Employees and Social Security

Turkish Social Security System

The social security system in Turkey went through a major transformation in 2007, resulting in a more efficient and fast functioning system, based on centralizing the control of different social security funds in a single institution.

The three insurance funds, namely SSK, Emekli Sandigi and Bag-Kur, were merged under a sole body called the Social Security Institution (SSI) in 2007. The three insurance funds together cover around 81% of the population as of 2008. The system started to be fully operational at the beginning of 2008.

Social Security Premium Payments

Social security premiums (as a percentage of employee's gross earnings) are payable by both employers and employees. To given an outline, the below table shows the rates regarding the issue.

Social Security Premiums (office employees)

Type of risk

Employer's

share (%)

Employee's

share (%)

Total (%)

Short - term risks

2*

-

2*

Long - term risks

11

9

20

General health insurance

7.5

5

12.5

Contribution to unemployment insurance

2

1

3

Total

22.5*

15

37.5*

*Pursuant to Law no. 6385, the premium rates with respect to short-term risks have been set at %2 for all employers regardless of risk rates.

Foreigners making social security contributions in their home countries do not have to pay the Turkish social security premiums if there is a reciprocal agreement between the home country and Turkey.

Unemployment Insurance Premium Payments

Employees, employers and the state are required to make a compulsory contribution to the Unemployment Insurance Plan at the rates of 1%, 2% and 1%, respectively, of the gross salary of the employee. Like the social security premium payments, unemployment insurance premiums are also to be paid on a monthly basis. Employers are able to deduct such contributions from their taxable income. On the other hand, an employee’s contributions are deductible from the income tax base of the employee.

A foreign individual who remains covered under the compulsory social security system of his/her home country that has a social security agreement in effect with Turkey is not liable for insurance payments to the Turkish social security. The proof of foreign coverage is to be filed with the local social security office. If the employee is not subject to a foreign social security, full contributions will generally be imposed. Unemployment insurance premiums are declared and paid to the Social Security Institution together with social security premium contributions.

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Terms of Employment

Terms of employment in Turkey are mainly governed by the Labor Law and Trade Union Law.

Pursuant to the Labor Law, there are various types of employment contracts:

a) Employment contracts for “temporary” and “permanent” work
b) Employment contracts for a “definite period” or an “indefinite period”
c) Employment contracts for “part-time” and “full-time” work
d) Employment contracts for “work-upon-call”
e) Employment contracts with a trial period
f) Employment contacts constituted with a team contract

Employment contracts are exempt from stamp tax and any type of duties and fees.

Any kind of discrimination among employees with respect to language, race, gender, political opinion, philosophical approach, religion or similar criteria is prohibited by law. Discrimination based on the gender of an employee is prohibited when determining the amount of remuneration for employees working in the same or equivalent jobs.

Working Hours and Overtime

Under the Labor Law, the maximum regular working hours are 45 hours per week. In principle, 45 hours should be split equally among the working days. However, in accordance with the Labor Law, working hours may be arranged by the employer within the legal limits.

As a rule, hours exceeding the limit of 45 hours per week are to be paid as “overtime hours”. The wage/salary for each hour of overtime work is paid by raising the hourly rate of the regular working salary by fifty percent. Instead of the overtime payment, employees may be granted 1.5 hours of free time for every overtime hour worked. Overtime hours worked during weekends and public holidays are to be paid as wage for one day holiday and overtime wage. These rates may be increased on the basis of a collective or personal employment contracts between employees and employers. The total number of overtime hours worked per year may not exceed 270 hours.

Annual Paid Vacation

There are six paid public holidays per year (January 1st, April 23rd, May 1st , May 19th, August 30th, October 29th), plus two paid periods of religious holiday, which comes to eight days in total. Employees are entitled to paid annual vacation for the periods indicated below, provided that they have worked for at least one year including the probation period:

Years of work

Minimum paid vacation period

1 - 5 years (inclusive)

14 working days

5 - 15 years

20 working days

15 years (inclusive) or longer

26 working days

These benefits are the minimum levels set by law and may be increased on the basis of a collective or personal employment contracts.

As per the Labor Law, in case the employer recruits at least 10 workers within the same workplace or across the whole country; any premium, wage, compensation, etc. to be paid to workers shall be paid in Turkish Lira (TRY) to the bank accounts of employees. If wage and salary amounts are not paid into employees' bank accounts, an administrative penalty is charged to the employer. It is possible to denominate wages/salaries in terms of a foreign currency. In this case, wages/salaries shall be paid in TRY calculated on the basis of the relevant foreign currency rate prevailing as of the payment date.


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Termination of Employment Contract

According to the relevant provisions of the Labor Law no. 4857, employers and employees are required to give specified notification periods prior to the termination of an employment contract, as shown in the following table.

Required minimum notification periods for employers and employees

Duration of service

Duration of notification period

0 - 6 months

2 weeks

6 - 18 months

4 weeks

18 - 36 months

6 weeks

more than 36 months

8 weeks

There are two types of termination for an employment contract:

1) Termination with notification

Both the employee and the employer may terminate an employment contract concluded for an indefinite period based on the notification periods indicated in the above table. The party who does not abide by the rule to serve notice shall pay compensation covering the wages which correspond to the notification period in order to terminate the employment contract.

2) Termination of an employment contract before the end of the contract period or before the notification periods stated above, based on justifiable and rightful reasons stated in the Labor Law

Both the employer and employee have the right to terminate an employment contract before its expiry or without having to comply with the prescribed notification periods, in the following cases:

Reasons of health

Cases arising from immoral, dishonorable or malicious conduct or other similar behavior

Force majeure

Severance Pay

An employee who quits satisfying the conditions indicated in the Labor Law or whose employment contract is terminated by the employer must be compensated with a severance pay to be calculated based on the employees’ seniority at the work place. This indemnity pay is calculated on the basis of the last thirty days’ gross wage per year of the employment contract from the commencement date of employment. The thirty days’ payment per year of employment may not exceed the upper limit determined semi-annually. However, severance pay may be agreed to be paid at an amount higher than the limit indicated above in case there is a provision in the employment contract.

The reasons on the basis of which employees are entitled to receive severance pay are as follows:

Leaving the workplace due to the compulsory military service (for males)

Retirement (in order to receive old age, retirement pension or disability allowance from the relevant insurance institutions)

Resignation of the employee after completing 3,600 premium days and 15 years of insurance period (in case of fulfillment of retirement conditions except the age limit and resignation with the submission of the document from the Social Security Institution indicating the fulfillment of retirement conditions, excluding the age limit, to the employer)

Voluntary termination by female employees within one year following the date of marriage

Death of the employee

Termination of the employment contract not based on a valid reason listed in the Labor Law by the employer and termination of the employment contract by the employer with valid a reason

Job Security

According to Labor Law, in case the employment contract is terminated by the employer, it is required that the underlying reason of this termination be notified to the employee, and the reason of termination be valid. The employee has the right to file a lawsuit in Labor Court within one month from the date of notification of termination. In the lawsuit to be filed, liability of proving that termination is based on a valid reason belongs to the employer, and if the employee claims that termination is due to another reason, he/she is obligated to prove this claim. In case the court decides that the termination is invalid and the employee is to be reemployed, and if the employee does not apply to the employer within ten work days from the date of notification of the decision to him/her, termination executed by the employer is deemed as a valid termination, and employer is only held responsible for the legal consequences.

Source: www.invest.gov.tr

1 Response

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