What happens to a foreign worker’s work permit if the employer becomes bankrupt or insolvent in Turkey? Learn the 2026 rules on termination, unpaid wages, new employers, residence status and work permit applications.

If a company employing a foreign national becomes bankrupt in Turkey, the employee’s work permit situation depends primarily on whether the employment relationship actually continues or terminates.

Bankruptcy, financial distress or restructuring does not necessarily mean that every employment contract ends immediately. However, an ordinary employer-dependent work permit is issued in connection with a particular employer, job and workplace. The Ministry of Labour and Social Security confirms that a foreigner cannot use a permit issued for one employer to work for another employer.

Therefore, once the employment relationship with the bankrupt employer ends, the foreign employee should not assume that the existing permit can simply be transferred to another company.

Does Employer Bankruptcy Automatically Cancel the Work Permit?

Not necessarily on the date the employer experiences financial difficulties.

Several situations must be distinguished:

• The company is experiencing financial distress but continues operating;
• Restructuring proceedings are underway;
• The company enters formal insolvency proceedings;
• Business operations continue temporarily;
• The employee’s contract is terminated;
• The company ceases operations entirely.

The decisive work permit issue is generally whether the employment relationship supporting the employer-dependent permit continues.

Why Does Bankruptcy Matter for a Foreign Employee?

An ordinary fixed-term work permit is employer-specific.

The Ministry states that work permits are issued for a specific job, workplace and address. A foreigner holding a permit with one employer cannot use the same permit to work for another employer.

Consequently, bankruptcy can create two separate problems:

Employment problem: Will the employee continue working and will unpaid wages and other employment claims be paid?

Immigration problem: If employment ends, what happens to the employer-sponsored work permit and the foreigner’s legal status in Turkey?

Both issues should be handled simultaneously.

What If the Company Is Insolvent but Still Operating?

Financial difficulty alone should not automatically be treated as termination.

A company may:

• Have substantial debts;
• Be unable to pay certain creditors;
• Delay salary payments;
• Enter restructuring proceedings;

while still employing workers.

If the foreign employee remains genuinely employed and the company continues operating, the work permit position may continue until another event affecting its validity occurs.

However, serious financial distress can create practical problems with salary payments, social security contributions and future work permit extensions.

What If the Company Stops Paying the Foreign Employee?

Failure to pay salary does not automatically transfer the employee to another employer or automatically create a new work permit.

It may, however, create important employment-law rights.

The foreign employee may need to evaluate:

• Unpaid salary claims;
• Severance rights;
• Termination rights;
• Social security deficiencies;
• Insolvency proceedings;
• Creditor claims.

From a work permit perspective, the employee should also determine whether the company is still genuinely employing them or whether the employment relationship has effectively ended.

Does Bankruptcy Automatically Terminate the Employment Contract?

Bankruptcy and employment termination should not automatically be treated as identical events.

Depending on the insolvency process and continuation of the business, employees may remain employed for some period.

Therefore, foreign workers should obtain clear information about:

• Whether their employment contract remains active;
• Whether a formal termination notice has been issued;
• Whether social security termination has been reported;
• Whether the company continues operations;
• Who is legally managing the company during the insolvency process.

This distinction directly affects the work permit analysis.

What Happens If the Foreign Employee Is Dismissed?

Once employment with the sponsoring employer terminates, the work permit consequences must be addressed.

The Ministry requires employers employing foreigners to notify it within 15 days of the termination of work and circumstances requiring cancellation of the work permit.

The Ministry’s current system also provides a specific post-permit procedure through which the employer requests termination of the permit.

Accordingly, a foreign employee should not assume that the work permit remains freely usable until the expiration date printed on the card after the underlying employment has ended.

Who Must Notify the Ministry?

The employer has an important notification obligation.

Under the current Ministry guidance, employers employing foreigners must notify the Ministry within 15 days concerning commencement and termination of work and circumstances requiring cancellation of the work permit.

Where the company is in bankruptcy proceedings, responsibility for company actions may depend on the procedural stage and persons legally authorized to act for the company.

The foreign employee should therefore not simply assume that someone else has completed all necessary work permit procedures.

Can the Foreign Employee Keep Using the Permit Until Its Printed Expiration Date?

Not to work for another employer.

This is a critical point.

Suppose a foreign employee has a work permit stating that it expires on December 31, but the sponsoring employer goes bankrupt and terminates the employee on September 1.

The employee cannot simply take the permit card to Company B and work there until December 31.

The Ministry expressly states that a permit issued for one employer cannot be used to work at another employer’s workplace.

A new employer requires the appropriate new work authorization.

Can the Work Permit Be Transferred to a New Employer?

An ordinary employer-dependent permit should not be viewed as transferable property belonging to the employee.

If the foreigner wants to work for another company, the new employment must be authorized under the applicable work permit procedure.

The fact that the employee:

• Has worked legally in Turkey for years;
• Has a valid-looking permit card;
• Was dismissed through no fault of their own;
• Lost the job because of bankruptcy;

does not automatically convert the old permit into authorization for another employer.

Can Another Company Hire the Foreign Employee Immediately?

The new employer should first address the applicable work permit requirements.

The foreigner should not begin working informally while waiting for the new employer to regularize the situation later.

The Ministry states that foreigners within the scope of the International Labour Force Law must obtain a work permit or applicable exemption before working in Turkey.

Working without valid authorization can result in administrative and immigration consequences.

What If Another Company Buys the Bankrupt Employer?

This requires careful analysis.

An asset purchase, share purchase, merger and transfer of a business do not necessarily have the same consequences.

The key question for work permit purposes is whether the foreigner’s legal employer changes.

For example:

Share acquisition:
If investors merely acquire the shares of the existing company and the same legal entity remains the employer, the situation may differ from an employer change.

Asset/business transfer:
If employees ultimately become employed by another legal entity, the work permit consequences must be separately examined.

The commercial transaction should therefore be reviewed before assuming that existing foreign employee permits automatically continue.

What If the Employer Is Acquired by a Competitor?

The transaction structure matters more than the commercial label.

A statement such as “Company B bought Company A” is not enough.

The following should be examined:

• Did Company A continue to exist?
• Did the legal employer change?
• Were employment contracts transferred?
• Did the workplace registration change?
• Was there a merger?
• Was only the business or assets acquired?
• Which company now pays the employee?

Foreign employee compliance should form part of insolvency and acquisition due diligence.

What Happens in a Merger?

A merger can involve different consequences from ordinary termination followed by recruitment by another employer.

Companies should determine whether the legal entity employing the foreign worker survives the transaction and whether the employer information underlying the permit remains accurate.

Where the employer legally changes, work permit implications should be addressed rather than assuming that corporate succession automatically solves the foreign employment issue.

What If a Group Company Wants to Employ the Foreign Worker?

A sister company is not automatically the same employer.

Suppose the bankrupt employer is Company A and the group’s financially healthy subsidiary is Company B.

Even if:

• Both companies have the same shareholders;
• They use the same brand;
• They operate from the same building;
• They have the same directors;

they may remain separate legal entities.

The Ministry’s employer-specific rule means that the permit for Company A cannot simply be used for employment by Company B.

Can the Foreign Employee Continue Working During the Bankruptcy Proceedings?

Potentially, if the employment relationship genuinely continues and the existing work permit remains valid.

Bankruptcy proceedings do not necessarily mean that all business operations immediately cease.

However, the employee should verify:

• Employment status;
• Salary payments;
• Social security registration;
• Work permit validity;
• Whether termination has been notified.

Continuing to perform work after the employment relationship has legally ended can create additional complications.

What Happens to Unpaid Salary?

Foreign employees generally have employment claims like other employees subject to Turkish employment law.

Depending on the circumstances, claims may include:

• Unpaid salary;
• Overtime;
• Unused annual leave payments;
• Severance compensation;
• Notice compensation;
• Other contractual employment receivables.

The existence of a foreign work permit does not mean the employee loses employment-law claims when the employer becomes insolvent.

Can the Foreign Employee Claim Severance Compensation?

Potentially, depending on the employee’s length of service, manner of termination and applicable employment-law requirements.

Bankruptcy itself should not be treated as eliminating accrued employee rights.

The foreign employee should preserve:

• Employment contract;
• Work permit documents;
• Payroll records;
• Bank statements;
• Social security records;
• Termination notice;
• Leave records;
• Correspondence with the employer.

These documents can become particularly important if employment claims must be pursued in insolvency proceedings.

What Happens to Social Security Contributions?

Foreign workers and employers remain subject to applicable social security obligations.

The Ministry confirms that foreigners with work permits and employers employing them must fulfill their social security obligations within the statutory periods under the applicable social security legislation.

If an insolvent employer has failed to make proper declarations or payments, the employee should examine their social security records promptly.

Does Employer Bankruptcy Affect the Foreign Employee’s Residence Status?

Potentially, and this is one of the most important consequences.

For ordinary work permit holders, the work permit generally also functions as a residence permit during its legal validity.

Therefore, when employment terminates and the employer-sponsored work permit is terminated, the foreigner should not focus only on finding another job.

Their legal basis for residing in Turkey may also need immediate attention.

The position is different for certain protected-status categories because their work permits do not substitute for residence permits.

Can the Foreigner Simply Apply for a Residence Permit After Losing the Job?

Possibly, if the foreigner qualifies for an appropriate residence permit category.

However, losing employment does not automatically guarantee eligibility for another residence status.

Possible alternatives depend on individual circumstances and may involve:

• Family circumstances;
• Property ownership;
• Education;
• Business activities;
• Other lawful residence grounds.

Timing can be critical.

Is There an Automatic Grace Period After the Employer Goes Bankrupt?

Foreign employees should be cautious about assuming that there is a universal automatic grace period during which they can continue working for anyone after their employment ends.

The Ministry’s 90-day continuation rule relates specifically to a properly filed work permit extension application and requires that the work and workplace remain unchanged.

It should not be confused with a general 90-day period following dismissal or employer bankruptcy.

Can the Employee Use the 90-Day Extension Rule to Work for a New Employer?

No.

The Ministry states that during the post-expiration extension-evaluation period, the employee may continue working for up to 90 days only where the work performed and workplace do not change.

Therefore, that rule cannot simply be used to move from a bankrupt Employer A to Employer B.

What If the Work Permit Extension Is Already Pending When the Employer Goes Bankrupt?

This requires immediate review.

An extension application is based on continuation with the same employer.

If the employer ceases operations or terminates the employee during the extension process, the factual basis of the application may have materially changed.

The foreign employee should not assume that an approval will still authorize employment elsewhere.

Can the Foreign Employee Start Freelancing After Bankruptcy?

Not automatically.

An employer-dependent work permit does not transform into an independent work permit because the sponsoring company becomes insolvent.

If the foreigner wants to conduct independent professional or commercial activity, the appropriate work authorization structure must be considered separately.

Can the Foreign Employee Establish a Company Instead?

Potentially, but company ownership and permission to work are separate issues.

Establishing or becoming a shareholder in a company does not automatically mean that the foreigner can actively work for that business without appropriate authorization.

The new business structure, the foreigner’s role and the applicable work permit requirements should be reviewed before activities begin.

What If the Foreign Employee Is a Shareholder in the Bankrupt Company?

Shareholder status does not automatically preserve an employer-dependent work permit.

The employee’s position should be examined based on:

• Type of work permit;
• Shareholding;
• Management role;
• Whether the company continues operations;
• Whether employment continues;
• Insolvency status.

A foreign shareholder actively working in Turkey may also be subject to specific work permit criteria.

Can Bankruptcy Affect a Pending Permanent Work Permit Application?

Potentially.

If an application relies on the foreigner’s employment and work history, major changes during the application process should be evaluated.

However, permanent work permits differ materially from ordinary fixed-term employer-dependent permits because the latter are directly connected to a particular employer and workplace.

Can the Foreign Employee Challenge a Work Permit Cancellation?

The Ministry states that decisions concerning rejection, cancellation or termination of a work permit may be challenged within 30 days from notification. If the administrative objection is rejected, administrative judicial proceedings may be available.

Whether challenging cancellation is appropriate depends on why the permit was terminated.

If employment genuinely ended because the company ceased operations, obtaining authorization for a new employer may be more relevant than challenging an otherwise lawful termination of the old permit.

What Should Foreign Employees Do Immediately After Learning About Bankruptcy?

The employee should quickly determine:

1. Whether the company is formally bankrupt or merely experiencing financial difficulty;
2. Whether business operations continue;
3. Whether the employment contract remains active;
4. Whether a termination notice has been issued;
5. Whether social security termination has been reported;
6. Whether the work permit remains active;
7. The permit expiration date;
8. Whether salary or severance amounts remain unpaid;
9. Whether another employer is willing to hire the employee;
10. Whether an alternative residence status may be necessary.

Waiting until the work permit or residence position becomes uncertain can substantially complicate the situation.

What Documents Should the Foreign Employee Preserve?

Important documents include:

• Work permit;
• Passport;
• Employment contract;
• Payroll records;
• Bank statements showing salary payments;
• Social security records;
• Termination notice;
• Company correspondence concerning bankruptcy;
• Unpaid wage calculations;
• Annual leave records;
• Evidence of severance entitlement;
• Any pending work permit application.

Employees should obtain copies before losing access to company systems.

What Should a New Employer Check?

A company considering hiring a foreign worker whose previous employer has become bankrupt should check:

• Existing permit status;
• Previous employment termination date;
• Proposed job;
• Salary;
• Workplace;
• Employer eligibility criteria;
• Professional qualifications;
• Whether a domestic application is legally available;
• Whether the foreigner has another valid residence basis.

The new employer should not simply rely on the employee’s physical possession of the old work permit card.

What If the Employer Disappears Without Completing Work Permit Procedures?

This can happen when a distressed company effectively stops operating before completing its administrative obligations.

The foreign employee should preserve evidence of:

• Last working day;
• Termination communications;
• Social security records;
• Company closure;
• Attempts to contact management;
• Existing work permit.

The employee may need to take separate steps concerning immigration status and employment receivables rather than waiting indefinitely for the former employer.

2026 Practical Rule: Bankruptcy Does Not Make the Work Permit Transferable

The safest distinction is:

Employer has financial problems but employment continues:
The existing permit may continue, subject to its normal validity and compliance requirements.

Formal bankruptcy but business and employment continue temporarily:
The permit position should be monitored carefully; bankruptcy itself should not automatically be equated with immediate termination.

Employment terminates:
The employer-dependent permit can no longer simply be relied upon as authorization to work elsewhere. Termination and permit-related notification obligations arise within the applicable 15-day framework.

Another company offers the foreigner a job:
The old permit cannot be transferred informally. Appropriate work authorization for the new employer is required.

Another group company takes the employee:
If it is a separate legal employer, group ownership does not automatically solve the work permit issue.

Company is acquired or merged:
The transaction structure and identity of the continuing legal employer must be reviewed.

The central principle is that the work permit follows the authorized employment relationship, not merely the foreign employee personally.

Frequently Asked Questions

1. Does bankruptcy automatically cancel a foreign employee’s work permit?

Not necessarily at the moment financial or bankruptcy proceedings begin. The key question is whether the employment relationship continues and whether a circumstance requiring permit termination has arisen.

2. What happens when the bankrupt employer dismisses the foreign employee?

Termination creates work permit consequences. Employers must notify the Ministry of termination and circumstances requiring cancellation within the applicable 15-day period.

3. Can the foreign employee use the old permit to work for another company?

No. The Ministry states that a permit issued for one employer cannot be used at another employer’s workplace.

4. Can another group company employ the foreign worker?

Potentially, but if it is a separate legal entity, appropriate work authorization for that employer is required.

5. Does the work permit remain valid simply because the card has not expired?

The printed expiration date should not be confused with authorization to work for another employer after the underlying employment relationship has ended.

6. Can the foreign employee claim unpaid wages after bankruptcy?

Potentially, yes. Unpaid salary and other employment receivables should be assessed and pursued under the applicable employment and insolvency procedures.

7. Does bankruptcy automatically erase severance rights?

No. The foreign employee’s accrued employment rights must be evaluated according to the circumstances of termination and applicable employment law.

8. Can the foreigner remain in Turkey after losing the job?

This requires prompt immigration review because an ordinary work permit generally also functions as a residence permit.

9. Is there an automatic 90-day period to find another employer?

The Ministry’s 90-day rule concerns qualifying pending extension applications with unchanged work and workplace; it is not a general grace period following employer bankruptcy.

10. What should the employee do first?

Confirm the employment termination status, work permit status, social security record, unpaid employment claims and whether a new employer or alternative lawful residence basis is available.

Client-Focused Legal Support After Employer Bankruptcy in Turkey

Employer bankruptcy can create several legal problems simultaneously for a foreign employee: loss of employment, unpaid salaries, severance claims, work permit termination, social security problems and uncertainty about the right to remain and work in Turkey.

Early action is particularly important where another company wants to employ the foreign worker or where the employee’s residence in Turkey depends on the existing work permit.

Fırat Fesih Kaya Law Office assists foreign employees, executives, international companies and foreign-owned businesses with employer bankruptcy, work permit termination, employer changes, unpaid employment claims and immigration compliance in Turkey.

Lawyer Fırat Fesih Kaya provides legal assistance concerning bankrupt employers, foreign employee work permits, new employer applications, unpaid salary and severance claims, corporate restructuring, company acquisitions and work permit compliance.

Phone: +90 312 434 22 22
Mobile: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey

This article is intended for general information and does not constitute legal advice. The consequences of bankruptcy depend on the insolvency procedure, employment status, type of work permit and the individual circumstances of the foreign employee.