1. General Principles and the Basis for Equity Discount

Is a 30% Equity Discount Applied to Employee Overtime Pay? Supreme Court Practice According to the established practices of the Supreme Court, fif the overtime pay is calculated for a long period and its proof relies on discretionary evidence such as witness statements, an equity discount should be applied, considering that the employee may have not worked on certain days due to reasons such as illness, leave, or excuses. However, this discount is not applied if overtime is based on written documents and employer records (timesheets, entry-exit records, etc.). The discount to be made must be determined based on the employee’s working style, the organization of work, and the calculated amount of overtime, and should not be at a rate that eliminates the essence of the right (Supreme Court 7th Civil Chamber, 2014/12587 E., 2014/22867 K.K; Supreme Court 22nd Civil Chamber, 2012/23673 E., 2013/13020 K.)K.

2. Evaluation of the 30% Equity Discount Rate in Court Decisions

a) Decisions Approving the 30% Rate

In court decisions, a 30% equity reduction from overtime pay is generally accepted as a reasonable and established practice.

The General Assembly of Civil Chambers of the Court of Cassation, in one of its decisions, upheld a resistance decision, stating that the 30% reduction applied by the court to overtime pay calculated based on witness statements, corresponding to approximately 1/3 of the amount, was reasonable, and that the Specialized Chamber’s decision to overturn, finding this reduction insufficient, was not appropriate (Yargıtay Hukuk Genel Kurulu, 2015/3411 E., 2019/590 K.)K.

Izmir Regional Court of Justice, 9th Civil Chamber, ruled that the 30% equity reduction made by the first instance court was appropriate for the employee’s working conditions, the organization of work, and the amount of overtime pay accrued. In this decision, the plaintiff’s attorney also requested a 30% reduction in the petition for amendment (BAM İzmir 9. Hukuk Dairesi, 2017/436 E., 2017/815 K.).

The Court of Cassation, 22nd Civil Chamber, in another decision, upheld the resistance decision which affirmed the court’s 30% equity reduction, on the grounds that no error was found in the evaluation of the evidence (Yargıtay 22. Hukuk Dairesi, 2014/6709 E., 2014/9930 K.)K.

The Court of Cassation, 9th Civil Chamber, implicitly affirmed the Regional Court of Justice’s opinion that the 30% equity reduction was in line with the precedents of the Court of Cassation and the evidence in the file, by rejecting the appeal objections in this regard (Yargıtay 9. Hukuk Dairesi, 2022/10795 E., 2022/12289 K.).

Istanbul 26th Labor Court ruled by making a 30% equitable reduction from the overtime pay calculated based on witness testimonies (Istanbul 26th Labor Court, 2019/65 E., 2021/111 K.)

b) Decisions Indicating a 30% Rate by Deeming Lower Rates Insufficient

The Supreme Court has rendered decisions ruling that a 30% rate should be applied, deeming reductions made at lower rates insufficient.

In one decision, the 5% discount rate applied by the court was found insufficient, and the decision was overturned with the statement, “making a 30% discount will be in accordance with the case file content and equity” (Supreme Court 22nd Civil Chamber, 2013/18120 E., 2013/17201 K.)

Similarly, the 1/4 discount rate was deemed insufficient, and it was ruled that “making a 30% discount will be in accordance with the case file content and equity” (Supreme Court 21st Civil Chamber, 2012/8032 E., 2012/13729 K.; Supreme Court 22nd Civil Chamber, 2012/8032 E., 2012/13729 K.)K

The Supreme Court has set the 30% rate as a minimum threshold in some of its decisions. For example, in one decision, it was stated that no equitable reduction was made “whereas an equitable reduction of not less than 30% should have been applied” (Supreme Court 22nd Civil Chamber, 2013/17137 E., 2014/35416 K.), and in another, it was expressed that a “20% equitable reduction” was insufficient, and an “equitable reduction of not less than 1/3” should have been made (Supreme Court 22nd Civil Chamber, 2013/9994 E., 2014/10261 K.).

c) Decisions Indicating a 30% Rate by Deeming Higher Rates Excessive

The Supreme Court overturned discounts exceeding 30%, finding them to “harm the essence of the right,” and recommended more reasonable rates.

In a dispute, the court’s applied equity discount rate of 45% was deemed too high, and the decision was overturned with the statement that “applying an equity discount of 30% would be more appropriate given the amount of receivable and the determined working arrangement, in line with the scope of the file and the essence of the right” (Supreme Court 7th Civil Chamber, 2013/19372 E., 2014/4795 K.).

In another decision, the discretionary discount rate of 50% applied by the court was found to be excessive, and it was stated that a 30% discretionary discount should be applied as it “would be more appropriate to the scope of the file” (Supreme Court 22nd Civil Chamber, 2014/1374 E., 2015/12303 K.).

d) Exceptional Circumstances Where a Discount Higher Than 30% Was Ruled Necessary

While the 30% rate is generally accepted, the specific circumstances of the file (contradictions in witness statements, nature of the job, etc.) may necessitate a higher discount.

In one decision, considering the discrepancies in witness statements and the nature of the work, the ruling with a 30% discount was overturned, stating that “while an equity discount of no less than 50% should have been applied to the calculated overtime receivable, applying a lower rate of discount was erroneous” (Supreme Court 22nd Civil Chamber, 2013/25037 E., 2013/21337 K.).

In another decision, the Supreme Court General Assembly of Civil Chambers adopted the Specialized Chamber’s overturning decision, which stated that a discount of no less than 50% should be applied due to contradictions in witness statements and the nature of the work, by overturning the local court’s decision that insisted on a 30% discount (Supreme Court General Assembly of Civil Chambers, 2015/1616 E., 2016/128 K.).

Similarly, considering the witness statements and the content of the file, it was stated that the reduction made by the court was insufficient, and that an “equity reduction of not less than 50%” should be made (Yargıtay 22. Civil Chamber, 2012/23673 E., 2013/13020 K.).

3. Common Procedural Errors in Equity Reduction

Repeated (Double) Reduction: Applying a further reduction by the court on an amount that has already had an equity reduction in the expert report is considered a practice that undermines the essence of the right and constitutes a ground for reversal (Yargıtay 7. Civil Chamber, 2014/12587 E., 2014/22867 K.).

Expert’s Exercise of Discretionary Power: The authority and duty to make discretionary reductions belong to the judge. It is an erroneous practice for the expert to determine the reduction rate in their report by exercising this authority (Yargıtay 9. Civil Chamber, 2017/14326 E., 2019/22728 K.).

Contradiction Between Rationale and Verdict: Applying a 30% reduction in the rationale of the court decision while applying a different rate (such as 25% or 50%) in the verdict section constitutes a ground for reversal, conflicting with Article 298/2 of the Code of Civil Procedure (Yargıtay 9. Civil Chamber, 2017/14326 E., 2019/22728 K.; Yargıtay 9. Civil Chamber, 2014/8979 E., 2015/22118 K.).

Violation of Procedural Acquired Right: Despite the procedural acquired right that arose in favor of the defendant regarding the equity reduction following compliance with the reversal decision, the failure to apply a reduction to the claim in the new report obtained after the reversal is also a ground for reversal (Yargıtay 22. Civil Chamber, 2018/16450 E., 2019/1380 K.).

CONCLUSION:

When examining current judicial decisions, in cases where overtime pay is calculated based on witness statements, the Supreme Court generally accepts a 30% equity reduction on the expert report as reasonable, equitable, and an established practice. This rate is used as a reference point to determine the lower and upper limits in many decisions. Rates significantly lower (such as 5%, 20%) or higher (such as 45%, 50%, 60%) than 30% are generally grounds for reversal, unless justified by the specific circumstances of the case. However, in exceptional circumstances such as contradictions in witness statements or the nature of the work, it is observed that a discount rate higher than 30% may also be applied.

Why is Expert Lawyer Support Necessary in Overtime Pay Cases?

Overtime pay cases, while appearing to be simple debt collection cases on the surface, are types of lawsuits that require a high level of expertise in terms of equity reduction, evaluation of evidence, probative force of witness statements, and correct application of Supreme Court precedents. In particular, the 30% equity reduction to be applied to overtime pay is a critical stage that directly affects the outcome of the case.

As explained in detail above; while the 30% rate is generally accepted in Supreme Court practice, lower or higher rates depending on the specifics of the case can be grounds for reversal, and in some cases, it is even accepted that a discount of not less than 50% should be applied. At this point;

Whether witness statements are contradictory,

Whether overtime work is proven by written evidence or circumstantial evidence,

Whether the expert report is prepared in accordance with procedure,

Whether a repeated (double) discount is applied,

Whether there is a contradiction between the reasoning and the judgment clause

Such matters must be meticulously evaluated by an expert labor law attorney.

One of the frequently encountered errors in practice is the court applying a discount again when a discount has already been made in the expert report, or the expert using the discretionary power that belongs to the judge. Such procedural errors can lead to the case being overturned by the Court of Cassation, thus prolonging the process and causing loss of rights.

Expert Legal Support in Tuzla, Pendik, Kartal, Maltepe, Gebze and Its Vicinity

In Istanbul’s Anatolian Side and the Kocaeli region, especially in areas with high industrial and worker density such as Tuzla, Pendik, Kartal, Maltepe, Gebze, and Çayırova, overtime pay lawsuits are quite common in practice. In cases heard in these regions, working with an attorney who is familiar with established Court of Cassation precedents and specialized in labor law is of great importance.

In this context, 2M Law Office, in overtime pay, worker receivables, and labor law disputes;

based on current Court of Cassation and Regional Courts of Justice decisions,

analyzing fairness discount applications on a case-by-case basis,

meticulously tracking procedural acquired rights

provides effective and reliable legal support to its clients with its approach.

In conclusion; technical issues open to interpretation, such as a 30% equity reduction in overtime pay claims, can only be managed correctly with the legal strategy of an expert lawyer in the field. Otherwise, serious loss of rights due to incorrect discount rates or procedural deficiencies is inevitable.