the relevant workplace and service period and the basis of each claim. An employee need not simply accept that only the workshop named in payroll can ever be responsible.
3. Is every textile order subcontracting?
Independent workshop
Production at its own workplace with its own machinery, workforce and independent management, often for several customers, can support an independent production arrangement. Each indicator must be assessed together.
Inside the customer's factory
Work in the customer's factory with integration into its organisation requires closer examination. Equipment ownership and instructions matter, but no single fact automatically establishes a lawful subcontracting relationship.
A single customer
Economic dependence or exclusive supply can be relevant evidence. A single customer alone does not satisfy all statutory conditions or conclusively prove a sham.
Mixed operations
Where stages occur in different locations or several businesses share production, examine the actual organisation, supervision, equipment, workforce and work allocated.
Product specifications and quality control should be distinguished from day-to-day employer authority over workers. Contract wording cannot turn an integrated labour-supply arrangement into independent production if practice shows otherwise.
4. Sham arrangements
Article 2 prohibits restricting principal-employer workers' rights by hiring them through a subcontractor while they continue working. It also regulates arrangements involving a person formerly employed at the workplace. The regulation includes a specific qualification for later shareholding in a legal entity or ordinary partnership, so this issue should not be reduced to an absolute rule about every former employee.
Risk indicators include lack of an independent organisation or appropriate expertise and equipment; direct employer-type instructions by the customer; an intermediary supplying labour only; attempts to evade public obligations or employment rights; and unlawful division of principal work. Sharing a site or coordination alone is not a complete legal test.
If a sham is established, the workers are treated as the principal employer's employees from the outset under the applicable provisions. Service, pay and other rights must be assessed accordingly. Collective-agreement benefits still require examination of their own coverage and entitlement conditions; they are not automatically identical for every worker.
5. Contract and compliance checklist
- Define the work: tasks, place, equipment, scope and genuine specialisation.
- Reflect real independence: record the workshop's actual organisation; avoid paper-only declarations.
- Clarify authority: distinguish product quality and delivery requirements from instructions concerning individual employees.
- Check payroll and social security lawfully: verification is more than an optional clause where statutory duties apply. Article 36 requires checking subcontractor wages on employee application or monthly on the employer's own initiative and paying unpaid wages from progress payments under its conditions. Data access must remain lawful and proportionate.
- Address recourse: allocate internal reimbursement responsibilities and evidence. An indemnity clause does not remove an employee's statutory claim against the principal employer; recourse is not created solely by inserting a clause.
- Consider security: suitable financial security may manage commercial exposure, but cannot validate unlawful subcontracting or waive workers' rights.
The workshop should also retain accurate registration, wage-payment and working-time records. Both businesses should make actual practice consistent with lawful written arrangements.
6. What this means for employees
If the workshop closes or cannot pay, a proven principal-employer relationship may provide an additional responsible party for qualifying claims. Keep lawful records of where, when and for whom work was done, supervision, payroll, payments and correspondence. Liability and the appropriate remedy depend on evidence and each claim's conditions; commercial labels alone decide neither.
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Sources
Ministry of Labour legislation: Labour Law Articles 2, 3 and 36. Subcontracting Regulation: establishment, agreement and sham-arrangement rules.
Reviewed on 27 October 2026. General information about Turkish law; the actual production and employment structure requires individual examination. Turkish statutory texts govern.