Turkey PEO & Employer of Record Services
Global PEO Services (GPS) helps companies hire employees in Turkey without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in Turkey, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Turkey labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Turkey. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Turkey - Country Overview
Turkey is a progressively industrialized country that welcomes foreign investments to drive its growth. The country’s GDP is 17th largest in the world and is one of the leading manufacturers and exporters of agricultural products, ships, motor vehicles, textile construction materials, transportation equipment, home appliances, and consumer electronics. Trading is a key component in the country’s economic landscape. The combined estimate of exports and imports equals 55% of Turkey’s GDP. Foreign companies can set up their base and operate with ease in Turkey as they get a level playing field.
Parliamentary Democratic Republic
Istanbul, Adana, Izmir
Employment Contracts in Turkey
Employment contracts must be in writing if they are for a fixed term and with the duration of a year or longer. Probationary periods can be for 2 to 4 months under the terms of a collective agreement. “Work on call” is a part-time assignment that an employee performs on a need-based arrangement. Such a work needs to be formalized with a written employment contract.
During the probationary period, either party may end the employment contract without giving notice or paying compensation. Concerned workers get wages and social insurance benefits according to the term of their work.
An employer may immediately terminate a fixed or an indefinite period contract for “just causes” as stipulated in the Labor Law. In such cases of termination, no notice or severance pay needs to be given.
Working Hours in Turkey
The maximum permissible workweek is usually 45 hours broken up into workdays of equal length. An employer can increase the schedule to more than 45 hours in the workweeks without paying overtime under the condition that no workday runs longer than 11 hours, and that within 2 months the average duration of the workweek is not more than 45 hours. Under collective bargaining agreements, this period for averaging hours may be stretched to 4 months.
A night shift cannot be for more than 7½ hours and can be assigned only once a week to a worker. Employers need to get a health certificate for suitability of employees for night work, and thereafter it is a must to make the employees undergo biannual medical check-up.
Overtime pay at 1.5 times the regular rate is mandatory when an employee’s working hours exceed 45 hours during a week. Workers can choose to take 1½ hours of compensatory time off per hour of overtime rather than taking payment at the premium rate.
If a workweek runs for less than 45 hours, employees working more than the specified hours per week get premium payment at a rate of 1 plus one-fourth of the regular rate, or compensatory time off in lieu of extra hour worked. Overtime and additional hours must not be more than 270 in a year. Workers must be ready to work overtime in cases of emergency.
Employee Leave in Turkey
The Law declares 6 public holidays in Turkey:
- Jan. 1: New Year’s Day
- April 23: National Sovereignty and Children’s Day
- May 1: Labor Day
- May 19: Commemoration of Ataturk and Youth and Sports Day
- Aug. 30: Victory Day
- Oct. 28-29: Republic Day, 1½ days starting at 1 p.m. on Oct. 28
In addition, 2 religious holidays must be observed:
- Feast of Ramadan, 3½ days starting at 1 p.m. on the day before the holiday
- Feast of Sacrifice, 4½ days starting at 1 p.m. on the day before the holiday.
The dates of religious holidays follow the Lunar Calendar and change year to year. Employees who work on public holidays must be paid double their regular wage.
Annual leave in Turkey varies with the employment length as follows:
- Employment duration between 1 and 5 years of employment (with one employer): 14 days
- Between 5 and 15 years: 20 days
- More than 15 years: 26 days.
Paid annual leave for employees aged younger than 18 years or more than 50 years cannot be less than 20 workdays. Employers must allow workers to take all of their annual leave in one increment. If both parties agree, leave may be broken up into parts, but not more than 3, and one of the parts need to be at least 10 days long.
Pregnant employees are not allowed to work during the 8-week period before childbirth or the 8-week period after birth. This 8-week period may go up to 10 weeks in case of multiple childbirths. The mandatory leave period may also be stretched on doctor’s advice if the mother’s health necessitates it.
Employees on mandatory maternity leave are compensated by Turkey’s Social Security Institution. They are paid two-thirds of their usual wages. Mothers of newborn children are allowed to take up to 6 months’ additional unpaid leave after the maternity leave is over.
Only fathers who work in the public sector are allowed paternity leave.
Employees who have made a minimum of 90 days’ contributions to the social security system receive sick leave for a maximum of 1 week, but they need to provide a medical report that certifies sickness or recovery. Employees who have made at least 30 days’ contributions get medical benefits. Employees, employers, and the government pay into the social security system to fund sick leave benefits.
If workers who have been employed by an establishment for a year or more get a call by the military or need to leave the job for statutory labor service, cannot be terminated from employment until 2 months of their absence.
For workers employed for longer than 1 year, this 2-month period is stretched by 2 additional days for every additional year of service, up to a maximum of 90 days.
Employee Benefits in Turkey
Pension and Social Security
The Social Security Institution of Turkey is responsible for implementing the country’s Social Insurance law. Under the law, all employees get insurance automatically. Both employers and employees need to contribute to this social insurance system.
The three insurance funds, namely SSK, Emekli Sandigi and Bag-Kur, were merged under the Social Security Institution (SSI) in 2007. The now combined three insurance funds cover nearly 81% of the population. The system became fully operational at the beginning of 2008.
Men who are 60 or more years of age and women 58 or more, can get retirement benefits if they have made contributions for 7,200 days to the social security system. Employees, employers as well as the government contribute to this fund. The pension contribution is 2% of employees’ last drawn salary and the coverage duration. Special conditions are applicable to those who got their insurance prior to October 2008 and also to mineworkers aged 50 or older and to those who cannot work until the pensionable age.
Eligible dependents as survivors include a spouse, children younger than 18 years of age (but up to age 25 if they are students); an unemployed and disabled son who is 18 years of age or older; an unmarried, divorced or widowed daughter.
A widow gets 50% of her deceased husband’s pension; a widow without children who does not have a job or is not receiving a pension already is entitled to 75%. Orphans get 25%, but 50% if the orphan is without the other parent.
The spouse becomes ineligible for survivor pension on remarriage, and eligible dependents may receive only one survivor pension. The family gets a funeral grant on the death of an old-age or disability pensioner.
The minimum daily benefit of unemployment insurance is 50% of average daily earnings in the last 4 months. The benefit payment is made for 180 days to an insured worker with minimum 600 days of contributions; for 240 days with minimum 900 days of contributions; and 300 days with minimum contributions of 1,080 days. The monthly benefit must not be greater than the minimum wage for the industry in which the insured worked, and the insured may get sickness and maternity benefits simultaneously.
Civil servants, household workers, workers in agriculture and forestry, military personnel, students, the self-employed and workers below age 18 are not covered.
Workers who have lost at least 60% of their capacity to work and who have 1,800 days of contributions over a period of 10 years are entitled to a pension from the Social Security Institution (SSI) which is based on their last drawn salary. The employer needs to pay the worker until the SSI takes over the case and pays for the related expenses.
If a worker gets injured due to an employer’s failure to comply with safety and health standards, the employer is then liable to the SSI for the related expenses. When an occupational illness or work accident occurs due to a third party, the third party needs to pay for damages.
All employers need to buy health insurance for their employees from a provider which the Council of Cooperative Health Insurance approves. Employers need to purchase health insurance for their employees on the day they hire them. Employers must get their insurance cards within 10 days of their health insurance registration.