If foreign companies are economically active in Turkey, the Labor Law and Social Security Regulations are of great importance for investors in addition to Corporate Law and tax aspects. As a potential employer in Turkey, you have to observe the Turkish regulations. Even if Turkish Labor Law has some things in common with German Labor Law, it is different in many areas. The following explanations are intended to provide a condensed overview of working life in Turkey.
The individual employment law in Turkey is essentially regulated by the Law no. 4857 from 22.05.2003 (Turkish Labour Law). This law is flanked and supplemented by numerous regulations. There are special regulations/laws for certain occupational groups (officials, seafarers, journalists, etc.).
- Establishment of the employment relationship
In principle, there is no written form requirement for the establishment of employment relationships. Employment relationships can be established verbally, in writing or even tacitly. Employment contracts can be concluded for an indefinite period or, under certain conditions, for a limited period. However, employment contracts for one year and longer must be in writing. For reasons of proof, it is always advisable to comply with the written form.
- Probationary period
A probationary period can be agreed for a maximum of two months. Longer probationary periods (maximum 4 months) can be agreed in collective labor agreements.
- Weekly working time
The weekly working time is a maximum of 45 hours. The law allows an annual maximum of 270 overtime hours. For such overtime hours wage supplements of 50% of the regular hourly wages have to be paid. With a contractual weekly working time of less than 45 hours, for additional hours wage supplements of 25% of the regular hourly wages have to be paid. One speaks of so-called overtime work. The employee is also entitled to compensate for this overtime hours or overtime work with time-off, so that he/she gets 1 hour and 30 minutes time off for each hour of overtime and 1 hour and 15 minutes for each hour of overtime work. However, the compensatory time-off must be used within 6 months during the working hours and without any reduction in pay.
- Wages and salaries
Compared to most Western European countries, wages and salaries are significantly lower in Turkey. However, Turkey cannot be compared with low salary countries like China or India. Concerning the labour costs in the manufacturing industry however Turkey belongs to one of the relatively expensive locations compared to other countries in Eastern Europe.
In addition to the monthly wages/salaries, additional benefits provided by the employer such as lunch tickets, when needed work clothes, travel expenses support or transport to work etc. are very common. However, there is no legal obligation to do so. Many Turkish companies also grant their employees gratifications and Bonuses as voluntary allowances.
Larger and international companies grant their employees often private health insurance.
- Minimum Salary
In Turkey there is a statutory minimum salary which is adjusted twice a year (on January 1st and July 1st). For the second half of 2022, a gross rate of 6,471 TL applies. In this case, the employee receives 5,500.35 TL net.
- Social insurance
The employer must register newly hired employees with the Social Insurance Institution (SGK) not later than one day before starting work.
- Social contributions 2022 (in % of the assessment basis)
The social security contributions and unemployment insurance are not calculated on the gross salary, but on the social security basis (monthly salary cap currently 37.530,- TL) and currently amount to 37.5%. The employer pays 22.5% and the employee 15%. In the case retired persons are employed, the proportion totals 32%, with the employer bearing 24.5%. The employer deducts the employee’s share of the premiums from the salary and pays them together with the employer’s share to the Social Insurance Institution.
- Holidays and Public Holidays
According to Turkish Labor Law, an employee’s holiday entitlement accrues for the first time after a one-year waiting period. In the first year of work there is therefore no entitlement to leave. However, such a right can be agreed in individual contracts. According to this, the employee is entitled from the first up to and including the 5th year of service 14 days; from the 6th to the 15th year 20 vacation days and from 26 vacation days including 15 years. There are exceptions to Minors and employees over 50 years of age. With these, the paid annual leave is not less than 20 days. There are also statutory (national and religious) holidays. A contractual holiday regulation agreement in favor of the employer is possible and especially common in international companies.
- The termination of employment relationshhips
When terminating employment relationships, it must be differentiated between ordinary/extraordinary termination, mutual termination, termination through death or in the case of fixed-term contracts by expiration.
If a probationary period has been agreed, the employment relationship can be terminated free and without notice during this probationary period.
- Ordinary termination for permanent employment contracts
The notice period depends on the duration of the employment relationship:
- 0 – 6 months: 2 weeks
- 6 – 18 months: 4 weeks
- 18 – 36 months: 6 weeks
- From 36 months: 8 weeks
If this deadline is not met because immediate termination is desired, a corresponding notice payment must be paid (ihbar tazminatı).
Normally, no special reason is required for ordinary termination. Special protection against dismissal applies to companies with more than 30 employees and a period of service of more than 6 months. There must be a reason for the dismissal of an employee on the part of the employer. No recognized reasons for dismissal are for example, membership and activity in a labour union, membership of a religious or ethnic group, marital status, political ideology or gender. Fixed-term employment relationships can only be terminated for good cause (extraordinary termination).
- Extraordinary termination for fixed-term and open-ended employment relationships
A reason justifying the extraordinary termination is required. Such reasons could be for example, health circumstances, different facts of the gross misconduct on the part of the other party or certain manifestations of force majeure.
The employer must give notice of termination in writing and state the reasons clearly and unambiguously. There are additional requirements for certain reasons of termination. The employee has the option of filing an action for protection against dismissal within one month against the written dismissal issued by the employer if the dismissal was given without giving reasons for the dismissal or if there is no recognized reason for the dismissal. If the employee wins the lawsuit, the employee must either be reinstated or the employer must pay compensation to him. There are also claims for compensation for lost working time. However, this possibility of filing an action for reinstatement only applies to employees for whom the special protection against dismissal mentioned above applies. Mandatory arbitration must be conducted before going to court. Disputes are often resolved in this way, so that no court proceedings are required.
In contrast to many other countries, there is a compensation regulation in Turkey, which comes into play in certain cases when employees leave the company if they have been employed continuously for at least twelve months. For each completed year of work, the employee receives a gross monthly salary as severance pay (kıdem tazminatı). There is an annually updated upper limit. This is currently 15,371.40 TL gross.
Furthermore, employees can request (long-service) compensation in the case of termination without notice by themselves in particular if they have justified reasons (compulsory military service, pension, marriage of female employees) for termination or if they dismiss based on justifying reasons such as health, defamatory or immoral situations and the like or for compelling reasons.
- Non-competition clauses
Non-competition clauses can be agreed for current contractual relationships. Post-contractual non-competition clauses must be in writing and only take effect under restricted conditions (local and time restrictions and specification of a specific field of activity). They can be agreed for a maximum of two years, must be sufficiently specific and presuppose, among other things, an impending damage to the employer.
- For more information, please contact our consulting firm.
Suzan Karakivrak, LL.M.