WORKPLACE AND EMPLOYMENT RELATED RULES AND FACTS

(last updated on January 2, 2008)

SOCIAL SECURITY & LABOUR ARRANGEMENTS

What standards?

The legal arrangements with regards to social security and labour in Turkey are in line with the ILO (International Labour Organisation) and other generally accepted international standards.

The Compulsory Social Insurance Schemes

Social insurance schemes are compulsory for both employees and the self-employed Turkish nationals. The social insurance schemes for the self-employed and employees are Bag-Kur and SSK, respectively.

These schemes cover the following risks: Old-age, invalidity, sickness, maternity, work injuries & occupational diseases, mortality. Thus, having paid social insurance contributions on behalf of the employees, employers are not to pay for any costs associated with the compensation of those risks confronted by employees.

In addition, for foreign nationals working in Turkey, only short-term risks (maternity leave, sickness, work injuries and occupational diseases) are covered by the associated scheme. On the other hand, foreign citizens can voluntarily register to social insurance institutions for the long-term risk coverage (invalidity, old-age, mortality). However, citizens of the countries with which reciprocity agreements in the power of law have been made are to be fully covered (compulsory) by the relevant social insurance scheme. These countries are UK, Germany, Netherlands, Belgium, Austria, Switzerland, France, Sweden, Libya, Denmark, Norway, and Turkish Republic of Northern Cyprus.

	SSK (employees' scheme)	Bag-Kur (the self-employed's scheme)
Risks covered by the scheme	Old-age, invalidity, sickness, maternity, work injuries & occupational diseases, mortality	Old-age, invalidity, sickness, mortality
Contribution rate (in percent of contribution base)	Employer*: 19.5% Employee: 14% Total: 33.5%	Self-employed: 40%
Monthly contribution base**	Minimum: YTL 608*** (approximately £ 300) Maximum: YTL 3,952*** (approximately £ 1,700)	Minimum: YTL 325.23 (approximately £ 116) Maximum: YTL 1,499.91 (approximately £ 539)

(*)For workplaces of type ‘high risk, the rate may increase by up to 5.5 percentage points.

(**) If the actual monthly salary/income of the person exceeds the maximum, then the contribution is calculated out of the maximum, instead of actual wage.

(***) For 01.01.2008-30.06.2008 (For 01.07.2008-31.12.2008 YTL 638 and YTL 4,147 respectively)

SOCIAL INSURANCE ACT No. 506

The Unemployment Insurance Scheme

Employees covered by SSK are also to be covered by the Unemployment Insurance.

The Unemployment Insurance contribution rates (in percent of the contribution base for an employee) are as follows:

Employer:	2%
Employee:	1%
State:	1%

Provision of basic health services

The State provides its residents with all basic health services and medication. The basic package includes a very wide range of services and healthcare products, and thus is generous when compared to international ones. The associated costs of people under the coverage of social insurance are financed by the social insurance institutions. Those for the poor, on the other hand, are financed by the State social assistance funds.

With regard to the basic health insurance, residents can use either State hospitals or the private healthcare providers with whom the Social Insurance institutions have made contracts.

If a resident demands some services not included in the basic healthcare package, he/she has to finance the additional costs.

Private Pension Schemes and Private Health Insurance

Private pension schemes (individual savings accounts/Defined Contribution type pension funds) are voluntary.

Moreover, since the basic health insurance is provided by the State, private health insurance is voluntary.

However, some employers opt to provide their employees with private pension or health insurance products designated for institutional clients so as to increase loyalty to their companies.

Severance Pay

An employer is free to fire the employees. In addition, employees may leave the work for reasons such as military service (men), maternity (women) and retirement. If one of these events occurs, the employer has to pay a Severance Pay to the leaving/fired employee.

Severance Pay (SP) is calculated as follows:

SP= Number of years the Employee worked for the company * Recent Monthly Salary of the Employee

However, the recent monthly salary term cannot exceed YTL 1,727.15 (approximately, £640). The official ceiling on this term is periodically updated by the Government.

In case an employer fires an employee due to an unacceptable behaviour (as defined by the Labour Law) of the employee, then no severance pay is made by the employer.

Unions and collective bargaining

According to Unions Act No. 2821, being a member of any union is voluntary for both employers and employees.

On the other hand, collective bargaining agreements are contained in the Collective Bargaining Agreements, Strikes, and Lock Outs Act No. 2822. These agreements can be signed between

Collective bargaining agreements are benefited by workers registered to a trade union.

Employment of the disabled, terror victims and former-prisoners

So as to prevent social unrest, the labour law makes enterprises with 50 or more employees employ

The number of such employees is to be 6% of the total labour force.

The Council of Ministers periodically determines the respective composition of those groups.

The wages to be paid to the people in this category cannot be less than the minimum wage.

However, some private companies evade this regulation since (monetary) penalties chargeable in case non-compliance is detected by work inspectors are not significant.

Establishing a workplace health unit

Enterprises with 50 or more employees have to set up a health unit which will be in charge of

A workplace health unit is composed of a doctor and a nurse (or a health officer) both of who have been licensed by the Ministry of Labour and Social Security. Depending on the number people employed and the level of risks, part-time or full-time employment of those health personnel is possible.

Recruitment of a work safety expert

An enterprise with 50 or more employees has to sign a contract with a work safety expert who has been licensed by the Ministry of Labour and Social Security and who will periodically visit and supervise the workplace. Instead of hiring such an external person, employers can assign one of their engineers to carry out the activities supposed to be done by an expert. In that case, the engineer in question has to be licensed by the Ministry and is supposed not to do any other job during the times allocated for work safety supervision.

WAGES & COST TO EMPLOYER

Minimum Wage

Gross wages cannot be less than the national minimum (gross) wage, which is currently YTL 608 per month (approximately £ 260 per month) for employees at the age of 16 or more. (The cost to employer is YTL 738.72/employee). The gross wage will be YTL 638 and the cost to employer will be YTL 775.17 from 1st July 2008.

In other words, if you establish a firm and recruit employees in Turkey, the monthly minimum labour cost will amount to approximately £318/employee @2,32 on 2 Jan 2008.

Minimum wage is applied nation-wide and updated periodically. The Minimum Wage Commission composed of the social partners advices the Government on what the minimum wage ought to be, and the Government determines the amount taking into account this advised figure.

Average wages in the industry

In the manufacturing sector, gross wages for blue collar workers start from £318 per month. For example, in Istanbul, the most expensive province in Turkey, a net wage of £350-£600 is attractive enough for an average blue collar worker.

With regard to an average white collar worker (an engineer or a person in charge of office works in departments such as accounting, marketing), gross wage starts from £350. In Istanbul, a net wage of £450-750 is attractive enough for an average white collar worker.

Very skilful white-collar workers, engineers or managers (even top managers) who graduated from Turkey’s top universities and have very good command of English can be employed at a net salary of £900-to-£3000 per month in Istanbul.

The above figures were obtained from some of the licensed human resources bureaus in Turkey. The reason why wages in Istanbul are used in this section is that it is the most expensive city in Turkey. In other provinces, wages are lower.

Cost to employer

As explained in the above sections, total cost of an employee to the employer is the gross wage plus social insurance and unemployment insurance contributions made by the employer (employer’s total contribution is 21.5% of the contribution base. For workplaces with high work safety risks the rate may extend to a level up to 27%).

To give some examples,

How to calculate a net wage?

Since negotiations on wages are generally based on net terms, it is important to know how to calculate a net wage. A net wage is calculated as follows:

Net Wage= Gross Wage - Social insurance and unemployment insurance contributions by the employee - taxes (personal income tax and stamp tax)

As explained in the relevant sections, social insurance and unemployment insurance contributions to be made by an employee are 14% and 1% of the contribution base, respectively.

On the other hand, the personal income tax rates start from 15%. The stamp tax rate for wages is 0.6%. The personal income and stamp taxes are applied to the amount to be calculated to equal “the gross wage minus employee’s contributions”.

To give an example, suppose that an employee earns a gross wage of £300 per month and he is in the lowest income bracket (income tax rate of 15%). Then the net salary to be paid to him (£215.2) is calculated as follows:

£215.2 =300- 300*(14%+1%) - [300- 300*(14%+1%)]*(15%+0.6%)

WORKING HOURS & HOLIDAYS

Working Hours

Number of normal working hours for an employee is 45 hours per week.

If the total number of working hours exceeds 45 hours, the difference between it and 45 is considered as overtime and the overtime work is granted 50% extra wage.

In a year, total amount of overtime cannot exceed 270 hours.

An employee cannot be forced to work for more than 11 hours a day. Moreover, he/she cannot work for more than 7.5 hours between 8.00 pm and 6.00 am (night).

Employers can ask their employees to work in shifts provided that they carry out some formalities (such as informing Regional Labour Directorate about the issue) defined by the relevant regulations. Number of shifts must be at least 3 and for an employee the interval between two consecutive shifts cannot be shorter than 11 hours.

An employee must be granted a holiday of at least 24 hours (continuous) per week.

Leave with pay

Employers have to let their employees have “leave with pay”. The duration of the leave depends on the number of years worked.

Number of Years Worked	Duration of Leave
(1-5)	14
(5-15)	20
(15-)	26

Public Holidays

Public holidays in Turkey include the following and are 14 days a year on the average:

Please click here for public holidays in 2005-2008

HOW TO FIND PEOPLE TO EMPLOY?

In the Turkish labour market, generally, two methods are used: