An Employer of Record (EOR) in Turkey owns a legal entity and enables foreign companies to hire employees on their payroll without setting up a company in Turkey. The EOR acts as the legal employer, while the workers or contractors perform their services under the guidance and supervision of the client company.
Discover the key considerations and essential details you should be aware of before hiring in Turkey through an employer of record (EOR).
Employment Contracts in Turkey
- Employment relationships in Turkey are decided based on the length of employment.
- Fixed term contracts are considered if the length of employment is over one month.
- Indefinite contracts are considered if the length of employment is over one year.
- Employment contracts in Turkey must include all standard clauses including, but not limited to, the contract duration, scope of work, job title, working hours, compensation, job location, employee benefits, probation period, notice period, termination period, severance pay, non-compete, device policy, and so on.
- Employers are not allowed to renew fixed-term contracts in a row more than once in order to avoid compensating employee benefits. General reasons to enter into fixed-term contracts include seasonal work, temporary projects, replacement of employees that are on leave.
- It is allowed to renew the fixed-term contracts if the nature of work allows it to be renewed more than once. The contract will be considered as an indefinite contract from the contract initial start date if the reasons for contract renewal are not legitimate.
- Employees can be hired temporarily through two arrangements in case of situations including maternity leave, employment termination, and sudden increases in workload.
- Employee transfers within the same groups of companies for a period of six months, and the contract cannot be renewed more than twice.
- Private employment offices connect employers with employees looking for temporary jobs.
- Article 31 provides protection against gender and maternity discrimination for employees. An employee is entitled to receive compensation equal to 4 months' salary in case of unfair dismissal.
- If there are open positions that match the skill set of part-time employees, they should be informed, and their requests to switch between part-time and full-time jobs must be considered.
Employee vs Independent Contractors Compliance
- As per the Turkish labor laws, working hours of part-time employees must be one-third less than full time employees. Part-time employees are not allowed to work overtime. This is to avoid employee misclassification in Turkey.
- Employers are not allowed to discriminate against employees and contractors due to the reasons including but not limited to employment relationship, language, religion and sex.
- Wages and benefits must be paid in proportion to the working hours in comparison to those of full-time employees.
- A full-time employee is defined as an employee in a similar industry when there are no full-time employees in the company.
Minimum Wages in Turkey
As of July 1, 2023, the minimum wage in Turkey stands at 11,402.00 lira per month, subject to adjustments based on inflation, economic factors, and the cost of living.
Probation Period
A probation period with a maximum duration of two months can be incorporated by the parties in an employment contract. Although the probation period is not mandatory, it can be extended to up to four months through the use of collective labor agreements.
Payroll Cycle
In Turkey, payroll is typically processed on a monthly basis, and salary is usually paid on the last day of the month.
Working Hours
According to Turkish Labor Law, the standard weekly working hours amount to 45 hours.
Overtime Pay
If an employee exceeds these regular working hours, overtime is accrued. The overtime period should be compensated with an additional payment of 50% of the original wage or an hour and 30 minutes of compensatory leave, as the employee requests in writing.
13th Month Salary
In Turkey, there are no legal obligations for 13th and 14th-month payments.
Payroll Contributions in Turkey
Social Security Floor and Ceiling Amounts
The following numbers are applicable for the duration: 01 July 2023 – 31 Dec 2023 while calculating insurance premiums.
- The floor amount of gross monthly salary is capped at 13414.50 TL
- The ceiling amount of gross monthly salary is capped at 7X of floor amount. i.e 7 * 13414 = 100608.75 TL
Employer Payroll Contributions in Turkey
In Turkey, employers are responsible for various payroll contributions, including 7.5% for Health Insurance, 2% for Unemployment, 11% for Pension & Disability, and 2% for Short Term Insurance, resulting in a total employment cost of 22.5% of the gross salary.
| Employers | % of Gross Salary |
| General Health Insurance | 7.5% |
| Unemployment | 2% |
| Pension & Disability | 11% |
| Short Term Insurance Branch | 2% |
| Total Employment Cost | 22.5% |
Employee Payroll Contributions in Turkey
Employees in Turkey contribute to various components of their payroll, with 5% for Health Insurance, 1% for Unemployment, and 9% for Pension & Disability, resulting in a total employee cost of 15% of their gross salary.
| Employees | % of Gross Salary |
| General Health Insurance | 5% |
| Unemployment | 1% |
| Pension & Disability | 9% |
| Total Employee Cost | 15% |
Short Term Insurance Branch
This premium serves the purpose of funding short-term insurance benefits for employees. These benefits encompass payments for various situations such as sick leave, maternity leave, workplace accidents, and work-related illnesses. In instances of workplace accidents, occupational diseases, illness, and maternity-related risks, individuals receive health and care assistance through General Health Insurance, while financial aid is provided through Short-Term Insurance Branches.
Unemployment Insurance, Wages Guarantee Fund and more
As per article 33, employers contribute 2% of gross salary to the unemployment insurance. 1% is contributed towards the wages guarantee fund. Wages guarantee fund covers the employees’ salary if the employer is not able to pay salaries due to declared bankruptcy or insolvency. This fund is a separate entity within unemployment insurance and it aims to cover employees’ wage claims for the last three months of their employment.
As per article 34, employees can stop working if the salaries are not paid 20 days after the pay day except during force majeure. A higher interest rate will be applied to the wage debt until the amount is paid. Employers should not be terminated from their job if they stop working due to wage debt. Employers are not allowed to hire replacements for such employees or nor can they assign work to others.
Employers who reduce the employee’s working hours due to unforeseen events must report the situation to the employment organization of Turkey. Employees are entitled to receive certain unemployment benefits for the hours they did not work if the working hours continue to be low for 4 weeks in a row. This situation cannot exceed a maximum of 3 months.
The following is the criteria to become eligible for unemployment benefits
The daily benefit for reduced work hours matches the unemployment benefit rate Unemployment benefits will start a week after the work is suspended due to unforeseen events. Contributions towards illness and maternity insurance are transferred to social insurance organizations. If an employee resumes work before availing the unemployment benefits completely, the leftover benefits can be utilized in future. Temporary disability payment during the reduced work hours cannot exceed the amount of reduced working hours benefit.
Notice Period
In Turkey, the minimum notice periods for terminating employment contracts are determined by the length of an employee's service. Here are the notice periods based on the length of service:
- Less than 6 months of service: A minimum notice period of 2 weeks is required for termination.
- 6 months to 1.5 years of service: In this case, the minimum notice period for termination is extended to 4 weeks.
- 1.5 years to 3 years of service: Employees with a service duration falling within this range are entitled to a minimum notice period of 6 weeks.
- More than 3 years of service: For employees who have worked for more than 3 years, the minimum notice period for termination is extended to 8 weeks.
It's important to note that these minimum notice periods can be extended by mutual agreement, but such extensions must be made solely in favor of the employee. In other words, the notice period can be longer if both the employer and the employee agree to it, but this extension should not be disadvantageous to the employee. This provision helps protect the rights of employees in employment terminations.
Termination and Severance
In Turkey, employees who are terminated can claim severance pay, which amounts to a month's salary per year of service. Each completed year of service is based on 30 days’ worth of the employees salary, taking into account their latest salary rate at the time of calculation. The maximum severance pay has been capped at 19,982.83 Turkish Liras as of January 1, 2023 to June 30, 2023, by the government. It’s important to know that termination of employment contracts in Turkey is subject to specific conditions and requirements as set out in the Labor Law. Even small mistakes can lead to big problems.
Personal Income Tax in Turkey
The personal income tax in Turkey is structured into several income brackets, with varying tax rates based on income levels, providing a progressive taxation system.
| Income Tax | |
| 0 - 24,000 TRY | 15% |
| 24,000 - 53,000 TRY | 20% |
| 53,000 - 190,000 TRY | 27% |
| 190,000 - 650,000 TRY | 35% |
| Over 650,000 TRY | 40% |
Employee Benefits in Turkey
Leave Types in Turkey
| Leave Type | Description |
|---|---|
| Annual Leave |
In Turkey, employees have the right to paid annual leave under Turkish Labor Law No. 4857. The duration of this leave varies depending on an employee's years of service:
|
| Maternity Leave |
Female employees have the right to 16 weeks of paid maternity leave, which can be taken both before and after childbirth.
During this period, employees must receive their full wage or salary, and their employers cannot reduce their earnings due to maternity leave. Additionally, job security is ensured, and employers are not allowed to terminate the employee's employment because she is on maternity leave. |
| Parental Leave | Both male and female employees in Turkey are entitled to take 52 weeks of unpaid parental leave after the birth of their child or the adoption of a child under the age of 3. This provides parents with the flexibility to care for and bond with their children during the early years of their lives. |
| Sick Leave |
Employees in Turkey are entitled to paid sick leave based on their length of service:
|
| Bereavement Leave |
Employees in Turkey are entitled to paid bereavement leave based on their length of service and their relationship to the deceased:
|
| Sabbatical Leave | Sabbatical leave is not specifically addressed in Turkish Labor Law. |
Turkey Overview
Turkey, located at the crossroads of Europe and Asia, is a vibrant and diverse country that offers a rich tapestry of culture, history, and natural beauty to visitors from around the world. From the bustling streets of Istanbul, where ancient traditions meet modern life, to the stunning landscapes of Cappadocia and the pristine beaches of the Mediterranean and Aegean coasts, Turkey provides a wide range of experiences.
| Overview | |
| Continent | Asia |
| Country | Turkey |
| Capital | Ankara |
| Time zone | UTC+03:00 (TRT) |
| Total Time zones | 1 |
| Working hours per week | 45 |
| Working week | Monday–Friday |
| Typical hours worked | 9 |
| Personal Tax filing deadline | 31st Mar |
| Financial Year | 1st January to 31st December |
| Date format | dd/mm/yyyy |
| Currency | Turkish Lira (TRY) |
| VAT | the standard rate is 18% |
In conclusion, Employer of Record (EOR) services in Turkey offer a strategic solution for businesses looking to expand their operations in this dynamic market. Navigating Turkey's complex labor laws and regulatory landscape can be challenging, but with the support of an EOR, companies can streamline their entry into the Turkish market, ensuring compliance with local regulations, and focusing on their core business objectives. By partnering with an experienced EOR provider, businesses can access a talented workforce, manage payroll and HR tasks efficiently, and mitigate potential risks associated with international expansion. Whether it's handling payroll, managing legal compliance, or providing HR support, EOR services empower companies to thrive and grow in Turkey's vibrant business environment.