Payroll compliance in Turkey
Turkey has an advanced economy with relatively low costs and is well positioned as a gateway between Europe and Asia – making it an attractive destination for foreign investment and business establishment.
However, Turkey’s frequent regulatory changes and disparate public sector digitisation efforts – intended to help Turkey become a major player in the global economy – have made compliance more challenging over recent years. This has contributed to Turkey sitting in seventh place in TMF Group’s 2022 Global Business Complexity Index, making it one of the more complex countries to do business in.
Turkey’s labour laws are enshrined in the Turkish Constitution, the Labour Act No. 4857 (‘Labour Act’) and the Turkish Law of Obligations, among others. Turkey has been a member of the International Labour Organisation (ILO) since 1932 and is among the states that are parties to many conventions prepared by the ILO.
Payroll frequency in Turkey is typically monthly, and salaries are usually paid on the last day of the month. Salaries must be determined and paid in cash (in Turkish Lira, unless there is a special exemption), and not in kind.
For Turkish employees, social security contribution rates for pension, health insurance and unemployment insurance amount to 22.5% of gross salary for the employer, and 15% for the employee. Foreign nationals still covered by their home social security system are not required to pay Turkish social security premiums up to a maximum period of three months.
Companies can employ foreigners up to a maximum ratio of one to five (only one foreign worker per five Turkish employees) and many professions are prohibited to foreigners in Turkey. Companies that recruit foreign employees are obliged to inform the Police or Gendarme local to the work address within 15 days of commencement.
If you’re doing business in Turkey and are looking to learn more about the country’s labour laws, incorporation procedures, tax implications and compliance requirements, request a copy of our full country profile, Doing business in Turkey.