A Q&A guide to employment and employee benefits law in Turkey.
The Q&A gives a high level overview of the key practical issues including: permissions to work; contractual and implied terms of employment; minimum wages; restrictions on working time; illness and injury; rights of parents and carers; data protection; discrimination and harassment; dismissals; redundancies; taxation; employer and parent company liability; employee representation and consultation; consequence of business transfers; pensions; intellectual property; restraint of trade agreements and proposals for reform.
To compare answers across multiple jurisdictions, visit the Employment and Employee Benefits Country Q&A tool.
The Q&A is part of the PLC multi-jurisdictional guide to employment and employee benefits law. For a full list of jurisdictional Q&As visit www.practicallaw.com/employment-mjg.
Foreign nationals working in your jurisdiction?
Nationals of your jurisdiction working abroad?
Employment laws regulating the employment of Turkish nationals apply to foreign nationals working in Turkey. Turkey also has special laws regulating the acquisition of work and residence permits for foreign nationals who intend to work in Turkey. The main laws applicable to the regulation of the employment relationship are the:
Turkish Labour Code No. 4857 (TLC), published in the Official Gazette dated 22 May 2003 and numbered 25134.
Code of Obligations No. 6098 (Code of Obligations), published in the Official Gazette dated 4 February 2012 and numbered 27836, which entered into force on 1 July 2012.
Law Concerning Foreigners' Work Permits No. 4817, published in the Official Gazette dated 6 March 2003 and numbered 25040.
Social Insurance and Universal Health Insurance Law No. 5510, published in the Official Gazette dated 16 June 2006 and numbered 26200.
Collective Bargaining Agreements, Strike and Lockout Law No. 2822, published in the Official Gazette dated 7 May 1983 and numbered 18040.
Law on the Workplace Health and Safety No. 6331, published in the Official Gazette dated 30 June 2012 and numbered 28339.
Regulation on the Application of the Law Concerning Foreigners' Work Permits, published in the Official Gazette dated 29 August 2003 and numbered 25214.
Turkish nationals employed abroad are subject to two different legal regimes. If an employment treaty has been signed with the country where Turkish nationals are employed, the provisions of that treaty will apply. That treaty can either:
Classify the Turkish nationals as employees of that jurisdiction.
Introduce a specific regime for Turkish nationals.
Turkey is currently a party to treaties signed with various countries, including:
Germany.
UK.
Austria.
Denmark.
France.
The Netherlands.
Switzerland.
Norway.
Bulgaria.
Libya.
Georgia.
If there is no treaty, then the local law of the foreign country will apply to Turkish nationals, provided that the employment term exceeds six months.
There is no specific age restriction on managers or company directors. Generally, it is forbidden to employ children that are below 15 years of age. However, children of 14 years of age, who have finished elementary school, can be employed as long as the work does not hinder their education. Children below 18 years of age cannot be employed in certain jobs and cannot work night shifts.
There are no nationality restrictions. Foreign nationals can work in Turkey after obtaining work and residence permits (see Question 4).
Under the Turkish Commercial Code, the limitation of the legal capacity or the declaration of bankruptcy of either a member of the board of directors' members of joint stock companies or the directors of limited liability companies will result in that board member or director being unable to hold their post as a board member or director.
Income tax and social security contribution incentives are available for employers investing in Turkish cities that have a maximum average gross domestic product of US$1,500 (as at 1 August 2012, US$1 was about EUR0.8) per person and employ at least ten employees (Law on Encouragement of Investments and Employment No. 5084, published in the Official Gazette dated 6 February 2004 and numbered 25365). These incentives provide:
A 100% income tax and social security contribution exemption for companies located in organised industrial zones. Organised industrial zones are areas determined and formed by the state in various parts of Turkey which provide infrastructure and other social facilities to promote the establishment and development of industry.
An 80% income tax and social security contribution exemption for companies located in other areas of the city, subject to certain conditions.
The scope of the Turkish incentive system was expanded in the first half of 2012. The local incentive mechanism now provides for exemptions, reductions, support and refunds in a number of circumstances, and consists of:
General, regional and large-scale incentives.
Newly introduced strategic investments incentives, including:
value added tax (VAT) and customs tax exemptions;
reduced corporate income tax;
support for contributions to the social security institution;
land allocation;
support for interest payments;
VAT refunds.
Unless extended, these incentives will expire at the end of 2012.
Under Article 9 of the Social Insurance and Universal Health Insurance Law, employers should notify the employment of new employees to the Social Security Institution (SSI) within one month of the employee's start date (for construction work, this notification must take place on the date employment commences).
Procedure for obtaining approval. The following are authorised to issue visas (Article 24, Passport Law No. 5682):
Provincial authorities in Turkey.
Police departments in Turkey.
Administrative districts in Turkey.
Consulates of the Turkish Republic outside of Turkey.
Different rules apply depending on whether the application is made inside or outside Turkey:
Within Turkey. The foreign national in Turkey will already hold a tourist visa to enter Turkey, which should have been obtained at the Turkish consulate located in the relevant foreign country or at the port of entry into Turkey (depending on the nationality of the applicant).
Outside Turkey. The foreign employee makes an application to obtain a working visa from the Turkish consulate, where the employer will also be required to submit certain additional documents to the Ministry of Labour and Social Security. The employee must then also obtain a working person residence permit from the relevant police department within 30 days of the employee entering Turkey with a working visa (see below, Permits). As another option, a foreign employee can apply for a residence permit which will then be required in order to obtain a working permit. The working visa can be renewed in Turkey.
Cost. The cost of a visa varies from country to country. Foreign nationals are advised to check this issue with the Turkish Consulate in their country.
Time frame. The length of time it takes to process visa applications depends on the country where the applicant applies from. However, on average it should take about a week. Foreign nationals who obtain a visa at the port of entry into Turkey can obtain the visa immediately.
Procedure for obtaining approval. The procedure varies, depending on whether the foreign national is making the application from within or outside Turkey.
Within Turkey. A temporary residence permit must be obtained from the relevant police department by the foreign employee after entering Turkey with a tourist visa (see above, Visa). The employer then makes an application to the Ministry of Labour and Social Security for a work permit for the foreign national. After obtaining the work permit, the employee will make a second application to the relevant police department to replace the temporary residence permit with a working person residence permit.
Outside Turkey. Once the working visa has been obtained (see above, Visa), the employee must obtain a working person residence permit from the relevant police department within 30 days of the employee entering Turkey with a working visa.
Special restrictive requirements apply to foreign nationals wishing to work as engineers. Resolutions of both the Ministry of Public Works and the Settlement of the Republic of Turkey and the Chamber of Turkish Engineers are necessary before the work permit can be granted by the Ministry of Labour and Social Security of the Republic of Turkey. Those resolutions are obtained by the applicant and submitted to the Ministry.
To obtain this permit, foreign nationals wishing to work as engineers must complete a registration process with the Chamber of Turkish Engineers within one month of arriving in Turkey. To complete the registration, the engineer must provide a certification of conformity to the equivalent national diploma, delivered by the Council of Higher Education of the Republic of Turkey. If the diploma is not from a recognised higher education institution, then the foreign national must sit and pass an examination (in English) or complete a recognised education programme at a Faculty of Engineering in Turkey. Without this certification and registration with the Chamber of Turkish Engineers, the work permit will not be issued.
Cost. The fee for obtaining a definite term employment work permit for up to one year is TRY137.95, and up to three years is TRY414.20 (as at 1 August 2012, US$1 was about TRY1.8). The fee for obtaining an indefinite term employment work permit is TRY690.90. The fee for obtaining a work permit for independent employment is TRY1,382.75.
An independent employment work permit will be granted to foreign nationals residing in Turkey uninterruptedly for at least five years and who contribute to the economic development of, and have a positive effect on employment in, Turkey (Article 36, Regulation on Application of the Law Concerning Foreigners' Work Permit, published in the Official Gazette dated 29 August 2003 and numbered 25214).
Time frame. It takes a minimum of 90 days to obtain any of the above work permits.
If the term of the employment is for longer than one year, a written employment contract must be executed between the employer and the employee (Article 8, TLC). At a minimum, in the first two months of employment, the employer must provide the employee with an explanatory document containing key employment terms, including the:
Length of the employment.
Salary.
Benefits.
Working hours.
The employment relationship is also regulated by the general rules of public order which apply to the public generally. The mandatory rules of the TLC and its implementing legislation apply as implied terms to employment contracts even where the parties provide for different provisions.
In addition to the provisions of the TLC, the Code of Obligations regulates employment agreements. The provisions of the Code of Obligations apply to the employment agreements for matters not regulated under the TLC (such as mobbing, which isn't defined by the Code of Obligations but which includes employers protecting their employees from physiological and sexual harassment, and the protection of personal rights).
Collective agreements with trade unions are not generally common in Turkey. However, they are common in certain sectors, for example, the automobile, banking, tobacco, shipping, metal and coal industries.
If an employer wants to materially change the terms and conditions of employment, they must inform the employee in writing (Article 22, TLC). Unless the employee consents to the proposed changes in writing within six business days, the employee is not bound by the changes. However, the employer can unilaterally change terms and conditions arising out of its administrative rights without the employee's consent to the extent that those changes are not material. The employer's administrative rights are the rights arising from their managerial duties (for example, providing the employees with work that is similar to the work they ordinarily do, employing employees in a similar social environment, or altering opening and closing hours).
There is a national minimum wage which applies to all employees in Turkey. The Minimum Wage Determination Commission sets the minimum wage rate for all employees working in Turkey (Article 39, TLC). The Commission is made up of representatives from employee and employer unions, and various officials from:
The Ministry of Labour.
The Undersecretariat of the Treasury.
The State Planning Organisation.
The minimum monthly gross wages that apply from 1 July 2012 to 31 December 2012 are:
For employees under the age of 16 years: TRY805.50 (gross).
For employees of 16 years old and over: TRY940.50 (gross).
The maximum working hours for an employee cannot exceed 11 hours a day and 45 hours a week (Article 63, TLC). However, working hours can be negotiated between both parties provided that the employer does not exceed the limit on the average working hours over a two-month period. In addition, under certain conditions and with the employee's consent, the employee can perform overtime work of up to 270 hours a year.
Rest breaks depend on the length of work (Article 68, TLC):
Up to four hours: a 15 minute break.
Between four and 7.5 hours: a 30 minute break.
More than 7.5 hours: a one-hour break.
Night shift work hours cannot exceed 7.5 hours (Article 69, TLC).
An employee is entitled to paid annual leave (holiday entitlement) after completing one full year of service (Article 53, TLC). The minimum holiday entitlement depends on the length of service:
One to five years' service: 14 days per year.
More than five to 15 years' service: 20 days per year.
More than 15 years' service: 26 days per year.
Furthermore, employees above the age of 50 or below the age of 18 are entitled to a minimum of 20 days per year.
Employment contracts or collective bargaining agreements (CBAs) can provide for longer holiday entitlements. Unused vacation entitlements are accruable and can be carried forward to subsequent years.
Each year Turkey has 14.5 days that are public holidays and are not included in the minimum holiday entitlement. These holidays are:
New Year (1 January).
National Sovereignty and Children's Day (23 April).
Labour Day (1 May).
Youth and Sports Day (19 May).
Victory Day (30 August).
Republic Day (half-day on 28 and full day on 29 October).
Ramadan and the Feast of Sacrifice (a total of eight days, the specific dates of which are calculated according to the lunar calendar, and therefore change every year).
If any of these days fall on a weekend, employees are not entitled to an additional day off.
Injured or sick employees can take time off during the term of their treatment. The employer is entitled to terminate the employment contract on the condition that the employee's sickness cannot be cured and the work at the workplace will be detrimental to that employee's health (Article 25, TLC). The employer can exercise this right to dismiss only after the employee's absence exceeds the relevant notice period by six weeks. For example, if the absence of an employee with four years of service exceeds 14 weeks (that is, the eight-week notice period plus six weeks (see Question 17, Notice periods)), the employer will be entitled to terminate the employment contract with just cause.
The employer is not obliged to make any payment to the employee during a period of sick leave. The Social Security Institution, which is the authorised official body responsible for social security matters, makes a temporary disability payment to the employee during the treatment term. Where an employee loses 10% of his working ability due to occupational accidents, he is usually entitled to receive at least 70% of his monthly salary as sick pay from the Social Security Institution (Article 19, Social Insurance and Universal Health Insurance Law No. 5510, published in the Official Gazette dated 16 June 2006 and numbered 26200). This figure is a percentage of the employee's salary and the amount depends on the nature of the treatment. However, in practice, employers generally pay the employee's full salary during the course of the employee's absence, deducting from that salary the amount paid by the Social Security Institution where the Social Security Institution is making payments.
Where the employer elects to make payments of sick pay, these payments cannot be recovered from the state.
Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?
Carers (including those of disabled children and adult dependants)?
Pregnant employees can take fully paid leave of (Article 74, TLC):
Eight weeks before childbirth (ten weeks where the mother is pregnant with more than one child).
Eight weeks after childbirth.
The employee, at her own discretion, can also take unpaid leave of an additional six months following the expiration of the eight-week period after childbirth. Once returned to work, the employee can take 1.5 hours off each day to nurse the baby until the child reaches the age of one.
The TLC does not provide for paternity rights.
The TLC does not provide for surrogacy rights.
The TLC does not provide for adoption rights.
The TLC does not provide for parental rights.
The TLC does not provide for carers' rights.
Under the TLC, some employee rights are linked to the duration of employment, including:
Holiday entitlements (see Question 9).
Notice periods and severance pay (see Question 17).
Where an individual employee voluntarily transfers to a new entity owned by a different person to the previous employer, continuous employment is not retained and employee benefits linked to the duration of service will restart from the beginning.
Where an individual employee is transferred to a new entity owned by a different person to the previous employer, the employee benefits will be retained.
Additionally, in the case of a transfer of workplace or a part of the workplace, the employees will be automatically transferred to the new employer (Article 6, TLC). In this instance, the employees' continuous employment is retained and all their rights arising from their former employer will be preserved.
Where the company merges with another company, spins off into a different company or changes its type, employment contracts (including all rights and obligations from them) are transferred to the new company (Article 178, TLC). An employee can object to the transfer; in that case, his employment will terminate at the end of the legal termination notice period (see Question 17, Notice periods).
Equal treatment of employees is a basic principle of Turkish labour legislation (Article 5, TLC). Therefore, unless there are justifiable grounds, employers cannot treat temporary and agency workers differently from their permanent employees.
An employer can, by getting written consent from its employee, temporarily transfer or assign the employee to another employer either (Article 7, TLC):
Within the same holding company or within the same group of companies.
For works that are similar to the work in which the employee is engaged.
The employment agreement between the principal employer and the employee continues. However, the employer must perform his duties for the temporary employer, and that employer has the right to instruct the employee.
Temporary work transfers agreements must be made in writing and cannot exceed six months. If necessary, a transfer can be renewed twice. The principal employer must still pay the employee. Where the principal employer fails to pay, the temporary employer will be jointly responsible for payment of the fees and social security premiums together with the principal employer.
There are two types of employment agencies in Turkey:
Public employment agency (Turkey Employment Agency).
Private employment agencies.
There is no general provision under the TLC or other labour legislation regulating the employment agreements executed between employment agencies and employees, and the only specific provision regulating these agreements in included in Article 14 of the Regulation on the Private Employment Agencies (Official Gazette No. 26954, dated 1 September 2008). Article 14 provides that private agencies must execute a written employment agreement with:
Professional football players.
Football coaches.
Trainers.
Fashion models.
Photo models.
Artists.
General managers.
Executives.
A written employment agreement must also be executed by the private agency between itself and the employers of the people listed above. However, the employment agency will be considered to be the principal employer where there is a temporary transfer of employees (see above, Temporary workers).
The employer must keep each employee's personal information on file, including:
The employment contract.
The CV.
The health report.
The employee's performance and progress.
Warnings.
Information concerning the employee's defences to any claims made by the employer or fellow employees concerning the employee's work, business, performance, progress or harmony with the working environment.
Payments made to the employee.
Paid annual leave records.
Other relevant documents.
The employer must keep this information confidential and not share it with any third party unless required to by law. In addition, the provisions of the Turkish Penal Code, published in the Official Gazette dated 12 October 2004 and numbered 25611, which protect a person's privacy can also apply where confidential information is revealed.
The Code of Obligations introduced a specific provision on the protection of the personal information of the employees. The employer can use the personal information of the employees only to the extent required for the competency of the employee for the work or for the fulfilment of the service (Article 419, Code of Obligations).
The employee must treat equally employees who perform similar duties and not distinguish between them on discriminatory grounds, for example (Article 5, TLC):
Religion.
Language.
National or ethnic origin.
Gender.
Political views.
Discrimination can result in the affected employee bringing a compensation claim for up to four months' salary, together with any other loss that can be claimed (for example, emotional distress or loss of opportunity).
In the case of sexual harassment of an employee by a colleague or a customer, the employee can terminate his or her employment with immediate effect and be entitled to a severance payment (Article 24, TLC) (see Question 17, Severance payments). In addition, other types of harassment, for example, insults against one's honour, are also prohibited by Article 24, and it is accepted by the Court of Appeal that in those cases the employee has the right to terminate employment with immediate effect and be paid a severance payment. There is no explicit definition of insults against honour under the TLC or other relevant legislation. However, under decisions of the Court of Appeal, the following acts committed by the employer would constitute insults against honour:
Swearing at the employee or using foul language towards the employee.
Threatening the employee.
Frightening or physically harming the employee.
The Code of Obligation also includes a specific provision on the protection of the personality of the employees. There is no specific provision defining the employees' personality rights, though precedent includes the life, health, physical integrity, reputation and personal space of the employee as coming within these rights. The employer must (Article 417, Code of Obligation):
Protect and respect the personality of the employees.
Provide a decent working environment.
Protect its employees from physical and sexual harassment and take the necessary measures to ensure the prevention of future harassment of employees who have been previously harassed.
Damages can be claimed under the Code of Obligations in the case of an employee's death or injury, or where the employer violates his personality rights.
No specific protection is available for whistleblowers under Turkish labour legislation.
An employer or employee must serve a written notice on the other party to terminate the employment relationship (Article 19, TLC). However, this provision does not apply to certain cases of termination with just cause (see below, Procedural requirements for dismissal). Notice periods vary depending on the employee's length of employment (Article 17, TLC):
Less than six months: two weeks' notice.
Six to 18 months: four weeks' notice.
More than 18 months to three years: six weeks' notice.
More than three years: eight weeks' notice.
Employment contracts can set out higher notice periods for employers, but court precedents have ruled that employees cannot be required to give longer periods than those provided in the TLC. Instead of waiting for the expiry of the notice period, the employer can also make a payment in lieu of notice to the employee in an amount corresponding to the gross salary of the employee for the applicable period, including all monetary benefits such as travel expenses, food and clothing/uniform contributions and so on which the employer has regularly provided for all employees.
Employees are generally entitled to a severance payment on termination of the employment relationship of an amount corresponding to the gross monthly salary of the employee for each year of service (Article 17, TLC). This amount is calculated by multiplying an employee's gross daily wage by 30, which is then multiplied by the employee's years of service. Any bonuses, child and family benefits, travel expenses, food and clothing/uniform contributions which are regularly provided to employees are also included in the calculation. Where a proportion of a year is served (and not a full year), the calculation is made on a pro rata basis.
However, the gross monthly salary payment cannot exceed a cap, which is currently set at TRY3,033.98 until January 2013. The Turkish government provides this cap, and revises it every six months.
The procedural requirements depend on whether the employment relationship is terminated for just cause:
Termination with just cause. There are three categories of just cause (Article 24, TLC):
health reasons;
behaviour breaching morality and good faith;
force majeure situations.
If the termination is related to morality and good faith, then the employer can dismiss the employee by serving a written dismissal notice having immediate effect and without making a severance payment. In this case, the dismissal notice should be served within six business days from becoming aware of the dismissal reason and within a maximum of one year from the occurrence of the dismissal reason (if the dismissal is related to health reasons or force majeure situations then the notice and severance payment explanations above apply).
Termination without just cause. The employer must serve a written dismissal notice on the employee. The dismissal will become effective at the end of the applicable notice period (see above, Notice periods).
Employers employing more than 30 employees must inform, in writing, an employee who is dismissed without just cause of a valid reason for his dismissal where he:
Has at least six months' service.
Is employed under an indefinite term contract.
The termination notice must be made in writing. The valid reason can be related to either:
The employee's conduct or performance.
The employer's business (for example, because of economic crisis, market stagnation, material reduction in customer orders, and so on).
Where the valid reason is attributed to the employee, the employee's written defence must be taken into account before terminating the employment contract.
If a dismissed employee who is working in a company employing fewer than 30 people believes his dismissal to be wrongful or unfair, he can claim bad faith compensation before the labour courts. The employee cannot claim reinstatement.
A dismissed employee who is working in a company employing more than 30 people can file a lawsuit to claim re-employment before the competent labour court within one month from receipt of the termination notice, if he believes that the valid reason indicated at the dismissal is wrong or unfair (see Question 17, Procedural requirements for dismissal). Where the court rules that the dismissal was made without a valid reason, instead of re-employing the employee, the employer can pay compensation to the employee in an amount varying between eight and 12 times the employee's monthly salary, to be determined by the court.
An employer cannot terminate the employment contract of an employee based on the fact that the employee is a union member.
Redundancy can be deemed a valid reason for terminating an employment contract. The employer can terminate the employment contract of one employee to the extent that the dismissal is based on economic reasons, technological development or reorganisation.
Mass dismissal is deemed to take place where the employer dismisses, within a one-month period:
Ten employees, if the total number of employees is between 20 and 100.
10% of all employees, if the total number of employees is between 101 and 300.
30 or more employees, if the total number of employees is more than 301.
In the case of a mass dismissal, the employer must notify the Turkish Labour Authority, the trade union (if any), and the regional directorate of the Ministry of Labour and Social Security one month before the dismissal and inform those institutions about the:
Reasons for, and timing of, the dismissals.
Names of the employees that will be dismissed.
Following this notification, the trade union and the employer will have a meeting with the aim of either:
Reducing the number of the dismissed employees.
Reducing the adverse effects of the dismissal.
The minutes of the meeting must be kept in writing. The mass dismissal will become effective only after the lapse of one month following the notification.
The meeting is of an advisory nature, and therefore the employer has no obligation to actively act on what the trade union says at the meeting. However, it is advisable to attempt to compromise to maintain a good relationship with the union.
Redundancy is considered a valid reason for termination of employment. Employees who are made redundant are entitled to claim:
Severance payment (see Question 17 for the calculation).
Notice payment (see Question 17 for the calculation).
Accrued salary.
Unused vacation payment (if applicable).
Employees are not entitled to management representation, or generally to be consulted about issues that affect them, although material changes to the working conditions require the employees' consent.
The employer is not required to consult with employees under the TLC.
Employee consultation or consent is not required for major transactions.
There is no duty to consult, and therefore no remedies are available for a failure to consult.
As there is no duty to consult, employees cannot take any action to prevent proposals going ahead.
When a workplace, or part of a workplace, is transferred in a legal transaction, all the employment agreements with all their rights and obligations existing at the date of transfer will be automatically transferred to the transferee (Article 6, TLC). Furthermore, the transferor and the transferee will be jointly liable for the debts accrued before the transfer date that are due and payable on the transfer date (Article 6, TLC).
The provisions of the TCC regarding the transfer of the employment contracts apply if the company merges with another company, spins off or changes its type (see Question 12, Consequences of a transfer of employee).
A transfer under Article 6 of the TLC does not constitute a justified reason for terminating the employment agreement by the employee or the employer. However, the transferee or transferor can terminate employment contracts for economic, technological development or reorganisational reasons.
Where a workplace transfer results in a material change of working conditions, the employee is entitled to terminate the employment contract and request severance under Article 22 of the TLC (see Question 17, Severance payments).
Where harmonisation does not create less favourable conditions for the transferred employees, the new employer can combine the terms of employment of the transferred employees with the existing employees' employment contracts. In other cases, the employees' consent is necessary to implement changes that will affect the employees' material work conditions.
An employer can be liable for the acts of its employees?
A parent company can be liable for the acts of a subsidiary company's employees?
An employer is liable for the acts of its employees committed during the course of their employment unless the employer proves that he has taken all the necessary measures to prevent the wrongful act (Article 66, Code of Obligations). If the employer or a third party suffers loss due to an employee's actions, the employer can seek reimbursement from the employee whose actions resulted in the damage. This reimbursement can be collected in all circumstances.
Since a subsidiary of a parent company is an independent legal entity, the parent company cannot be held liable for the acts of its subsidiaries.
An employer must provide its employees with the necessary safety equipment required to perform their duties, and the training to use that equipment (TLC). In addition, entities that employ more than 50 employees must also establish a health unit, which includes a basic medical kit, under the supervision of a workplace physician. If the necessary health and safety measures are not taken, the employee cannot be required to perform his work. In some cases, the employee may be entitled to terminate his employment contract with immediate effect where there are breaches of the health and safety requirements.
In addition to the provisions of the TLC concerning workplace health and security, a new Law numbered 6331 on the Workplace Health and Security (WHS) entered into force on 20 June 2012. Under Article 2 of the WHS, the WHS will be applicable to all public and private workplaces and employers, excluding:
Turkish Armed Forces.
General law enforcement officers.
Secretariat of the National Intelligence Organisation.
Intervention operations of disaster units.
Housing services.
Persons producing goods or providing services on their own behalf without employing any other person.
Prison workshop, education, security and vocational course operations carried out during the term of imprisonment.
Unlike the TLC, the WHS does not indicate any thresholds, though its scope may be narrowed with the enactment of secondary legislation. The material changes adopted by the WHS include the introduction of requirements for employers to:
Establish a work and security council within a workplace.
Take the necessary steps to inform and educate employees on work and safety matters.
Determine the responsibilities of the employers and the employees on work-related health and safety matters (for example, emergency plans).
Appoint an employee representative to liaise with the employer on health and safety matters.
Foreign nationals working in your jurisdiction?
Nationals of your jurisdiction working abroad?
Generally, an individual's tax liability is determined by whether or not that individual is a resident in Turkey. Turkish residents have unlimited tax liability, that is, they are liable to pay tax on all their global income sources. Any person who remains in Turkey for more than six months in a calendar year is presumed to be a Turkish resident. However, foreign nationals who stay in Turkey for more than six months for either a specific work purpose, or a purpose which is specified in the Income Tax Code No. 193 (Income Tax Code), published in the Official Gazette dated 6 January 1961 and numbered 10700, are not treated as tax resident. They are therefore exempt from income tax.
Non-resident foreign nationals are subject to Turkish income tax where the income is received from a Turkish source. In cases where the national receives remuneration partially or wholly from an employer located outside of Turkey, the employee is subject to Turkish income tax in an amount corresponding to the proportion of the work that was performed in Turkey.
Different rules can apply where an agreement preventing double taxation exists between Turkey and the country from which the income is received or where the employee originally resided (double taxation treaty). In that case, the provisions of the treaty will apply.
A Turkish citizen who lives abroad and works for the Turkish government, a Turkish governmental institution or a company with headquarters in Turkey is deemed to have unlimited tax liability and is subject to Turkish income tax on any worldwide income (see above, Foreign nationals). Turkish employees who are abroad for a specific job or business, or a particular purpose, and whose income is taxed in another country, are not liable to pay income tax in Turkey.
Income tax can be collected by withholding the tax before the salary is paid to the employee (Article 94, Income Tax Code). Salaries paid by the employer in Turkey are subject to withholding tax at progressive rates. The rates for 2012 up until 31 December 2012 on employees' salaries are as follows:
TRY0 to TRY10,000: 15%.
TRY10,000 to TRY25,000: 20%.
TRY25,000 to TRY88,000: 27%.
Above TRY88,000: 35%.
Social security premiums are paid by the employers on behalf of both employers and employees over the employee's gross earnings. 19.5% of the employee's gross salary is paid as an employer's portion of the social security premium, whereas 14% is paid as the employee's portion. The government provides a margin for the gross salary of the employee to be taken into account when calculating these percentages, irrespective of the employee's actual salary. This margin is currently TRY6,113.40 (until December 2012). If the gross salary of the employee is below the referred margin, the actual gross salary will be considered when calculating the social security contribution. However, if the gross salary is above the margin, the margin will be considered when calculating the contribution.
Employees must pay 1% of their gross salary as a contribution to the Unemployment Insurance Plan. Employers and the state must also contribute, at the rates of 2% and 1% of the employee's gross salary respectively.
The employer must pay 0.0066% of the employees' gross salary as stamp duty.
Pension contributions are paid through ordinary social security contributions (see Question 26, Social security contributions).
Pension contributions are not subject to tax (except in relation to stamp duty) (see Question 26, Other).
For the employee to become eligible to receive the state pension, there are certain conditions such as:
Reaching retirement age (currently 65 years old).
The starting date of employment.
The total number of days for which Unemployment Insurance Plan premiums are paid.
The monthly amount of the state pension depends on the level of social security contributions paid.
Is linked to the employee's salary?
Is linked to employer and/or employee contributions and investment return on those contributions?
The Law Concerning Individual Pension Savings and Investment System No. 4632 (which came into force on 7 October 2001) introduced a private pension system which is complementary to the state pension system. The system is based on voluntary participation and defined contribution. Participants can decide to diversify their contributions among more than one pension mutual fund offered by the pension companies. Therefore, the value of the pension depends on the level of the contributions made by the participants, and the participants bear the investment risk.
The vesting rules were introduced in August 2008, and the number of group pension contracts is expected to rise considerably. Therefore, it may become a common practice in the near future for employers to provide access or contributions to pension schemes for their employees.
In addition to individual pensions, it is also possible to have a group pension contract under which all contributions that the employer pays become vested over a certain period of time in the employee's individual account. This means that when the employee leaves his job through retirement or resignation, the amount the employer contributes is credited to the employee's account. The employer determines the vesting periods and percentages at the outset.
The Undersecretariat of the Treasury and the Pension Monitoring Centre (Emeklilik Gözetim Merkezi) (EGM) are the regulatory bodies that oversee the operation of supplementary pension schemes.
The principal legislation governing supplementary pension schemes are as follows:
Individual Pension Savings and Investment System Law No. 4632 published in the Official Gazette dated 7 April 2001 and numbered 24366.
Insurance Law No. 5684, published in the Official Gazette dated 14 June 2007 and numbered 26552.
Regulation Regarding the Working Principles of Individual Pension Advisory Board (published on 31 October 2001 in the Turkish Trade Registry Newspaper, No. 24569).
Regulation Regarding the Establishment and Working Principles of Pension Companies (published on 8 January 2008, No. 26750).
In Turkey, the state imposes tax on private pensions according to the exempt-exempt-taxable (EET) system. The EET system provides that contributions made to the pension, and investment income and capital gains of the pension fund, are exempt from tax.
Employers can deduct their contributions to pensions when calculating their tax base for corporate tax purposes. However, an employer's tax deductions are subject to the following conditions:
The private pension contract must be concluded with a Turkish pension company.
The deductible amount cannot exceed 10% of the employee's monthly gross salary.
The annual total deductions must not exceed the annual gross minimum wage.
Where both the employer and the employee make contributions to the pension, the total amount of the deductible contributions must satisfy the last two conditions (that is, the total must not exceed 10% of the employee's gross monthly salary and the annual payments must not exceed the annual gross minimum wage).
The Council of Ministers is authorised to increase the 10% rate to 20% and change the annual gross minimum wage limit to two times the annual gross minimum wage.
Employees can deduct their contributions when calculating their income tax. However, an employee's tax deductions are subject to the following conditions:
The private pension contract must be concluded with a Turkish pension company.
The deductible amount cannot exceed 10% of the employee's monthly gross salary.
The annual total deductions must not exceed the annual gross minimum wage.
Where both the employer and the employee make contributions to the pension, the total amount of the deductible contributions must satisfy the last two conditions (that is, the total must not exceed 10% of the employee's gross monthly salary and the annual payments must not exceed the annual gross minimum wage).
The Council of Ministers is authorised to increase the 10% rate to 20% and change the annual gross minimum wage limit to twice the annual gross minimum wage.
In the case of a business transfer, employees' accrued pension benefits remain unaffected.
There are no further protections for pension rights on a business transfer.
Employees who are working abroad?
Employees of a foreign subsidiary company?
Employees of a Turkish company who are working abroad can participate in a pension scheme established by the parent company in Turkey. However, the parent company will not be able to benefit from tax deductions for these employees (see Question 30).
Employees of a foreign subsidiary company can participate in a pension scheme established by the parent company in Turkey. However, the parent company will not be able to benefit from tax deductions for these employees (see Question 30).
There is no protection available for pension scheme benefits in the case where the sponsoring employer becomes insolvent.
It is particularly common for foreign companies to reward employees that perform certain jobs, for example, in sales and finance, with contractual or discretionary bonuses. There are no restrictions or guidelines on what bonuses can be awarded.
All IP rights created during the course of employment belong to the employer (Decree Law on Protection of Patent Rights Numbered 551, published in the Official Gazette dated 27 June 1996 and numbered 22326).
An employee cannot engage in activities that conflict or compete with the employer's business during the term of their employment.
Following the termination of employment, it is possible to restrict an employee from engaging in competitive activities, provided that the restriction is limited to a (Article 445, Code of Obligations):
Certain duration (maximum two years).
Geographical area.
Scope of activities.
The restriction must either be explicitly contained in the employment contract or accepted by the employee in writing on the termination of the employment.
The employer and the employee can agree on post-employment restrictive covenants provided that the terms of that agreement are contained in the form of a written agreement (Article 446, Code of Obligations).
The employee can be relieved from post-employment restrictions by paying the penalty amount agreed in the employment contract. However, if the employer suffers an additional loss due to the violation of the post-employment restriction, the employee must compensate the loss of the employer in addition to the penalty amount.
A draft Collective Employment Relationships law (Draft Law) is currently being considered by the Turkish Parliament. The key changes to be adopted by the Draft Law are as follows:
Abrogate the Collective Bargaining Agreements, Strike and Lockout Law No. 2822 and the Labour Unions Law No. 2821.
Carry out labour union membership procedures via electronic public databases.
Decrease the line of business collective agreement threshold from 10% to 0.5%.
T +90 212 366 47 00
F +90 212 290 23 55
E eaziz@paksoy.av.tr
Wwww.paksoy.av.tr
Qualified. Turkey, Istanbul Bar Association
Areas of practice. Corporate and commercial; employment; real estate; M&A.
Recent transactions
T +90 212 366 47 00
F +90 212 290 23 55
E sterzi@paksoy.av.tr
W www.paksoy.av.tr
Qualified. Turkey, Istanbul Bar Association
Areas of practice. Employment law; corporate; M&A.
Recent transactions
