Introduction to Payroll in Turkey
Turkey’s geographic position makes it an attractive destination for visitors and businesses looking to expand their operations. Only a couple of hours away by plane from most European cities, Turkey often works as a sort of invisible connector between the European Union and Asia.
The country offers great incentives for investors and businesses coming from abroad, which appeals to more and more companies pursuing international expansion. If your company is one of them, this guide is for you.
Before you set out on your Turkish expansion journey, however, you need to know how to set up payroll in Turkey. Core payroll in Turkey can be complex and challenging for foreign businesses, which is why you need to work with a trusted payroll company.
Working with a payroll provider in Turkey can help you speed up this process and make it much easier, smoother, and more cost-efficient, while always ensuring full compliance with the rules and regulations established by payroll bureaus in Turkey.
Skuad acts as your global payroll partner and handles every single step of your payroll on your behalf — from onboarding all the way through to monthly payments.
Managing payroll for your business in Turkey isn’t simple if you choose to do it by yourself. This requires handling multiple tasks across several different teams, as well as always being on top of any new policies, rules, and regulations. Teaming up with Skuad can make the entire process a cinch for you.
To get started with standardizing payroll in Turkey, you need to establish several policies related to your new business, such as:
You’ll need to register your business and use your registered number on all your legal and official documents, including tax forms and paychecks.
Do you plan on opening different branches of your business in different parts of Turkey? If so, you’ll need to establish specific policies for each area.
Guaranteeing your employees leaves of various types — including sickness, pregnancy, maternity, and vacation — is paramount, which is why you need to have a comprehensive leave policy in place.
You’ll need to decide on your company’s attendance policy in terms of standard working hours and overtime, and also in terms of permissions, special requests, and the use of time sheets and biometric devices.
Making sure that your Turkish business operates in compliance with the local labor and employment laws is critical.
Your business will need to establish specific salary components, including earnings, allowances, bonuses, deductions, and benefits.
Generally speaking, employees in Turkey are paid once a month. However, it’s up to your company to establish which day of the month your employees will get paid — and to communicate it to them clearly.
To manage payroll and calculate individual salaries, it’s essential to collect information on every single one of your employees.
Payroll calculation phase
At this point, the data that you — or your payroll management provider — have calculated during the pre-payroll phase is added to your payroll system, which in turn calculates how much money each of your employees needs to get paid.
Paying out your employees’ monthly salaries is one of the main parts of the post-payroll phase. As soon as you complete your payroll calculation, you’ll need to send that information to your bank, which will proceed with salary disbursement.
Typically, salaries also represent one of the largest costs for your company, which makes it imperative to consistently keep your organization’s internal accounts in order.
Payroll reporting and compliance
Payroll tax in Turkey is another challenging aspect to deal with — and another reason to consider working with a global payroll provider like Skuad. In Turkey, individual income tax varies from 15% to a maximum of 40% and is calculated according to specific and gradually increasing rates.
The employer is expected to pay an extra 22.5% in contributions to help cover the employee’s social security taxes:
- 2% for unemployment tax
- 11% for disability, death, and retirement tax
- 7.5% for general health insurance
- 2% for short-term insurance branch premium
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Navigating the complexities of Turkey payroll taxes can feel daunting even in the best of times. This is why it's fundamental to seek the expert support of a professional partner like Skuad, to simplify and accelerate your payroll systems in Turkey — enabling you to go back to running a thriving, profitable business.
Managing payroll in Turkey requires keeping all the necessary financial records in relation to payroll while also adhering to Turkey's statutory requirements.
Maintaining full compliance with Turkish labor laws is integral to managing payroll in Turkey. Typically, payroll includes standard pay with additions (bonuses and benefits) and deductions (taxes and social programs).
In Turkey, the national minimum wage is set to be increased to 4,250 liras per month in 2022. This works out to roughly USD $275.
Hours of work
Turkish employees are expected to work nine hours a day, five days a week — generally, Monday through Friday. This can change significantly for certain sectors, of course, including retail and hospitality.
Dismissal, termination, and severance pay
Terminating an employee’s contract in Turkey can be complicated, as termination isn’t allowed beyond the probation period unless a just reason is found. Some of the reasons that constitute compliant terminations are:
- A voluntary termination by the employee, or one agreed on mutually between the employee and employer
- Unsatisfactory performance during the probation period
- Misconduct by the employee
- Medical conditions affecting the employee
- Allegations of sexual harassment
- Other disciplinary observations
For a termination to be lawful, the notice period needs to be no less than two weeks, increasing by extra days or weeks depending on how long the employee has been with the company. Severance pay is available to all employees in Turkey, as long as they’ve been working with the same company for at least one consecutive year.
In Turkey, employees can request one week of paid sick leave each year. This allowance is paid for by the country’s Social Security Institution. If needed, an employee can ask for their leave to be extended at the discretion of the employer. However, any extended leave will not be paid.
The country observes a total of eight public holidays, which include:
- New Year's Day
- National Sovereignty and Children’s Day
- Ramazan Bayrami (End of Ramadan)
- Labor Day
- Commemoration of Atat
- Kurban Bayrami (Feast of Sacrifice)
- Victory Day
- Republic Day
Maternity and paternity allowances
Expectant employees are allowed to take a total of 16 weeks of paid maternity leave. Eight weeks must be taken before the child is born, and the remaining eight are taken after the birth.
During this time, the staff member will receive about two-thirds of their standard salary, which is paid for by the Turkish Social Security Institution. The employee is also entitled to claim 1.5 hours a day for lactation, from the eighth week following the baby’s birth up until the child turns 1 year old.
If the employee wants or needs to, they can extend their maternity leave without the need to provide a medical certificate. Any extra leave, however, will remain unpaid.
Fathers and partners receive a total of five days of paid paternity leave, which must be taken straight after the baby’s birth. During this time, the employee will be paid in full directly by their employer and not by the Social Security Institution.
According to the law, fathers and partners aren’t entitled to any additional leave, but this can still be allowed at the discretion of the employer.
Annual paid leave
Full-time and part-time staff are entitled to receive paid time off every year, which accrues on a monthly basis and is worked out pro rata based on the individual employment contract. Turkish employees can use their paid annual leave allowance only after 12 months of work with the same company.
On a positive note, employees can carry forward as many days of leave as they want, as there are no legal limits to this.
Payroll in Turkey: Build a Great Team With Exceptional Turkish Talent
Managing payroll in Turkey can give you headaches, but there’s no need to tackle it by yourself. Choose to work with an expert, trusted, and friendly partner like Skuad.
With Skuad, you’ll have the peace of mind that every aspect of all your payroll services in Turkey is taken care of in the best and most compliant way, every time. Our knowledgeable team is always up to date with the latest in all things payroll, which means that we can deliver a fully trustworthy service regardless of any changes in labor laws or other regulations.
Are you ready to take on the Turkish market and secure the best local talent for your expanding business? Book your demo today and take a look at how outsourced payroll in Turkey works and what our team can do for you.