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;
- unemployment
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
Contractual Provisions
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.
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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.