Employer of Record Turkey

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An Overview of Employing in Turkey

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.

Bonus

Bonuses are not mandatory by Turkish Labour Law; however, all provisions mentioned in the contract of employment must be awarded.

Some Turkish employers opt to give the bonus as a 13th salary.

Social Security System

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:

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.

Healthcare

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.

Employers’ Costs

Social security contributions are deducted from an employee’s gross earnings in the form of e-declarations by the 26th of each month.

Cost Employer’s
Contribution (%)
Employee’s
Contribution (%)
Maximum
Threshold (TRY)
Social Security Contributions (SSI) 20.5% 14.0% 22072.50
Unemployment Insurance 2.0% 1.0% 22072.50
Total 22.5% 16.0%

Breakdown of SSI Contributions

Contribution Employer
Contribution (%)
Employee
Contribution (%)
Total
Short-term social security 2.0% 0.0% 2.0%
Disability, old age, and death 11.0% 9.0% 20%
Health Insurance 7.5% 5.0% 12.5%
Unemployment insurance 2.0% 1.0% 3.0%
Total 22.5% 15% 37.5%

Statutory Insurances

Universal Health Insurance

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.

An Overview of the Main Statutory Benefits

Pension

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).

Sickness

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

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.

Paternity Leave

Employees are entitled to five days of paid paternity leave.

Other

Minimum Living Allowance (MLA/AGI)

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:

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

Contract of Employment

The contract of employment must be executed in Turkish and the native language of the employee.

Rules of Registration

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.

Probationary Period

The maximum probationary period is two months; extensions to this are not permitted. If a Collective Bargaining Agreement is signed the maximum period is four months.

No notice period is required during the probationary period.

Working Hours

The maximum regular working hours is 45 per week and an employee must not work more than 11 hours in one day.

Rest Breaks

Turkish Labor Law prescribes the minimum rest periods for employees:

Work period Rest period entitlement
< 4 hours 15 minutes
4 hours > 7.5 hours 30 minutes
>7.5 hours 1 hours

Overtime

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.

Vacation Allowance

Any scheduled annual leave must be paid before the leave is taken.

Termination

Termination of contracts in Turkey can be complex and must comply by the regulations stated in the Turkish Labor Law.

Notice Period

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.

Length of Service Notice period
0-6 months 2 weeks
6-18 months 4 weeks
18 months – 3 years 6 weeks
More than 3 years 8 weeks

Severance Pay

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.

Holiday Entitlement

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:

Employment duration Holiday entitlement
(days per year)
1-5 years 14 days
5-15 yeas 20 days
15 years + 26 days
Public holidays 2022
New Year’s Day Saturday 1st January
National Sovereignty and  Children’s Holiday Saturday 23rd April
Labour Day Sunday 1st May
Ramadan Eid Festival (Ramazan Bayrami) Monday 2nd May – Wednesday 4th May
National Youth Day Thursday 19th May
Kurban Bayrami Saturday 9th July – Tuesday 12th July
Democracy and National Solidarity Day Friday 15th July
National Victory Day Tuesday 30th August
Republic Day Saturday 29th October

Keen to engage a EOR in Turkey? At TopSource Worldwide, we work with local experts to help you navigate the various admin and cost obstacles you may come across along your expansion journey

To find out how we can help your business with our employment solutions, contact us today.

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Published date: 22nd Feb 2022
Review date: 22nd Feb 2023