Employing in Turkey
An employer of record, sometimes known as an international PEO can help you quickly hire and onboard workers in Turkey – often with just two weeks’ notice. Establishing your own local entity without risk and saving costs, this type of service makes an EOR in Turkey worth checking out!
Salary Currency: Turkish Lira – TRY (₺)
Salary Pay Date: The salary must be paid within 20 days of the month in which the salary is due.
Salary: Salaries should be updated annually in line with inflation rates. No annual increase is mandatory if not stated in the employment contract.
An Overview of the Main Statutory Benefits
In Turkey, it is mandatory to register the employee for a private pension scheme equal to 3% of their salary.
After one month of employment, the employee can opt out.
The Turkish government additionally contributes 25% towards private pension contributions (subject to a maximum).
Turkey has a comprehensive public healthcare system covered by Universal Health Insurance (Genel Sağlık Sigortası). This is funded by the insurance premiums paid by employers and employees. Anyone registered with the SGK is entitled to subsidised public healthcare.
Private healthcare options are also available, and employees may choose to take out private healthcare insurance with a recommended insurance provider.
The Turkish Social Security Institution (SSI) – Sosyal Güvenlik Kurumu (SGK), was established in 2006. The system is similar to a Bismarck model, whereby premiums are paid into one collective fund by employers and employees and then reallocated to cover:
- short-term social security
- disability, old age and death
- health insurance;
Social security contributions are considerably high in Turkey but cover a generous range of benefits.
All non-national employees are eligible for social security benefits provided that they pay the contributions and meet the necessary requirements.
Employers are required to register all new starts with the SSI before their start date.
This refers to the percentage of the employee’s wage that is not subject to income tax. The MLA is calculated based on the annual gross minimum wage and takes into consideration the marital status and number of dependents of the employee.
The following rates of annual gross minimum salary are not subject to income tax:
- 50% for the employee
- 10% for the non-employed spouse (including those on a self-employed income)
- 7,5% for each of the first two dependent children;10% for third dependent child and 5% for the following dependent children (deduction applicable only to either mother or father)
Please note: In the application of MLA, dependent children are defined as:
- Under 25 for those still in education
- Under 18 for those residing with or being cared for by the tax payer
Other Statutory Benefits
Social security contributions are deducted from an employee’s gross earnings in the form of e-declarations by the 26th of each month.
Breakdown of SSI Contributions
This is covered as part of the social security contributions: 7.5% (employer); 5.0% (employee). Universal Health Insurance entitles the employee to free healthcare in any SGK-regulated hospitals or practices.
The contract of employment must be executed in Turkish and the native language of the employee.
Termination of contracts in Turkey can be complex and must comply by the regulations stated in the Turkish Labor Law.
Overtime is calculated by the hour at a rate of 1.5 times the normal hourly rate. All hours worked over the weekly maximum (45) must be calculated as overtime.
The total overtime hours worked cannot exceed 270 hours in a year.
The employer must register the employee with the local Social Security Institution one day before their start date.
All employees should have a medical before commencing employment.
The maximum regular working hours is 45 per week and an employee must not work more than 11 hours in one day.
An employee is entitled to severance pay if a contract is terminated by the employer provided that they have been employed for more than one year.
Severance pay is calculated based on the employee’s last month’s gross salary and is exempt from income tax. Severance pay is only subject to stamp tax.
The current severance pay ceiling is 10,848.59 TL. (for the period: 01 January 2022 and 30 June 2022) and is updated every six months in January and July.
Other Contractural Provisions
The minimum notice period for regular employment depends on the employment duration. For regular terminations, both the employer and employee must abide by the notice period. If an employer fails to comply by these terms, they must pay full compensation to cover the entitled notice period. In addition to this, a minimum of two hours’ paid leave per day must be awarded as job searching entitlement.
Turkish Labor Law prescribes the minimum rest periods for employees:
Holiday & Leave
Holiday entitlement is accrued from the first day of employment but can only be used once the employee has completed one full year. Any unused annual leave may be carried forward to the following year.
The minimum entitled days are based on the employment duration:
- 1-5 years – 14 days
- 5-15 years – 20 days
- 15+ years – 26 Days
Public holidays 2022
An employee is not entitled to sickness pay for the first two days of illness. However, it is common for employers to voluntarily offer payment to support their employees during sick leave. Following this, from the third day of leave, the social security system (SSI) will cover the remaining sickness for any documented illness, provided that the employee has paid a minimum of 90 days of short-term insurance premium in the previous year. This remuneration can take up to two months to receive, therefore it common for an employer to continue to pay their employee during sickness leave and be refunded once the employee has received the social security payments.
It is important to note that social security will cover only a percentage of the employee’s salary during sick leave:
(two-thirds for outpatient illnesses and half for inpatient illnesses). It is, therefore, at the employer’s discretion to decide whether they pay the employee’s regular salary or make adjustments based on the SSI payments.
If sick leave exceeds six weeks of the employee’s notice period, the employer has the right to terminate the contract, but must pay severance pay.
Maternity & Paternity Leave
Employees are entitled to 16 weeks of paid maternity leave: 8 weeks to be taken prior to the birth and 8 weeks following the birth of the baby. (In the case of a multiple birth, an additional two weeks is added to this time).
An employee can request to shorten the period prior to birth to up to three weeks, provided they receive a medical report. The unused leave can then be added to extend the leave post-birth.
An employee may also take unpaid maternity leave for up to six months.
Employees are entitled to five days of paid paternity leave.
Any scheduled annual leave must be paid before the leave is taken.
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