a. Terms of Employment
Employment in Turkey is mainly governed by Turkish Labor Law and Trade Union Law.
Under the new Turkish Labor Law, there are four different types of job contracts:
a) Job contracts for “temporary” and “permanent” work
b) Job contracts for a “definite period” or an “indefinite period”
c) Job contracts for “part-time” work
d) Job contracts for “work-upon-call”
Job contracts do not have to be concluded in a specific format. However, if a job contract is signed for a definite period, it must be concluded in writing. Job contracts are exempt from stamp tax and other duties.
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. Should the principle of equality be violated, the employee who is subject to discrimination can request monetary compensation.
Working Hours and Overtime
Under the Labor Law, the maximum normal working hours are 45 hours per week. In principle, 45 hours should be split equally among the working days. However, under the new rules introduced by the new Labor Law, working hours may be distributed unevenly over the working days provided that the total daily working hours do not exceed 11 hours a day and that the parties agree on the uneven distribution of the working hours over the working days.
Hours exceeding the limit of 45 hours per week are to be paid as “overtime hours”. Payment for the overtime hours must be 1.5 times the regular hourly wage/salary. 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 at twice the regular hourly rate. These rates are the minimum set by law and may be increased on the basis of a collective or bilateral agreement between employees and the employer. 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:
These benefits are the minimum levels set by law and may be increased on the basis of a collective or bilateral agreement.
Under the law on the amendments to Turkish Labor Law, wages and salaries must be paid in Turkish Lira (TRY) into the bank account of employees. If wage and salary amounts are not paid into employees' bank accounts, an administrative penalty totaling TRY 100 per employee (per month) 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.
b. Termination of Employment
According to the relevant provisions of the Labor Law, employers and employees are required to give specified notification periods prior to the termination of employment, as shown in the following table.
There are two types of termination for a job contract:
1) Termination with notification
2) Termination without notification based on justifiable reasons
Termination with notification
Both the employee and the employer may terminate a job contract concluded for an indefinite period based on the notification periods indicated in the above table. The employer may terminate a job contract by paying the salary of the employee corresponding to the notification period. However, the employee covered by the labor security preserves the right to subject the validity of the termination of employment to judicial review.
Termination without notification based on justifiable reasons
Both the employer and employee have the right to terminate a job contract without notification under the following conditions:
• Reasons of health
• Cases arising from misconduct and similar reasons
• “Force majeure” events that prevent the employee from working for a period exceeding one week.
Termination indemnity (severance pay)
A lump-sum termination indemnity is to be paid to employees whose employment is terminated due to retirement or for reasons other than resignation or misconduct. Such indemnity pay is calculated on the basis of thirty days' pay per year of employment at the gross rate of pay applicable at the date of retirement or leaving. However, the thirty days’ payment per year of employment may not exceed a semi-annually determined limit which is TRY 2,623.23 for the first half of 2011. Indemnity may be agreed to be paid at an amount higher than the limit indicated above in case there is a provision in the contract of employment.
Termination indemnity paid within the limit specified is exempt from income withholding tax. However, the amounts of indemnity paid in excess of the limit shall be subject to income tax. The reasons on the basis of which employees are entitled to receive termination indemnity are as follows:
a) Leaving workplace due to the compulsory military service (for males)
b) Retirement (in order to receive old age, retirement pension or disability allowance from the relevant insurance institutions)
c) Voluntary termination by female employees within one year following the date of marriage
d) Death of the employee
c. 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.
Within the scope of the program:
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. The below table shows the rates that apply in the case of office employees in the private sector. Rates for employees working in specific sectors (such as mining, oil/gas exploration) may vary depending on the risk category of the work performed.
*The rates change according to the risk categories of jobs. Depending on the risk category, the employer's share varies between 1% and 6.5%.
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.
Turkey's loan agreement with the International Monetary Fund (IMF) will help the country manage costs and maintain efficiency. In addition, the EU accession period and Turkey’s efforts to comply with the EU regulations will also make positive contributions to the reform program.
• Uniform norm and standards for workers, civil servants and the self-employed
• Gradual increasing of the retirement age to 65
• Decrease in accrual rate to 2%
• The valorization of past earnings by Consumer Price Index (CPI) +30 % of GDP real growth
• Indexation of pensions to CPI
• Universal health insurance
• A new health scheme for the poor
• Introduction of co-payments for secondary and tertiary healthcare
Source: Republic of Turkey Prime Ministry Investment Support and Promotion Agency
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