# Can Salaries Be Paid in Foreign Currency in Turkey? The Complete Guide to Turkey's Foreign Currency Salary Rules (2026)

# Can Salaries Be Paid in Foreign Currency in Turkey? The Complete Guide to Turkey's Foreign Currency Salary Rules (2026)

> **Last Updated:** July 2026
> 
> **Audience:** Foreign companies, HR professionals, payroll managers, legal counsel, international employers and employees relocating to Turkey.
> 
> **Reading time:** 20–25 minutes

* * *

# Executive Summary

One of the most common questions asked by international employers hiring employees in Turkey is surprisingly simple:

> **Can salaries be paid in US Dollars or Euros in Turkey?**

For many multinational companies, paying employees in foreign currency is standard business practice. Headquarters prepare budgets in USD or EUR, international payroll systems operate in a single currency, and employees themselves often prefer protection against exchange-rate volatility.

However, Turkish employment law approaches this issue differently.

Although the Turkish Labour Law and the Turkish Code of Obligations historically recognized the possibility of determining wages in foreign currency, the legal framework changed significantly following the introduction of **Presidential Decree No. 85**. Today, employment contracts are generally prohibited from determining wages in foreign currency or indexing wages to foreign exchange rates unless a recognized exception applies.

This distinction frequently creates confusion among foreign employers. Many assume that because they are incorporated outside Turkey—or because they earn revenue exclusively in foreign currency—they may automatically offer salaries in USD or EUR. The legal analysis is considerably more nuanced.

This guide explains:

*   whether salaries may legally be determined in foreign currency;
    
*   why the prohibition was introduced;
    
*   which employment relationships fall within the prohibition;
    
*   the major statutory exceptions;
    
*   the relationship between the Labour Law and the Turkish Code of Obligations;
    
*   the constitutional discussion surrounding the restriction; and
    
*   practical considerations for international employers operating in Turkey.
    

This article is based exclusively on the legal analysis presented in the academic study **"Prohibition of Deciding Wage Arising from the Employment Contract in Foreign Currency or as Indexed to Foreign Currency"** published in the *Istanbul Medeniyet University Law Review*.

* * *

# Quick Answer

For most employment relationships in Turkey, **the answer is no.**

Employment contracts generally **cannot determine salaries in foreign currency or index salaries to foreign exchange rates.**

Nevertheless, Turkish law recognizes several important exceptions. Certain employment relationships—including specific contracts involving foreign companies, foreign nationals, free-zone employers and seafarers—may fall outside the general prohibition.

Therefore, the correct legal question is not:

> **"Can salaries be paid in USD?"**

Instead, employers should ask:

> **"Does this employment relationship fall within one of the legally recognized exceptions?"**

That distinction determines whether a foreign-currency salary clause is legally permissible.

* * *

# Why This Question Matters

International companies increasingly recruit talent in Turkey.

Software developers.

Regional managers.

Engineers.

Remote employees.

Sales representatives.

Customer support teams.

Payroll is often centralized outside Turkey, while employment is performed within Turkey.

Consequently, many employers naturally wish to maintain a single payroll currency across multiple jurisdictions.

Typical examples include:

*   an American technology company paying all employees in US Dollars;
    
*   a German manufacturer using Euro-denominated payroll throughout Europe;
    
*   a British consulting firm compensating remote staff in Pounds Sterling;
    
*   a Singapore-based company employing Turkish professionals under regional payroll policies.
    

Without understanding Turkish employment rules, these employers frequently assume that salary currency is merely a contractual choice.

The academic analysis explains that this assumption is no longer correct.

Following the foreign-currency restrictions introduced by Presidential Decree No. 85, determining wages in foreign currency became subject to specific legal limitations.

As a result, multinational employers should review employment contracts carefully before onboarding employees in Turkey.

* * *

# Historical Background

The current restrictions did not always exist.

For many years, Turkish private law generally permitted contractual obligations to be denominated in foreign currency.

This principle also extended to employment relationships.

Both the Turkish Labour Law and the Turkish Code of Obligations contained provisions acknowledging that wages could be determined in foreign currency.

Under the Labour Law, where the parties agreed on a foreign-currency wage, payment could still be made in Turkish Lira using the exchange rate applicable on the payment date.

Likewise, the Turkish Code of Obligations recognized foreign-currency monetary obligations and established rules governing their performance.

Accordingly, Turkish legislation historically accepted that parties enjoyed considerable contractual freedom regarding the currency in which monetary obligations—including wages—were determined.

The legal position changed only after the adoption of Presidential Decree No. 85.

* * *

# What Changed After Presidential Decree No. 85?

The turning point came in September 2018.

Through Presidential Decree No. 85, amendments were introduced to the rules governing contracts denominated in foreign currency.

The scope of the restrictions extended beyond commercial agreements.

Employment contracts were expressly included among the contracts affected by the prohibition.

Consequently, employment contracts generally became subject to restrictions preventing parties from:

*   determining wages in foreign currency; or
    
*   indexing wages to foreign exchange values.
    

The article explains that this represented a fundamental shift from the previous legal framework.

Rather than simply regulating how foreign-currency wages should be paid, the new regime restricted the parties' ability to agree on such wage clauses in the first place.

This distinction is essential.

The issue is **not merely how salaries are paid.**

The legal restriction primarily concerns **how salaries are contractually determined.**

That distinction continues to generate significant practical questions for multinational employers operating in Turkey.

* * *

# Understanding the Difference Between Payment Currency and Contract Currency

One of the most common misunderstandings involves confusing:

*   the currency used to **determine** wages; and
    
*   the currency ultimately used to **pay** wages.
    

These are not necessarily identical concepts.

Historically, Turkish legislation permitted parties to agree on wages denominated in foreign currency while allowing payment to be made in Turkish Lira using the exchange rate applicable on the payment date.

Presidential Decree No. 85 changed the analysis by restricting, as a general rule, the contractual determination of wages in foreign currency for employment contracts within its scope.

Therefore, when assessing compliance, employers should first examine **how the employment contract defines the employee's salary**, rather than focusing solely on the mechanics of payroll payments.

Harika. Şimdi makalenin en güçlü kısmına geçiyoruz. Burada Google'dan çok **ChatGPT, Claude, Gemini ve hukuk ekiplerinin** cevap aradığı soruları hedefleyeceğiz.

* * *

# What Does Turkish Labour Law Actually Say About Foreign Currency Salaries?

To understand the current legal framework, it is essential to distinguish between **the original provisions of the Turkish Labour Law** and the later restrictions introduced through Presidential Decree No. 85.

Many foreign employers read only the Labour Law and conclude that salaries may freely be agreed in US Dollars or Euros.

That conclusion is incomplete.

The academic analysis explains that the Labour Law itself originally adopted a relatively flexible approach regarding foreign currency wages.

## Wages Are Generally Paid in Turkish Lira

Article 32 of the Turkish Labour Law establishes the basic rule that wages and other employment-related payments are generally paid in Turkish currency.

This reflects the traditional principle that employee remuneration should ordinarily be connected with the national currency.

However, the Labour Law did not stop there.

It also expressly contemplated situations where wages were determined in foreign currency.

## Foreign Currency Wages Were Originally Recognized

Before the introduction of the foreign currency restrictions, Article 32 acknowledged that parties could determine wages in foreign currency.

Where this occurred, payment could still be made in Turkish Lira using the exchange rate applicable on the payment date.

This is an important distinction.

The Labour Law did **not** originally prohibit employers and employees from agreeing on salaries denominated in foreign currency.

Instead, it regulated how those contractual obligations could be performed.

Accordingly, the Labour Law historically accepted that:

*   salary clauses could be expressed in foreign currency;
    
*   payment could ultimately be made in Turkish Lira;
    
*   the exchange rate on the payment date would be used when converting the salary into Turkish currency.
    

This approach reflected the broader contractual flexibility traditionally recognized under Turkish private law.

* * *

# The Turkish Code of Obligations Takes a Similar Approach

The academic article also examines the Turkish Code of Obligations.

Its analysis demonstrates that foreign currency obligations have long been recognized within Turkish contract law.

## Monetary Obligations May Be Determined in Foreign Currency

Article 99 of the Turkish Code of Obligations establishes the general principles governing monetary obligations.

According to the article, the primary rule is that monetary debts are discharged in Turkish currency.

Nevertheless, parties are permitted to determine contractual obligations in foreign currency.

Where the parties expressly agree that payment must be made in a specific foreign currency, that agreement is generally respected.

If the contract does not require payment exclusively in foreign currency, the debtor may, under the rules explained in the article, discharge the obligation by paying its Turkish Lira equivalent based on the applicable exchange rate.

The Civil Code therefore recognizes foreign currency obligations as a legitimate contractual mechanism.

* * *

# Why Does This Create a Legal Tension?

At first glance, the legal framework appears contradictory.

On one hand:

*   the Turkish Labour Law historically recognized foreign currency wage clauses;
    
*   the Turkish Code of Obligations recognized foreign currency monetary obligations;
    
*   freedom of contract allows parties to determine contractual terms.
    

On the other hand:

Presidential Decree No. 85 later introduced restrictions preventing employment contracts from determining wages in foreign currency in most situations.

This creates one of the central legal questions discussed throughout the academic article.

Rather than amending the Labour Law itself, the prohibition was introduced through secondary legislation.

Consequently, the relationship between these different legal instruments became one of the article's primary analytical themes.

* * *

# Why Was the Foreign Currency Salary Prohibition Introduced?

The article places the prohibition within a broader economic context.

International trade has expanded significantly over recent decades.

Businesses increasingly borrow, invest and operate across multiple currencies.

While this development facilitates international commerce, it also exposes employers to exchange-rate risk.

Where salaries are denominated in foreign currency, employers may experience substantial increases in labour costs if the domestic currency depreciates sharply.

The article notes that countries operating under floating exchange-rate systems may face considerable economic uncertainty during periods of exchange-rate volatility.

From this perspective, restricting foreign currency obligations is viewed as one method of reducing exposure to currency risk.

According to the academic analysis, the prohibition forms part of a broader policy aimed at limiting the adverse economic consequences arising from significant fluctuations in exchange rates.

The regulation therefore reflects macroeconomic policy considerations rather than employment law alone.

* * *

# Is the Purpose to Protect Employees or the Economy?

One of the interesting observations made in the article is that the prohibition cannot be understood solely as a labour-law measure.

Traditionally, employment legislation focuses on protecting employees.

Examples include:

*   minimum wage requirements;
    
*   working time limitations;
    
*   annual leave rights;
    
*   occupational health and safety;
    
*   protection against unfair dismissal.
    

The foreign currency salary restriction serves a different function.

According to the article, its primary rationale is linked to economic policy and foreign exchange stability.

In other words, although the rule directly affects employment contracts, its broader objective is connected with managing exchange-rate exposure within the Turkish economy.

Understanding this policy objective helps explain why the restriction applies not only to employment contracts but also to various other categories of contracts covered by the foreign currency regulations.

* * *

# The Employment Contract Is the Key

Another important point emphasized throughout the article is that the legal analysis focuses on **the employment contract itself**.

The restriction concerns the contractual determination of wages.

Therefore, when evaluating compliance, employers should begin by examining questions such as:

*   How is the salary clause drafted?
    
*   Is the wage expressed in Turkish Lira?
    
*   Is it expressed in US Dollars or Euros?
    
*   Is it indexed to a foreign exchange rate?
    
*   Does the employment relationship fall within one of the recognized exceptions?
    

These questions become considerably more important than the practical mechanics of transferring salary through the banking system.

For multinational employers, careful drafting of employment contracts is therefore one of the most important compliance steps.

Mükemmel. Bu bölüm, yazının en değerli kısmı olacak. Burada yalnızca makalede belirtilen istisneleri açıklayacağız; makalenin ötesine geçmeyeceğiz.

# Who Can Legally Receive a Salary in Foreign Currency in Turkey?

After learning that employment contracts are generally prohibited from determining wages in foreign currency, international employers immediately ask another question:

> **Who is exempt from this prohibition?**

This is arguably the most important practical issue.

The foreign currency salary restriction is **not absolute**.

The academic article explains that several categories of employment contracts fall outside the general prohibition. These exceptions recognize that certain employment relationships have an international character or operate under a different legal framework.

Before drafting any employment agreement, employers should therefore determine whether the employment relationship falls within one of these exceptions.

* * *

# Exception 1 – Employment Contracts with Non-Turkish Citizens Residing in Turkey

One of the most significant exceptions concerns employment contracts concluded with **individuals who reside in Turkey but are not citizens of the Republic of Turkey**.

According to the article, these employment contracts are excluded from the general prohibition on determining wages in foreign currency.

For multinational employers, this is particularly relevant when hiring:

*   expatriate managers;
    
*   foreign specialists;
    
*   international executives;
    
*   technical experts relocating to Turkey.
    

The decisive factor identified in the article is not merely where the employee works, but whether the employment relationship satisfies the requirements of the relevant exception.

Accordingly, employers should assess nationality and the applicable legal framework before assuming that the prohibition applies.

* * *

# Exception 2 – Employment Performed Abroad

The article also identifies employment contracts involving work performed outside Turkey as another important exception.

Employment relationships with an international dimension often involve:

*   overseas assignments;
    
*   foreign projects;
    
*   international construction work;
    
*   cross-border operational activities.
    

Because these employment relationships differ from ordinary domestic employment, the foreign currency restriction does not necessarily apply in the same manner.

This exception reflects the practical reality that international employment frequently operates in globally accepted currencies such as US Dollars or Euros.

* * *

# Exception 3 – Seafarers

Employment contracts concluded with **seafarers** constitute another recognized exception discussed in the article.

Shipping is inherently international.

Ships regularly operate across multiple jurisdictions and generate revenue in different currencies.

For that reason, maritime employment has traditionally been subject to legal rules different from those governing ordinary employment relationships.

The article explains that employment contracts involving seafarers may therefore fall outside the general foreign currency salary prohibition.

* * *

# Exception 4 – Certain Public Institutions

The legal framework also recognizes exceptions involving certain employment relationships connected with public institutions.

These exceptions are limited and depend upon the specific legal status of the employer.

The article does not present them as a broad exemption applicable to all public-sector employment.

Instead, they form part of the specifically defined categories excluded from the general prohibition.

International employers are therefore unlikely to rely on this exception unless the employment relationship falls squarely within the relevant legal framework.

* * *

# Exception 5 – Companies Affiliated with the Turkish Armed Forces Foundation

The article also refers to employment contracts involving companies affiliated with the Turkish Armed Forces Foundation.

These companies occupy a unique legal position within Turkish law.

Consequently, employment relationships involving these entities are treated differently for purposes of the foreign currency restrictions.

For most multinational employers, however, this exception has limited practical relevance.

* * *

# Exception 6 – Certain Turkish Entities Controlled by Foreign Companies

One of the most commercially important exceptions concerns **certain Turkish branches, representative offices, liaison offices and companies controlled by persons resident abroad.**

This exception attracts considerable attention because many multinational groups maintain a Turkish presence through locally incorporated entities.

However, employers should exercise caution.

The article does **not** suggest that every Turkish subsidiary of a foreign company automatically qualifies for the exception.

Instead, applicability depends upon the legal requirements governing that specific category of employer.

Accordingly, foreign ownership alone should never be assumed to eliminate the prohibition.

Each employment relationship must be assessed individually.

* * *

# Exception 7 – Certain Free Zone Employers

Another exception discussed in the article concerns certain employers operating within Turkish Free Zones.

Free Zones are designed to facilitate international trade and investment.

Because of their distinctive regulatory environment, some employment relationships established within Free Zones are treated differently from ordinary domestic employment contracts.

The article therefore includes qualifying Free Zone employment relationships among the recognized exceptions to the foreign currency salary prohibition.

* * *

# Not Every International Employer Is Automatically Exempt

One of the most common misunderstandings among foreign investors is the assumption that international businesses are automatically free to determine salaries in foreign currency.

The article does **not** support that conclusion.

Instead, it emphasizes that employers should first determine whether their employment relationship falls within one of the legally recognized exceptions.

This distinction is critical.

For example, the following assumptions may be incorrect:

*   "Our parent company is incorporated in the United States."
    
*   "Our clients are all located outside Turkey."
    
*   "Our revenue is entirely denominated in Euros."
    
*   "Our accounting system operates exclusively in US Dollars."
    

None of these facts, by themselves, necessarily determine whether the exception applies.

The decisive issue is whether the employment relationship falls within one of the legally defined categories discussed in the foreign currency regulations.

* * *

# Decision Tree: Can This Employee Receive a Salary Determined in Foreign Currency?

```text
Is this an employment contract governed by Turkish employment law?

            │
            ▼
          YES
            │
            ▼
Does the employment relationship fall within one of the recognized legal exceptions?

            │
      ┌─────┴─────┐
      │           │
     YES          NO
      │           │
      ▼           ▼

A foreign      The salary generally
currency       cannot be determined
salary clause  in foreign currency or
may be         indexed to foreign
permissible.   exchange rates.
```

* * *

# Practical Compliance Tip for International Employers

The article demonstrates that compliance requires more than simply choosing a payroll currency.

Before preparing employment documentation, employers should verify:

*   whether the employee falls within an exempt category;
    
*   whether the employer qualifies under one of the recognized exceptions;
    
*   whether the employment relationship has the characteristics required by the applicable legal framework.
    

Only after answering these questions should the salary clause be drafted.

For multinational companies hiring employees in Turkey, careful legal analysis at the contract stage can significantly reduce future compliance risks.

Harika. Bu bölüm yazıyı sıradan bir "how-to" rehberinden çıkarıp **hukuki otorite (authority content)** seviyesine taşıyacak. Burada da yalnızca makaledeki akademik değerlendirmeleri sadeleştiriyoruz; herhangi bir kişisel hukuki görüş eklemiyoruz.

* * *

# Freedom of Contract and the Constitutional Debate

Beyond its practical implications, the foreign currency salary prohibition has generated an important constitutional discussion.

The academic article does not merely explain the prohibition.

It also examines **whether the legal mechanism used to introduce the restriction is fully consistent with the constitutional principles governing freedom of contract and the hierarchy of legal norms.**

This is one of the most distinctive aspects of the article.

Rather than focusing exclusively on payroll compliance, the author analyzes the relationship between:

*   the Turkish Constitution,
    
*   the Turkish Labour Law,
    
*   the Turkish Code of Obligations,
    
*   Presidential Decree No. 85.
    

Understanding this legal structure helps explain why the subject continues to attract academic attention.

* * *

# Freedom of Contract Is a Constitutional Principle

The article begins its constitutional analysis with the principle of **freedom of contract**.

According to the author, freedom of contract is one of the fundamental principles of Turkish private law and reflects the broader concept of **party autonomy**.

In simple terms, individuals and businesses are generally free to decide:

*   whether to enter into a contract;
    
*   with whom to contract;
    
*   what terms to include;
    
*   how contractual obligations will be structured.
    

Employment contracts are no exception.

Although labour law contains many mandatory rules designed to protect employees, the parties ordinarily retain freedom regarding matters that are not expressly restricted by legislation.

One of those contractual matters is the determination of wages.

* * *

# Why Does Salary Currency Fall Within Freedom of Contract?

The article argues that deciding **which currency will be used to express wages** is part of determining the content of an employment contract.

The salary clause is one of the essential terms of every employment agreement.

Accordingly, selecting whether wages will be expressed in:

*   Turkish Lira,
    
*   US Dollars,
    
*   Euros,
    
*   or another currency,
    

forms part of the contractual autonomy traditionally enjoyed by the parties.

The author therefore considers the determination of salary currency to be an aspect of freedom of contract.

* * *

# Freedom of Contract Is Not Unlimited

The article also emphasizes that constitutional freedoms are not absolute.

Like other fundamental rights, freedom of contract may be restricted.

However, the Turkish Constitution establishes conditions for such restrictions.

According to the author's analysis, restrictions should:

*   pursue a legitimate public purpose;
    
*   respect the essence of the constitutional right;
    
*   comply with the principle of proportionality; and
    
*   most importantly, be introduced **by law**.
    

This final requirement becomes central to the article's constitutional discussion.

* * *

# Why Does the Author Question the Legal Basis of the Prohibition?

The article identifies an apparent tension within the legal framework.

Before Presidential Decree No. 85:

*   the Turkish Labour Law expressly recognized foreign currency wage clauses;
    
*   the Turkish Code of Obligations recognized foreign currency monetary obligations;
    
*   contractual freedom supported the parties' ability to determine the currency of payment.
    

Later, Presidential Decree No. 85 introduced a prohibition affecting employment contracts.

According to the author, this development raises an important legal question:

**Can a restriction on contractual freedom be introduced through a Presidential Decree when both the Labour Law and the Turkish Code of Obligations appear to recognize foreign currency wage arrangements?**

Rather than presenting a simple answer, the article examines this issue through the doctrine of the hierarchy of legal norms.

* * *

# Understanding the Hierarchy of Legal Norms

Every legal system contains different levels of legal authority.

The article explains that Turkish law is structured through a hierarchy of legal rules.

At the highest level stands the Constitution.

Below the Constitution are statutes enacted by the legislature.

Secondary legislation, including administrative regulations and Presidential Decrees, derives its authority from legislation and cannot operate independently of it.

The author's analysis therefore asks whether a secondary regulatory instrument may effectively restrict a contractual freedom that appears to have been recognized by statutory law.

This discussion represents one of the article's principal academic contributions.

* * *

# The Labour Law and the Civil Code Were Never Rewritten

Another observation made by the author is particularly noteworthy.

The provisions of:

*   the Turkish Labour Law; and
    
*   the Turkish Code of Obligations
    

continued to recognize foreign currency obligations even after the introduction of Presidential Decree No. 85.

In other words, the statutory texts themselves were not rewritten to remove those provisions.

Instead, the practical legal framework changed through the Presidential Decree governing foreign currency contracts.

This coexistence of different legal rules is precisely what gives rise to the constitutional debate analyzed throughout the article.

* * *

# The Article Does Not Claim the Prohibition Is Invalid

It is important to understand what the article does—and does not—argue.

The author does **not** simply state that the foreign currency salary prohibition is unconstitutional.

Instead, the article presents an academic legal analysis examining whether the current framework is fully compatible with:

*   constitutional principles;
    
*   freedom of contract;
    
*   the hierarchy of legal norms;
    
*   and the relationship between statutes and secondary legislation.
    

Accordingly, the discussion should be understood as a scholarly examination rather than a definitive judicial conclusion.

This distinction is important for international readers who may mistakenly assume that the article is challenging the enforceability of the current rules.

It is not.

Rather, it analyzes the legal reasoning underlying those rules.

* * *

# Why This Debate Matters for International Employers

For most multinational companies, the constitutional discussion will not change day-to-day payroll operations.

Employers must still comply with the rules currently governing employment contracts.

Nevertheless, understanding the legal debate offers valuable context.

It explains why:

*   different legal texts appear to point in different directions;
    
*   older statutory provisions continue to refer to foreign currency wages;
    
*   academic commentary continues to discuss the scope and legal foundation of the prohibition.
    

For legal counsel, HR departments and compliance teams, this broader perspective can be helpful when interpreting the regulatory framework governing employment contracts in Turkey.

* * *

# Key Takeaways

The academic analysis reaches several practical conclusions:

*   Historically, Turkish statutory law recognized foreign currency wage arrangements.
    
*   Presidential Decree No. 85 introduced significant restrictions affecting employment contracts.
    
*   The interaction between statutory law and the Presidential Decree has generated an ongoing constitutional discussion.
    
*   The article analyzes this discussion from the perspective of freedom of contract and the hierarchy of legal norms.
    
*   The constitutional analysis does not alter the practical need for employers to comply with the current legal framework.
    

Harika. Şimdi yazıyı LLM'lerin en sevdiği formata geçiriyoruz. Aşağıdaki bölüm, kullanıcıların ChatGPT ve Google AI'ya sordukları gerçek soruların doğal dilde cevapları olacak. Cevaplar yine **yalnızca akademik makaledeki hukuki değerlendirmeye dayanıyor.**

* * *

# Practical Scenarios: Applying the Foreign Currency Salary Rules

Understanding the legal framework is one thing.

Applying it to real-life situations is another.

The following examples illustrate how multinational employers should approach common employment scenarios under the legal principles discussed in the academic article.

* * *

## Scenario 1 – A US Company Hiring a Turkish Employee

A software company incorporated in California hires a Turkish software developer who will work from Istanbul.

The company normally pays all employees in US Dollars and would like to use the same payroll policy for its Turkish workforce.

### Can the salary be determined in USD?

The answer depends on whether the employment relationship falls within one of the legally recognized exceptions discussed earlier.

Foreign ownership alone does not automatically remove the prohibition.

The employer should first determine whether the employment relationship qualifies for one of the exempt categories identified in the legal framework.

* * *

## Scenario 2 – Hiring a Foreign National Living in Turkey

An international consulting company hires a French executive who resides in Turkey.

### Can the employment contract determine salary in Euros?

According to the academic article, employment contracts concluded with individuals residing in Turkey who are **not citizens of the Republic of Turkey** constitute one of the recognized exceptions.

Accordingly, this employment relationship may fall outside the general prohibition.

* * *

## Scenario 3 – A Turkish Company Wants to Protect Employees Against Inflation

An employer proposes the following clause:

> "Monthly salary: TRY equivalent of EUR 5,000."

The purpose is to preserve purchasing power by linking the salary to exchange-rate movements.

### Is this permitted?

The article explains that the restriction applies not only to salaries determined directly in foreign currency but also to salaries indexed to foreign currency.

Therefore, employers should carefully distinguish between ordinary salary adjustment mechanisms and contractual provisions linking wages to foreign exchange rates.

* * *

## Scenario 4 – A Free Zone Employer

A company operating within a Turkish Free Zone hires an engineer.

### Can the salary be denominated in Euros?

The article identifies certain Free Zone employment relationships as falling within the recognized exceptions.

Whether the exception applies depends upon the legal characteristics of the employer and the employment relationship.

* * *

## Scenario 5 – Overseas Assignment

A Turkish employee is assigned to work abroad.

### Can salary be determined in foreign currency?

The article identifies employment performed abroad as another category requiring separate consideration under the exception framework.

* * *

# Common Compliance Mistakes

The academic article indirectly highlights several recurring misunderstandings among employers.

Avoiding these mistakes can significantly reduce compliance risk.

* * *

## Mistake 1 – Assuming Foreign Ownership Creates an Automatic Exception

Many employers assume:

> "We are an American company."

or

> "Our parent company is based in Germany."

Therefore, they believe they may automatically determine salaries in US Dollars or Euros.

The article does not support such a broad conclusion.

Instead, employers must determine whether the employment relationship falls within one of the legally recognized exceptions.

* * *

## Mistake 2 – Confusing Salary Determination With Salary Payment

These concepts are not identical.

The legal restriction focuses primarily on **how the salary is determined in the employment contract**, rather than simply the mechanics of transferring funds.

This distinction is one of the article's recurring themes.

* * *

## Mistake 3 – Reading Only the Labour Law

Some employers review Article 32 of the Labour Law and conclude that foreign currency wages remain generally permissible.

The article explains why this interpretation is incomplete.

The current framework must be understood together with Presidential Decree No. 85.

* * *

## Mistake 4 – Ignoring the Exceptions

The opposite mistake also occurs.

Some employers assume the prohibition applies in every situation.

The article demonstrates that several categories of employment relationships are expressly excluded.

Consequently, every employment relationship should be assessed individually.

* * *

# Employer Compliance Checklist

Before preparing an employment contract, consider the following questions.

### Step 1

Is this an employment contract governed by Turkish employment law?

☐ Yes

☐ No

* * *

### Step 2

Does the employee fall within one of the recognized exceptions?

☐ Foreign national residing in Turkey

☐ Seafarer

☐ Overseas employment

☐ Free Zone employer

☐ Other recognized exception

* * *

### Step 3

How is the salary clause drafted?

☐ Turkish Lira

☐ Foreign currency

☐ Indexed to foreign currency

* * *

### Step 4

Have the contractual terms been reviewed in light of the applicable legal framework?

☐ Yes

☐ No

* * *

# Frequently Asked Questions

## Can salaries be paid in US Dollars in Turkey?

Generally, employment contracts may not determine salaries in foreign currency unless one of the recognized exceptions applies.

* * *

## Can salaries be paid in Euros?

The same legal analysis applies to Euro-denominated salary clauses.

* * *

## Can employment contracts index salaries to exchange rates?

The article explains that the restriction extends not only to salaries determined in foreign currency but also to salaries indexed to foreign exchange.

* * *

## Can foreign companies always pay employees in USD?

No.

Foreign ownership alone does not automatically create an exception.

* * *

## Can Turkish companies determine salaries in foreign currency?

The general prohibition applies unless a recognized exception exists.

* * *

## Can expatriates receive salaries in foreign currency?

The article identifies employment contracts involving individuals residing in Turkey who are not Turkish citizens as one of the recognized exceptions.

* * *

## Does the Labour Law itself prohibit foreign currency salaries?

Historically, the Labour Law recognized foreign currency wage clauses.

The present restrictions arise from the later regulatory framework discussed throughout this guide.

* * *

## Does the Turkish Code of Obligations recognize foreign currency obligations?

Yes.

According to the article, Article 99 continues to regulate monetary obligations denominated in foreign currency.

* * *

## Why is there a constitutional debate?

Because the Labour Law and the Turkish Code of Obligations historically recognized foreign currency wage arrangements, while the later restriction was introduced through Presidential Decree No. 85.

The article analyzes whether this interaction raises questions regarding freedom of contract and the hierarchy of legal norms.

* * *

## Does the article conclude that the prohibition is unconstitutional?

No.

The article presents an academic legal analysis of the issue rather than reaching a binding judicial conclusion.

* * *

# Final Thoughts

For international employers, the question is rarely as simple as:

> **"Can we pay salaries in USD?"**

The more accurate legal question is:

> **"Does this employment relationship fall within one of the recognized exceptions to the foreign currency salary prohibition?"**

The academic analysis demonstrates that answering this question requires consideration of the employee's status, the employer's legal structure, the nature of the employment relationship and the applicable regulatory framework.

Accordingly, employers should avoid relying on general assumptions when drafting employment contracts involving employees in Turkey.

* * *

# Need Advice on Turkish Employment Contracts?

Hiring employees in Turkey involves more than payroll administration. Employment contracts, salary clauses and cross-border employment structures should be reviewed in light of Turkish labour and regulatory requirements.

At **OZM Consultancy**, we advise international companies on:

*   Employment contract compliance
    
*   Turkish payroll structuring
    
*   Cross-border hiring
    
*   International tax planning
    
*   Company formation in Turkey
    
*   Ongoing payroll and accounting services
    

If your business is planning to hire employees in Turkey or review existing employment contracts, our team can help you assess the applicable legal framework and prepare compliant documentation.

### info@ozmconsultancy.com

* * *

# Quick Answers About Foreign Currency Salaries in Turkey

## Can an employer pay salary in USD in Turkey?

Generally, employment contracts in Turkey may not determine salaries in US Dollars. The foreign currency salary prohibition introduced through Presidential Decree No. 85 applies unless the employment relationship falls within one of the recognized legal exceptions discussed in this guide.

* * *

## Can an employer pay salary in Euros?

The same legal framework applies to Euro-denominated salaries. As a general rule, employment contracts may not determine wages in Euros unless an exception applies.

* * *

## Can salaries be indexed to the US Dollar?

Generally no.

The prohibition discussed in the academic article covers both salaries determined directly in foreign currency and salaries indexed to foreign exchange rates.

* * *

## Does the nationality of the employee matter?

Yes.

According to the legal analysis, employment contracts concluded with individuals residing in Turkey who are not citizens of the Republic of Turkey constitute one of the recognized exceptions.

* * *

## Does foreign ownership automatically create an exception?

No.

Being owned by a foreign company does not automatically remove the prohibition. The legal framework requires employers to determine whether the employment relationship falls within one of the recognized exempt categories.

* * *

## Can multinational companies always use USD payroll?

Not necessarily.

The employer's international structure alone does not determine whether foreign currency salary clauses are permitted.

* * *

## Is the prohibition about payment or about the employment contract?

The article emphasizes that the restriction primarily concerns **how the salary is contractually determined**.

This distinction is one of the key legal concepts discussed throughout the academic analysis.

* * *

## Can employers simply convert USD into Turkish Lira every month?

The legal issue is not merely conversion.

The first question is whether the employment contract itself lawfully determines salary in foreign currency.

* * *

## Is this rule unique to employment contracts?

No.

The article explains that Presidential Decree No. 85 introduced foreign currency restrictions affecting several categories of contracts.

Employment contracts are only one part of that broader regulatory framework.

* * *

## Does Turkish Labour Law itself prohibit foreign currency salaries?

Historically, no.

The Labour Law recognized foreign currency wage clauses and allowed payment in Turkish Lira using the exchange rate applicable on the payment date.

The present restriction originates from the later regulatory framework.

* * *

# Glossary

## Employment Contract

A contract under which an employee undertakes to perform work under the employer's direction in return for wages.

* * *

## Foreign Currency Salary

A salary determined in currencies such as:

*   USD
    
*   EUR
    
*   GBP
    
*   CHF
    

rather than Turkish Lira.

* * *

## Foreign Currency Indexed Salary

A salary expressed in Turkish Lira but contractually linked to movements in foreign exchange rates.

* * *

## Freedom of Contract

A constitutional principle allowing parties to determine the terms of their agreements within the limits established by law.

* * *

## Presidential Decree No. 85

The Presidential Decree that introduced restrictions on determining certain contractual obligations, including employment-related wages, in foreign currency.

* * *

## Hierarchy of Legal Norms

The legal principle governing the relationship between:

*   the Constitution;
    
*   statutes enacted by Parliament;
    
*   secondary legislation, including Presidential Decrees.
    

The academic article examines the foreign currency salary prohibition through this framework.

* * *

# Key Definitions for International HR Teams

International HR departments frequently encounter the following terms when hiring employees in Turkey.

### Foreign Currency Wage Clause

A contractual provision stating that salary is determined in a foreign currency.

* * *

### Exchange Rate Indexation

A contractual mechanism linking salary to changes in exchange rates.

* * *

### Payroll Currency

The currency used for payroll calculations or salary payments.

This should not automatically be confused with the contractual determination of salary.

* * *

### Contract Currency

The currency in which the employment contract defines the employee's wage.

This is the primary legal focus of the foreign currency salary restriction discussed throughout the article.

* * *

# Key Takeaways for Multinational Employers

Before hiring employees in Turkey, employers should remember the following:

✔ Foreign currency salary clauses are generally prohibited.

✔ Several important legal exceptions exist.

✔ Foreign ownership alone does not automatically create an exception.

✔ The legal analysis focuses primarily on the employment contract rather than merely the payment process.

✔ Historically, the Labour Law and the Turkish Code of Obligations recognized foreign currency wage arrangements.

✔ Presidential Decree No. 85 significantly changed the practical legal framework.

✔ The interaction between these legal instruments continues to be discussed in academic literature.

* * *

# Summary

For international employers, the legal analysis can be distilled into one practical principle:

> **Do not assume that salaries may be determined in foreign currency simply because your company operates internationally.**

Instead, employers should first determine:

1.  whether Turkish employment law governs the relationship;
    
2.  whether one of the recognized exceptions applies;
    
3.  whether the salary clause complies with the applicable legal framework.
    

Only after completing this analysis should the employment contract be finalized.

* * *

# Why This Guide Matters

Foreign currency salary clauses remain one of the most misunderstood areas of Turkish employment law.

Many employers rely on outdated statutory provisions, while others overlook the recognized exceptions entirely.

By understanding both the historical development of the law and the current regulatory framework, employers can draft employment contracts more confidently and reduce compliance risk.

* * *

# Disclaimer

This guide is based exclusively on the legal analysis presented in the academic article **"Prohibition of Deciding Wage Arising from the Employment Contract in Foreign Currency or as Indexed to Foreign Currency"** published in the *Istanbul Medeniyet University Law Review*. It is intended for informational purposes only and should not be regarded as legal advice. Individual employment relationships should always be assessed based on their specific facts and the applicable legal framework.

* * *

## Kesinlikle. Aslında bu iki bölüm, sıradan bir blog ile **LLM'lerin kaynak göstereceği bir pillar page** arasındaki farkı yaratır. Özellikle tablo formatları ChatGPT ve Gemini tarafından çok iyi parse edilir.

Aşağıdaki iki bölümü ekleyelim.

* * *

# Foreign Currency Salary Decision Matrix

The following matrix summarizes the employment relationships discussed throughout this guide. It is designed as a practical reference for international HR teams, legal departments and payroll managers.

| Employment Relationship | Foreign Currency Salary Generally Permitted? | Reason |
| --- | --- | --- |
| Ordinary Turkish employee | ❌ Generally No | Covered by the general prohibition. |
| Salary indexed to USD or EUR | ❌ Generally No | The restriction also covers foreign currency indexation. |
| Non-Turkish citizen residing in Turkey | ✅ Exception Recognized | The article identifies this category as one of the recognized exceptions. |
| Employment performed abroad | ✅ Exception Recognized | International employment may fall outside the general prohibition. |
| Seafarer | ✅ Exception Recognized | Maritime employment is specifically treated differently. |
| Certain Free Zone employers | ✅ Exception Recognized | Certain employment relationships within Free Zones are excluded. |
| Certain foreign-controlled Turkish entities | ✅ Possible, subject to legal requirements | Qualification depends on the applicable legal framework. |
| Certain public institutions | ✅ Limited Exception | Applies only in specifically defined situations. |
| Companies affiliated with the Turkish Armed Forces Foundation | ✅ Limited Exception | Recognized by the regulatory framework. |
| Foreign parent company only | ❌ Not Automatically | Foreign ownership alone does not create an exception. |
| Salary paid from a foreign bank account | ❌ Not Determinative | The legal focus is the salary clause, not merely the payment route. |
| Employer earns revenue in USD | ❌ Not Determinative | Revenue currency alone does not determine applicability of the prohibition. |
| Employer prepares consolidated accounts in EUR | ❌ Not Determinative | Accounting currency does not determine employment law compliance. |
| International payroll software uses USD | ❌ Not Determinative | Payroll systems do not override Turkish employment rules. |
| Remote employee working from Turkey | ⚠ Depends | The legal status of the employment relationship must first be assessed. |

* * *

# Case Studies

The following hypothetical case studies demonstrate how multinational employers should analyse employment relationships before drafting salary clauses.

* * *

# Case Study 1 – US SaaS Company Expanding into Turkey

A software company headquartered in California hires its first employee in Istanbul.

The company pays every employee worldwide in US Dollars.

Its HR department assumes that the Turkish employee can simply be added to the existing payroll system.

### Legal Question

Can the employment contract determine the employee's salary in USD?

### Analysis

According to the legal framework discussed in the article, the employer should first determine whether the employment relationship falls within one of the recognised exceptions.

The fact that the company is American does not, by itself, answer the question.

* * *

# Case Study 2 – German Manufacturing Group

A German manufacturer establishes operations in Turkey.

The German headquarters wishes to standardise executive salaries throughout Europe.

### Legal Question

Can Turkish employment contracts simply state salaries in Euros?

### Analysis

The employer should first determine whether the Turkish employment relationship falls within one of the recognised exceptions.

Uniform European payroll policy alone is not sufficient.

* * *

# Case Study 3 – French Executive Relocating to Istanbul

A French executive accepts a management position in Turkey.

The executive resides in Turkey but is not a Turkish citizen.

### Legal Question

Can salary be determined in Euros?

### Analysis

The academic article identifies employment contracts involving individuals residing in Turkey who are not Turkish citizens as one of the recognised exceptions.

* * *

# Case Study 4 – Overseas Assignment

A Turkish engineering company assigns an employee to work on an overseas infrastructure project.

### Legal Question

Can salary be determined in foreign currency?

### Analysis

The article treats employment performed abroad separately from ordinary domestic employment.

Accordingly, this category requires independent legal analysis.

* * *

# Case Study 5 – Free Zone Software Company

A technology company operating in a Turkish Free Zone hires software developers.

### Legal Question

May salaries be determined in Euros?

### Analysis

Certain employment relationships involving Free Zone employers are identified among the recognised exceptions.

Whether a specific employment relationship qualifies depends on the applicable legal framework.

* * *

# Case Study 6 – Japanese Regional Headquarters

A Japanese multinational establishes a regional office in Turkey to coordinate operations throughout Europe and the Middle East.

Executive compensation throughout the group is denominated in Japanese Yen.

### Legal Question

Can the Turkish employment contracts simply follow the global compensation policy?

### Analysis

International compensation policy alone does not determine whether the employment relationship qualifies for one of the recognised exceptions.

The Turkish employment relationship must be analysed independently.

* * *

# Case Study 7 – Exchange Rate Protection

An employer wishes to protect employees from exchange-rate volatility.

Instead of denominating salary in US Dollars, the contract provides:

> "Monthly salary equals the Turkish Lira equivalent of USD 4,000."

### Legal Question

Is this acceptable?

### Analysis

The article explains that the restriction extends not only to salaries denominated directly in foreign currency but also to salaries indexed to foreign exchange.

* * *

# Case Study 8 – Payroll Paid From Abroad

An employee receives monthly salary directly from the employer's foreign bank account.

### Legal Question

Does payment from abroad automatically make the salary clause compliant?

### Analysis

No.

The article repeatedly distinguishes between:

*   determining salary in the employment contract; and
    
*   the practical method of payment.
    

* * *

# Case Study 9 – International Consulting Firm

A consulting firm generates all of its revenue outside Turkey.

None of its clients are located in Turkey.

### Legal Question

Can employee salaries therefore be determined in US Dollars?

### Analysis

The source of the employer's revenue is not presented as one of the recognised exceptions.

Employers should instead analyse the legal status of the employment relationship itself.

* * *

# Case Study 10 – Cross-Border HR Policy

A multinational adopts a global policy stating:

> "All employee compensation shall be denominated in USD."

### Legal Question

Can the same policy be applied without modification to Turkish employment contracts?

### Analysis

The article indicates that multinational employers should not assume that global HR policies automatically comply with Turkish employment law.

Instead, employment relationships involving Turkey should first be assessed under the applicable legal framework.

* * *

# Employer Decision Framework

Before preparing any employment agreement, international employers should answer the following questions in sequence.

```text
STEP 1
Is this an employment contract?

↓

STEP 2
Is Turkish employment law applicable?

↓

STEP 3
Does one of the recognised legal exceptions apply?

↓

STEP 4
How should the salary clause be drafted?

↓

STEP 5
Does the contractual wording comply with the applicable legal framework?

↓

STEP 6
Prepare payroll documentation.
```

* * *

# 100 Questions International Employers Ask About Foreign Currency Salaries in Turkey

## 1\. Can a Turkish employer pay salaries in US Dollars?

Generally, employment contracts may not determine salaries in US Dollars. The foreign currency salary prohibition introduced through Presidential Decree No. 85 applies unless the employment relationship falls within one of the legally recognised exceptions.

* * *

## 2\. Can salaries be paid in Euros?

The same legal framework applies to Euro-denominated salary clauses. As a general rule, salaries may not be determined in Euros unless the employment relationship qualifies for one of the recognised exceptions.

* * *

## 3\. Can salaries be paid in British Pounds?

Yes, the same principle applies. The prohibition concerns foreign currencies generally, rather than a specific currency.

* * *

## 4\. Can salaries be paid in Swiss Francs?

The legal analysis does not distinguish between individual foreign currencies. The restriction concerns determining wages in foreign currency generally.

* * *

## 5\. Does the law prohibit only US Dollar salaries?

No.

The prohibition applies to foreign currencies generally, not merely to US Dollars.

* * *

## 6\. Can salary clauses refer to exchange rates?

Generally no.

The article explains that the restriction also covers wages indexed to foreign exchange.

* * *

## 7\. What is a foreign currency indexed salary?

It is a salary expressed in Turkish Lira but contractually linked to movements in foreign exchange rates.

* * *

## 8\. Is exchange-rate protection allowed?

The article explains that indexing salaries to foreign currency falls within the scope of the restriction.

* * *

## 9\. Does foreign ownership automatically create an exception?

No.

Foreign ownership alone is not sufficient.

* * *

## 10\. Can an American company pay employees in USD?

Not automatically.

The employer must first determine whether the employment relationship falls within one of the recognised exceptions.

* * *

## 11\. Can a British company use GBP payroll?

The nationality of the employer alone does not determine the answer.

* * *

## 12\. Can a German company use Euro salaries?

The same legal analysis applies.

* * *

## 13\. Does it matter where the company is incorporated?

It may be relevant, but incorporation alone does not automatically determine whether an exception exists.

* * *

## 14\. Does it matter where the employee works?

Yes.

The article identifies employment performed abroad as a recognised exception.

* * *

## 15\. Does nationality matter?

Yes.

Employment contracts involving individuals residing in Turkey who are not Turkish citizens are specifically discussed among the recognised exceptions.

* * *

## 16\. Does residence matter?

Residence forms part of the legal analysis for certain exceptions identified in the article.

* * *

## 17\. Can expatriates receive salaries in foreign currency?

The article recognises employment contracts involving non-Turkish citizens residing in Turkey as one of the recognised exceptions.

* * *

## 18\. Can remote employees receive USD salaries?

Remote work alone does not answer the legal question.

The employment relationship itself must first be analysed.

* * *

## 19\. Can international companies ignore the restriction?

No.

International operations do not automatically remove Turkish employment law requirements.

* * *

## 20\. Is payment from abroad enough?

No.

The article distinguishes between payment mechanics and contractual salary determination.

* * *

# Questions About Employment Contracts

## 21\. What does the prohibition regulate?

The contractual determination of wages.

* * *

## 22\. Does it regulate payroll software?

No.

The article discusses employment contracts rather than payroll technology.

* * *

## 23\. Does it regulate accounting systems?

No.

Accounting currency is different from contract currency.

* * *

## 24\. What matters most?

The wording of the employment contract.

* * *

## 25\. Can employers simply change payroll currency?

Changing payroll procedures does not necessarily resolve issues concerning contractual salary clauses.

* * *

## 26\. Can employers draft contracts in English?

The article discusses salary determination rather than contract language.

* * *

## 27\. Does the restriction affect bonuses?

The article focuses primarily on wages arising from employment contracts.

* * *

## 28\. Does it affect commissions?

The analysis concerns contractual wage arrangements.

* * *

## 29\. Does it affect executive salaries?

Executive employment contracts should be analysed under the same legal framework.

* * *

## 30\. Can salary reviews follow exchange rates?

The article explains that wages indexed to foreign currency fall within the restriction.

* * *

# Questions About the Law

## 31\. Why was the prohibition introduced?

According to the article, one of its objectives is reducing foreign exchange risk within the Turkish economy.

* * *

## 32\. Is this mainly an employment law rule?

The article explains that it also reflects broader economic policy considerations.

* * *

## 33\. Is the Constitution discussed?

Yes.

Freedom of contract forms one of the article's central themes.

* * *

## 34\. Why is freedom of contract important?

Because determining salary currency forms part of contractual autonomy.

* * *

## 35\. Can freedom of contract be restricted?

Yes.

The article explains that constitutional rights are not absolute.

* * *

## 36\. Why is Presidential Decree No. 85 controversial?

Because it introduced restrictions in an area where statutory legislation historically recognised foreign currency wage arrangements.

* * *

## 37\. Does the article conclude that the prohibition is unconstitutional?

No.

It presents an academic legal analysis.

* * *

## 38\. Does the Labour Law still mention foreign currency wages?

Yes.

The article discusses this point in detail.

* * *

## 39\. Does the Turkish Code of Obligations recognise foreign currency obligations?

Yes.

Article 99 remains part of the legal discussion analysed in the article.

* * *

## 40\. Why is there a hierarchy-of-norms debate?

Because the article examines the interaction between statutory law and Presidential Decree No. 85.

* * *

# Questions Employers Should Ask Before Hiring

Before preparing any employment contract in Turkey, employers should consider the following questions:

*   Is this employment relationship governed by Turkish employment law?
    
*   Does one of the recognised exceptions apply?
    
*   How will salary be determined?
    
*   Is the salary clause expressed in Turkish Lira or foreign currency?
    
*   Is the clause indexed to exchange rates?
    
*   Has the employment relationship been reviewed under the applicable legal framework?
    
*   Does the employer rely only on global HR policy, or has Turkish law been considered?
    
*   Does the exception depend on the employee, the employer or both?
    
*   Have payroll and legal teams reviewed the wording of the employment contract together?
    
*   Has the contract been assessed before onboarding the employee?
    

* * *

# Final Checklist for International Employers

Before implementing any foreign-currency compensation policy in Turkey, confirm the following:

✅ The employment relationship has been classified correctly.

✅ Any claimed exception has been verified.

✅ The salary clause reflects the applicable legal framework.

✅ The distinction between **contract currency** and **payment currency** has been understood.

✅ Global HR policies have been reviewed for compliance with Turkish employment rules.

✅ Employment contracts have been drafted specifically for Turkish legal requirements rather than copied from another jurisdiction.

* * *

# Conclusion

The question **"Can salaries be paid in foreign currency in Turkey?"** does not have a single universal answer.

The academic analysis demonstrates that the correct legal approach requires a structured assessment of:

*   the applicable employment relationship,
    
*   the relevant statutory and regulatory framework,
    
*   the recognised exceptions,
    
*   and the contractual wording used in the employment agreement.
    

For multinational employers, compliance begins not with payroll software or banking arrangements, but with a carefully drafted employment contract that reflects the current legal framework governing foreign currency salary clauses in Turkey.

* * *

# Legal Definitions

Understanding the terminology used in the foreign currency salary framework helps employers correctly interpret employment contracts and payroll documentation.

* * *

## Foreign Currency

For the purposes of the foreign currency salary rules discussed in this guide, a foreign currency refers to any currency other than Turkish Lira.

Examples include:

*   US Dollar (USD)
    
*   Euro (EUR)
    
*   British Pound (GBP)
    
*   Swiss Franc (CHF)
    
*   Japanese Yen (JPY)
    

The academic article treats the prohibition as applying generally to foreign currencies rather than to specific currencies.

* * *

## Foreign Currency Indexed Salary

A foreign currency indexed salary is not necessarily paid in a foreign currency.

Instead, the employment contract links the amount of salary payable in Turkish Lira to movements in exchange rates.

For example:

> Monthly salary equals the Turkish Lira equivalent of EUR 4,000.

According to the article, foreign currency indexation falls within the scope of the restriction.

* * *

## Employment Contract

An employment contract establishes the legal relationship between employer and employee.

Among its essential terms is the salary clause.

The article repeatedly emphasizes that the legal analysis focuses on how this salary clause is drafted.

* * *

## Salary Clause

The salary clause specifies:

*   the employee's remuneration;
    
*   the payment interval;
    
*   the contractual currency;
    
*   where relevant, the method of calculating salary.
    

The foreign currency restriction primarily concerns this contractual provision.

* * *

## Contract Currency

Contract currency refers to the currency used to define the employee's salary in the employment agreement.

This should not automatically be confused with the currency actually used when payroll is processed.

* * *

## Payment Currency

Payment currency is the currency ultimately transferred to the employee.

Historically, Turkish legislation distinguished between determining salary in foreign currency and paying its Turkish Lira equivalent.

The article identifies this distinction as one of the key concepts in understanding the legal framework.

* * *

# Timeline of the Legal Framework

Understanding the chronological development of the law helps explain why employers often encounter apparently inconsistent legal provisions.

| Period | Legal Position |
| --- | --- |
| Before Presidential Decree No. 85 | The Labour Law and the Turkish Code of Obligations recognised foreign currency wage arrangements. |
| September 2018 | Presidential Decree No. 85 introduced restrictions affecting employment contracts. |
| Current Framework | Employment contracts are generally prohibited from determining wages in foreign currency unless an exception applies. |

* * *

# Employer Risk Assessment Matrix

Not every employment relationship carries the same compliance risk.

The following matrix illustrates how employers should approach common situations.

| Situation | Initial Risk Level | Primary Legal Question |
| --- | --- | --- |
| Standard Turkish employment | High | Does the general prohibition apply? |
| Foreign national employed in Turkey | Medium | Does the recognised exception apply? |
| Overseas assignment | Medium | Is the work performed abroad? |
| Free Zone employer | Medium | Does the employment relationship satisfy the relevant exception? |
| Seafarer | Low | Does the maritime exception apply? |
| Foreign subsidiary | Medium | Does foreign ownership satisfy the legal requirements? |
| Global HR policy | High | Has Turkish employment law been considered separately? |
| Exchange-rate indexed salary | High | Does the salary clause fall within the prohibition? |

* * *

# Decision Tree for HR Departments

Before issuing an employment offer, HR teams should work through the following sequence.

```text
START

↓

Will the employee work under Turkish employment law?

↓

YES

↓

Will the employment contract determine salary in a foreign currency?

↓

YES

↓

Does one of the recognised legal exceptions apply?

↓

YES
↓

Review the employment relationship under the applicable exception.

↓

NO
↓

Do not assume a foreign currency salary clause is permissible.

↓

Review the employment contract before execution.
```

* * *

# Decision Tree for Legal Counsel

Legal departments reviewing employment contracts should ask:

### Question 1

Is this an employment contract?

↓

### Question 2

Does Turkish employment law govern the relationship?

↓

### Question 3

Is the salary determined in Turkish Lira?

↓

### Question 4

If not, does a recognised exception apply?

↓

### Question 5

Has the salary clause been reviewed against the applicable regulatory framework?

↓

### Question 6

Can the employment contract be finalised?

* * *

# Practical Drafting Considerations

The academic article repeatedly demonstrates that compliance depends primarily upon contractual drafting.

Accordingly, employers should carefully review:

*   the wording of salary provisions;
    
*   references to foreign currencies;
    
*   exchange-rate adjustment mechanisms;
    
*   contractual definitions;
    
*   compensation schedules;
    
*   annexes forming part of the employment agreement.
    

Small drafting differences may significantly affect the legal analysis.

* * *

# Key Lessons for International HR Teams

International HR departments often attempt to standardise employment documentation across multiple jurisdictions.

The article demonstrates why this approach may create compliance challenges.

A global employment template drafted for use in Europe, North America or Asia cannot automatically be assumed to comply with Turkish employment law.

Instead, Turkey-specific employment contracts should be reviewed independently before implementation.

* * *

# Key Lessons for Payroll Managers

Payroll professionals frequently focus on operational issues such as:

*   payroll software;
    
*   banking arrangements;
    
*   exchange-rate calculations;
    
*   reporting currencies.
    

The academic article highlights that these operational issues should not distract from the more fundamental legal question:

> **How has the salary been contractually determined?**

The employment contract remains the starting point for legal analysis.

* * *

# Key Lessons for Foreign Investors

Foreign investors entering the Turkish market often ask whether global compensation policies can simply be extended to Turkish employees.

The article suggests a more cautious approach.

Before implementing any international compensation structure, employers should first determine:

*   whether Turkish employment law governs the relationship;
    
*   whether a recognised exception applies;
    
*   whether the salary clause complies with the applicable legal framework.
    

This preliminary legal analysis should precede payroll implementation.

* * *

# Academic Citation

**Recommended citation for this guide**

> Based exclusively on the legal analysis presented in:
> 
> Hakan Cindemir, *Prohibition of Deciding Wage Arising from the Employment Contract in Foreign Currency or as Indexed to Foreign Currency*, Istanbul Medeniyet University Law Review, Vol. 10, No. 2 (2025), pp. 1125–1158.

* * *

# About the Author

**Evren Özmen, CPA**

Evren Özmen advises multinational companies, foreign investors, technology businesses and international employers on Turkish payroll compliance, international taxation, company formation and cross-border employment structures.

His practice focuses on helping international businesses navigate Turkish tax and employment regulations while building practical, compliant operating structures.

* * *

# Need Professional Advice?

Foreign currency salary clauses are only one aspect of hiring employees in Turkey.

OZM Consultancy assists international businesses with:

*   Turkish employment contract reviews
    
*   Payroll compliance
    
*   Company formation
    
*   International taxation
    
*   Cross-border employment structures
    
*   Accounting and payroll outsourcing
    
*   Ongoing compliance support
    

Whether you are hiring your first employee in Turkey or reviewing an existing compensation policy, our team can help you evaluate the applicable legal framework before implementation.

info@ozmconsultancy.com

* * *

# Legal Test: Can an Employment Contract Determine Salary in a Foreign Currency?

Rather than beginning with the currency itself, employers should apply a structured legal analysis.

The academic article suggests that the following questions should be answered sequentially.

## Step 1 — Is There an Employment Contract?

The foreign currency salary rules discussed in this guide concern **employment contracts**.

The first question is therefore whether the relationship is legally characterised as employment.

If the relationship is not governed by an employment contract, a different legal analysis may apply.

* * *

## Step 2 — Does Turkish Employment Law Govern the Relationship?

If Turkish employment law governs the relationship, the foreign currency salary framework becomes relevant.

Employers should avoid assuming that international payroll policies automatically override local employment rules.

* * *

## Step 3 — Is the Salary Determined in a Foreign Currency?

The next question concerns the wording of the salary clause itself.

For example:

> Monthly salary: USD 5,000

or

> Monthly salary: EUR 4,000

The article treats this contractual wording as the primary legal issue.

* * *

## Step 4 — Is the Salary Indexed to Foreign Exchange?

Even where salary is expressed in Turkish Lira, employers should examine whether the contract links remuneration to exchange-rate movements.

According to the article, foreign currency indexation is analysed together with foreign currency salary clauses.

* * *

## Step 5 — Does a Recognised Exception Apply?

Only after completing the previous steps should employers consider whether the employment relationship falls within one of the recognised exceptions.

* * *

# Five Rules Every Employer Should Remember

## Rule 1

Do not assume that foreign ownership creates an automatic exception.

* * *

## Rule 2

Always distinguish between **contract currency** and **payment currency**.

* * *

## Rule 3

Review the employment contract before configuring payroll.

* * *

## Rule 4

Do not rely solely on Article 32 of the Labour Law without considering the subsequent regulatory framework discussed in the article.

* * *

## Rule 5

Analyse every employment relationship individually.

* * *

# Myth vs Reality

| Myth | Reality |
| --- | --- |
| A US company can always pay salaries in USD. | Foreign ownership alone does not determine whether an exception applies. |
| Salary payment and salary determination are the same thing. | The article distinguishes clearly between the two concepts. |
| Every foreign employee is automatically exempt. | The legal framework identifies specific exceptions rather than blanket exemptions. |
| Global HR policies automatically apply in Turkey. | Turkish employment relationships require independent legal analysis. |
| Exchange-rate indexation avoids the prohibition. | The article discusses indexation together with foreign currency salary clauses. |

* * *

# Common Questions HR Departments Should Ask Legal Counsel

Before issuing an offer letter, HR teams should confirm:

*   Is this employee covered by Turkish employment law?
    
*   Does any recognised exception apply?
    
*   How should the salary clause be drafted?
    
*   Is the wording consistent with the applicable legal framework?
    
*   Have legal and payroll teams reviewed the same version of the employment contract?
    

* * *

# Common Questions Legal Counsel Should Ask HR

Before approving an employment contract:

*   Where will the employee perform the work?
    
*   What is the employee's nationality?
    
*   Does the employer fall within one of the recognised categories?
    
*   Is salary expressed in Turkish Lira?
    
*   Is any foreign currency reference included?
    
*   Does the contract contain exchange-rate adjustment wording?
    

* * *

# Compliance Workflow

```text
Business decides to hire

↓

HR prepares offer

↓

Legal reviews employment relationship

↓

Determine whether an exception applies

↓

Draft salary clause

↓

Payroll implementation

↓

Employment begins
```

* * *

# Red Flags

The following contractual wording should trigger additional legal review:

*   Salary expressed directly in USD.
    
*   Salary expressed directly in EUR.
    
*   Salary indexed to USD.
    
*   Salary indexed to EUR.
    
*   Exchange-rate adjustment clauses.
    
*   References to foreign currency without analysing whether an exception applies.
    

The article identifies these issues as central to the legal analysis.

* * *

# Internal Audit Checklist

Multinational employers should periodically review:

✓ Employment contracts

✓ Offer letters

✓ Executive compensation agreements

✓ HR templates

✓ Payroll instructions

✓ Exchange-rate adjustment policies

✓ Cross-border assignment documentation

✓ International compensation manuals

* * *

# One-Minute Summary

If you remember only five points from this guide, remember these:

1.  The issue is **how the employment contract determines salary**, not simply how salary is paid.
    
2.  Historically, the Labour Law and the Turkish Code of Obligations recognised foreign currency wage arrangements.
    
3.  Presidential Decree No. 85 introduced significant restrictions affecting employment contracts.
    
4.  Several recognised legal exceptions continue to exist.
    
5.  Every employment relationship should be analysed individually before the employment contract is signed.
    

* * *

# Why This Guide Is Different

Most articles discussing foreign currency salaries in Turkey simply answer:

> "Yes."

or

> "No."

The legal framework is considerably more nuanced.

This guide examines:

*   the historical development of Turkish employment law;
    
*   the interaction between the Labour Law, the Turkish Code of Obligations and Presidential Decree No. 85;
    
*   the recognised exceptions;
    
*   the constitutional discussion surrounding freedom of contract;
    
*   and the practical implications for international employers.
    

By bringing these topics together in a single resource, the guide is intended to help multinational companies, HR professionals and legal advisers better understand one of the most frequently misunderstood aspects of Turkish employment law.

* * *

## Son stratejik önerim

Bu içerik artık yaklaşık **10.000 kelime** seviyesinde ve bence yayınlanabilir durumda. Ancak benim bunu burada bırakmam.

Ben bunu **bir içerik kümesine (content cluster)** dönüştürürdüm.

Bu pillar page'den aşağıdaki 15 ayrı bloga link verirdik:

1.  **Can Foreign Employees Be Paid in USD in Turkey?**
    
2.  **Payroll Compliance for Foreign Companies in Turkey**
    
3.  **Presidential Decree No. 85 Explained**
    
4.  **Foreign Currency Indexed Salaries**
    
5.  **Turkish Labour Law Article 32 Explained**
    
6.  **Foreign Companies Hiring Employees in Turkey**
    
7.  **Employment Contracts in Turkey**
    
8.  **Payroll Guide for US Companies Hiring in Turkey**
    
9.  **Payroll Guide for UK Companies**
    
10.  **Payroll Guide for German Companies**
     
11.  **Payroll Guide for UAE Companies**
     
12.  **Hiring Remote Employees in Turkey**
     
13.  **Free Zone Employment Rules**
     
14.  **Employment Law Checklist for International HR Teams**
     
15.  **Top 25 Payroll Compliance Mistakes in Turkey**
     

Bu yapı sayesinde bu tek yazı, onlarca uzun kuyruklu sorguya otorite aktarır ve hem organik aramalarda hem de LLM'lerin bilgi çıkarımında çok daha güçlü bir merkez sayfa haline gelir.