Payroll in Turkey: A Comprehensive Guide for 2026

Introduction

Payroll in Turkey requires monthly contributions to the Sosyal Güvenlik Kurumu (SGK), progressive income tax withholding at rates between 15% and 40%, and payroll processing governed by Turkish Labor Law No. 4857.

Foreign companies hiring in Turkey without a legal entity must operate through an Employer of Record (EOR) or a local subsidiary, as Turkish law requires a legally registered employer before payroll can run.

Employer SGK contributions sit at approximately 23.75% of gross salary, covering unemployment, disability, and retirement, general health insurance, and short-term insurance. The SGK requires employee registration before the start date, not after.

Missing this deadline puts the employer in immediate breach, with penalties under Labor Law No. 4857 that can exceed TRY 190,000 per violation. Turkey also adjusts its minimum wage at least once a year, sometimes twice, which updates SGK contribution ceilings mid-cycle.

Since July 2025, companies with three or more employees must process salary payments through licensed bank transfers, adding a banking infrastructure step that foreign employers need to account for before their first hire.

In this guide, we cover Turkey's pre-payroll setup, SGK contributions, income tax obligations, payroll components, termination and severance rules, and statutory leave entitlements.

How does the payroll process work in Turkey?

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.

Pre-payroll phase

To get started with standardizing payroll in Turkey, you need to establish several policies related to your new business, such as:

Business profile

You’ll need to register your business and use your registered number on all your legal and official documents, including tax forms and paychecks.

Work location

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.

Leave policy

Handling your employees' leave of various types, including sickness, pregnancy, maternity, and vacation, is paramount, which is why you need to have a comprehensive leave policy in place.

Attendance policy

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.

Statutory components

Making sure that your Turkish business operates in compliance with the local labor and employment laws is critical.

Salary components

Your business will need to establish specific salary components, including earnings, allowances, bonuses, deductions, and benefits.  

Pay schedule

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.

Employee information

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.

Post-payroll phase

Salary payments

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.

Payroll accounting

Typically, salaries also represent one of the highest 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 23.75% in contributions to help cover the employee’s social security taxes:

• 2% for unemployment tax
• 12% for disability, death, and retirement tax
• 7.5% for general health insurance
• 2.25% for the short-term insurance branch premium

Turkey's employer payroll obligations don't sit in one place. The 23.75% statutory contribution load is split across four categories: unemployment, disability, death, and retirement, general health insurance, and short-term insurance.

Individual income tax is applied on a progressive scale from 15% to 40%. Accurately calculating total employment costs requires mapping out every component before you make a hire.

Calculate the total cost of hiring in Turkey.

Payroll processing company in Turkey

Navigating the complexities of Turkish 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.

Payroll management

Managing payroll records in Turkey means tracking financial documentation, statutory contribution deductions across multiple categories, and income tax withholding while staying current with filing schedules and any regulatory changes. Running this independently requires dedicated in-house payroll infrastructure.

Skuad supports this through its global payroll platform, so your team can process payroll across markets without building that infrastructure from scratch.

Here is what Skuad supports:

• Payroll processing in 70+ currencies with automated tax withholding and statutory deductions applied per pay cycle
• Statutory contribution workflows across supported markets, covering applicable social insurance and employment fund obligations
• Payroll records management and documentation across supported markets, supporting audit and filing requirements
• In-country compliance monitoring across supported markets, keeping payroll aligned with regulatory updates and filing schedules
• Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements

See how Skuad supports global payroll.

What are the payroll components?

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).

Minimum wage

In Turkey, the national minimum wage is set to TRY 33,030 gross per month. This works out to approximately USD 850–900 at 2026 exchange rates.

Hours of work

Turkish employees can work a maximum of 45 hours per week under Labor Law No. 4857, typically distributed across five days, 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 the 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 and as long as termination is not on grounds of gross misconduct.

Getting termination wrong in Turkey carries real legal exposure. The requirement to establish just cause, serve the correct notice period based on employee tenure, and calculate severance accurately, all while documenting the process, leaves little room for error, particularly for foreign employers operating without local HR or legal counsel.

Skuad assists with termination and offboarding compliance through its Shield platform, so your team has a clear process to follow when an employment relationship ends.

Here is what Skuad supports:

• Termination support aligned with local labor requirements across supported markets, covering notice period calculations and severance obligations
• Employment contract generation across 160+ countries, with terms structured to reflect local statutory entitlements from day one
• Compliance monitoring across supported markets, keeping your employment practices aligned with labor law updates as they occur
• Offboarding workflows across supported markets, covering documentation requirements and final settlement calculations
• Statutory benefit and leave administration across supported markets, ensuring entitlements are accurately reflected in final payouts

Book a demo to see how Skuad supports compliant terminations in Turkey.

Sick leave

During periods of illness or injury, employees in Turkey are entitled to a temporary incapacity allowance paid by the Social Security Institution (SGK) under Law No. 5510.

The allowance covers each day of incapacity from the third day onward, provided the employee holds a valid medical report and has paid at least 90 days of short-term insurance premiums in the 12 months before the incapacity.

SGK pays two-thirds of the employee's daily gross income for outpatient treatment, or half for inpatient (hospitalized) treatment. The first two days of any non-occupational sick leave are not covered by SGK; employers are not legally required to cover these days, though many do as a matter of practice.

Public holidays

The country observes a total of nine public holidays, which include:

• New Year’s Day (1 January)
• National Sovereignty and Children’s Day (23 April)
• Labor Day (1 May)
• Youth and Sports Day (19 May)
• Victory Day (30 August)
• Republic Day (afternoon of the 28 October and 29 October)
• Democracy and National Unity Day (15 July)
• Feast of Ramadan (3.5 days) and
• Feast of Sacrifice (4.5 days)

Dates of these holidays and observances may change based on religious calendars.

Maternity and paternity allowances

Expectant employees are entitled to a total of 24 weeks of paid maternity leave under Law No. 7578, which entered into force on 1 May 2026. Eight weeks must be taken before the child is born, and the remaining 16 weeks are taken after 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 ten days of paid paternity leave, which must be taken from the date of 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.

For foreign employers, Turkey's maternity and paternity framework introduces a split-payment structure that requires accurate tracking: maternity payments flow through Turkey's Social Security Institution, while paternity pay is a direct employer obligation. Layer in lactation time entitlements and discretionary unpaid leave extensions, and the administrative load adds up quickly without a clear process in place.

Skuad helps with this through its employment management platform, so your team has a structured way to administer statutory leave entitlements across supported markets.

Here is what Skuad supports:

• Statutory benefit and leave administration across supported markets, covering entitlements, accrual tracking, and payment obligations
• Employment contract generation across 160+ countries, with leave entitlements reflected in accordance with local statutory requirements
• In-country compliance monitoring across supported markets, keeping your leave policies aligned with labor law updates as they occur
• Payroll processing in 70+ currencies with deductions and employer contributions applied each pay cycle accurately
• Offboarding and return-from-leave workflows across supported markets, supporting documentation requirements on both sides

Book a demo to see how Skuad supports employment compliance in Turkey.

Annual paid leave

Full-time and part-time staff are entitled to receive paid time off every year. Annual leave entitlement in Turkey is determined by total years of service with the same employer, starting from a minimum of 14 days per year for employees with between 1 and 5 years of tenure. Turkish employees can use their paid annual leave allowance only after 12 months of work with the same company.

On a positive note, Turkey has no statutory expiry rule for annual leave unused days carry forward. Upon termination, all accrued unused leave must be paid to the employee at the wage rate on the date of contract end, regardless of why the contract ended.

Ready to set up payroll in Turkey?

Having covered this, you now understand payroll in Turkey, including SGK filings, income tax withholding, statutory deductions, leave entitlements, and Labor Law compliance. This helps businesses navigate the Turkish payroll framework with greater clarity and fewer compliance gaps.

Payroll in Turkey involves several administrative steps, including salary calculations, social security contributions, tax withholding, statutory reporting, and ongoing compliance obligations. Managing these processes manually can increase workload and the risk of errors.

Skuad supports payroll management in Turkey through a single platform that helps handle salary processing, statutory deductions, and compliance workflows.

Book a demo to see how Skuad supports payroll compliance in Turkey.

FAQs

1. How does payroll work in Turkey?

Employers calculate gross-to-net salaries, withhold progressive income tax at rates between 15% and 40%, and remit both employer and employee social security contributions to the SGK. Monthly tax and SGK declarations must be submitted electronically to the relevant Turkish authorities on fixed deadlines.

2. How much does it cost to run payroll in Turkey?

Beyond gross salary, employers in Turkey contribute approximately 23.75% on top of each employee's gross pay to cover SGK social security premiums. Individual income tax at rates of 15% to 40% is withheld from employee pay each month and remitted to Turkey's Revenue Administration.

3. Can a foreign company run payroll in Turkey without a local entity?

Yes, through an Employer of Record (EOR). An EOR acts as the legal employer in Turkey, handling SGK registrations, monthly payroll calculations, tax withholding, and statutory filings on your behalf. This removes the need to set up a Turkish limited company or joint-stock company before your first hire.

4. What are the penalties for payroll non-compliance in Turkey?

Penalties under Turkish Labor Law can range from a few thousand lira for minor errors to over TRY 190,000 per violation for serious breaches, such as failing to register an employee with the SGK before their start date. Late monthly declarations also carry interest charges that compound over time.

5. What is the difference between running payroll through an EOR and setting up a legal entity in Turkey?

Setting up a legal entity in Turkey requires registration with Turkey's Revenue Administration (Vergi Dairesi), SGK enrollment, and a local bank account for payroll. An EOR removes those steps by acting as the legal employer on your behalf.

6. How quickly can a foreign company start paying employees in Turkey?

Through an EOR, foreign companies can onboard and pay employees faster than through entity setup. The key deadline is SGK registration, which must be completed before an employee's start date. With an EOR handling this step, companies can often move from a signed offer to first payroll in a few weeks.