Payroll in Turkey

Payroll Management in Turkey requires navigating a complex set of parameters crucial for compliance and accuracy. Vigilance in these areas is essential for both employers and employees to ensure precise payroll calculations and adherence to local regulations.

Employers in Turkey are required to process payroll on a monthly basis. Employers are responsible for deducting income tax, stamp tax, social security contributions, health insurance premiums, unemployment premiums, pensions, and any other mandatory deductions directly from employees’ salaries.

These deductions must then be submitted to the Tax Office and Social Security Institution (SGK) by employer. It is imperative for employers and employees alike to keep a close eye on these parameters to ensure accurate payroll calculations and maintain compliance with local regulations.

1. Payroll Processing

Payroll processing in Turkey involves several key steps:

• Calculate Gross / Net Salary: Including any bonuses, overtime, or allowances.
• Deduct Taxes: Income & stamp tax.
• Implement Social Security Contributions: The employee’s contribution typically amounts to around 15% of their gross salary, while the employer’s contribution is approximately 22.5%.
• Submit reports: Provide necessary payroll reports to tax office and SGK.

2. Payroll Parameteres

• • Employer Contributions:  22.5% 

  • Employee Contributions:  15% 

  • Government Contributions: 1% 

• Bonuses and Additional Payments: While there is no statutory requirement to pay bonuses in Turkey, it’s common practice to offer performance-based bonuses, especially in industries like finance and technology. Employers may also provide additional payments such as holiday allowances or end-of-year bonuses, which are subject to taxation and social security deductions.
• Overtime: The standard workweek in Turkey is 45 hours, typically spread over six days. Employees working more than 45 hours are entitled to overtime pay at a rate of 1.5 times the regular hourly wage. Turkish labor law allows a maximum of 270 hours of overtime per year for each employee.

3. Leaves

In Turkey, employees are entitled to various types of leave:

• Annual Leave: Employees in Turkey are entitled to paid annual leave, which increases based on the length of service:
  • Up to 1 year of service: No entitlement
  • 1 to 5 years: 14 days of paid leave
  • 5 to 15 years: 20 days of paid leave
  • More than 15 years: 26 days of paid leave
• Sick Leave: Employees can take sick leave if they provide a doctor’s note. The Social Security Institution (SGK) compensates a portion of the salary for extended sick leave.
• Maternity Leave: Female employees are entitled to 16 weeks of paid maternity leave, split equally before and after childbirth. Fathers are granted 5 days of paternity leave.
• Public Holidays: There are several public holidays in Turkey, during which employees are entitled to paid leave. These include:
  • New Year’s Day
  • National Sovereignty and Children’s Day (April 23)
  • Labor and Solidarity Day (May 1)
  • The Democracy and National Unity Day (July 15)
  • Republic Day (October 29)
  • Religious holidays such as Eid al-Fitr and Eid al-Adha

  If employees are required to work on public holidays, they are entitled to overtime pay at double their regular rate.

4. Compensations

• Termination Pay: When an employee is terminated, employers must comply with local labor laws regarding notice periods and severance pay. The notice period depends on the employee’s length of service:
  • 0-6 months: 2 weeks’ notice
  • 6 months to 1.5 years: 4 weeks’ notice
  • 5 to 3 years: 6 weeks’ notice
  • 3+ years: 8 weeks’ notice
• Severance Pay: Employees who have completed at least one year of service are entitled to severance pay. The severance payment is equivalent to one month’s salary for each year of service.

5. Additional Considerations for Foreign Employees

Foreign employees working in Turkey are subject to the same payroll regulations as Turkish citizens, but there are some additional considerations:

• Work Permits: Foreign employees must obtain a work permit before they can be legally employed in Turkey. Employers are responsible for securing these permits on behalf of their employees.
• Tax Residency: Foreign employees who spend more than six months in Turkey are considered tax residents and are subject to the same income tax rates as local employees. Those who spend less than six months are only taxed on their Turkish-sourced income.

Do you need more info? Click then: Turkey Work Visa