Payroll Legislation, Payroll Process, and Outsourcing in Turkey: What Every Business Needs to Know
Payroll Legislation, Payroll Process, and Outsourcing in Turkey: What Every Business Needs to Know
Payroll Legislation, Payroll Process, and Outsourcing in Turkey: What Every Business Needs to Know
Managing payroll in Turkey involves navigating complex legislation, strict compliance rules, and ever-changing tax regulations. For foreign and local businesses alike, understanding the payroll legislation and implementing a smooth payroll process is crucial to ensuring compliance and employee satisfaction. This blog will cover the key aspects of Turkish payroll legislation, the payroll process, and how outsourcing your payroll can save time and reduce errors.
1. Payroll Legislation in Turkey
Turkey’s payroll legislation is governed by a combination of labor laws, social security regulations, and tax laws. Here are the main components you need to be aware of when managing payroll in Turkey:
A. Labor Law (4857 Sayılı İş Kanunu)
Turkey’s Labor Law No. 4857 governs employment contracts, working hours, annual leave, and termination rules. Key provisions include:
Standard Working Hours: 45 hours per week.
Overtime: Any hours worked beyond the standard working hours must be paid at 1.5 times the regular hourly rate.
Annual Leave: Employees are entitled to annual paid leave, with the number of days determined by their length of service.
B. Social Security Contributions (SGK)
Employers in Turkey are required to contribute to the Social Security Institution (SGK) for each employee. Contributions are shared between employers and employees and cover healthcare, pensions, and unemployment insurance.
| Contribution Type | Employer Contribution (%) | Employee Contribution (%) |
| Short-Term Insurance | 2% | - |
| Long-Term Insurance (Pension) | 11% | 9% |
| General Health Insurance | 7.5% | 5% |
| Unemployment Insurance | 2% | 1% |
| Total Contribution | 22.5% | 15% |
C. Income Tax
Income tax in Turkey is progressive, meaning that employees are taxed based on their income level. The income tax rates for 2024 are as follows:
| Income Range (TRY) | Tax Rate (%) |
| 0 – 110,000 | 15% |
| 110,001 – 230,000 | 20% |
| 230,001 – 870,000 | 27% |
| 870,001 – 3,000,000 | 35% |
| Over 3,000,001 | 40% |
Employers must withhold income tax from employees’ salaries and remit it to the Turkish Revenue Administration on a monthly basis.
2. Payroll Process in Turkey
The payroll process in Turkey involves multiple steps to ensure compliance with tax and labor laws. Here is an overview of the typical payroll process:
A. Collect Employee Information
To process payroll, businesses must first collect accurate employee information, including:
Full name and contact details
Tax Identification Number (TIN)
Social Security Number (SGK number)
Employment contract details (salary, working hours, and benefits)
B. Calculate Gross Salary
The gross salary is the agreed-upon salary before any deductions. In addition to the base salary, other components such as bonuses, overtime pay, and allowances (e.g., meal or transportation) should be included in this calculation.
C. Deduct Taxes and Contributions
Once the gross salary is calculated, the following deductions need to be made:
Income tax based on the employee’s income bracket.
Employee Social Security Contributions (SGK), which total 15% of the gross salary.
Unemployment Insurance contributions (1% from the employee).
D. Calculate Net Salary
After deducting taxes and social security contributions, the remaining amount is the net salary, which is paid to the employee.
E. Prepare and Distribute Payslips
Each employee should receive a detailed payslip showing the breakdown of their earnings, deductions, and net pay. This ensures transparency and helps employees understand their compensation.
F. Submit Reports and Payments to Authorities
Employers must submit monthly payroll reports to the Social Security Institution (SGK) and the Turkish Revenue Administration, detailing employee contributions, income taxes withheld, and unemployment insurance contributions.
3. Outsourcing Payroll in Turkey
For businesses looking to simplify their payroll management, outsourcing is a cost-effective and efficient solution. Outsourcing payroll in Turkey allows companies to stay compliant with local laws while focusing on their core activities. Here’s why you should consider outsourcing your payroll:
A. Save Time and Resources
Outsourcing payroll eliminates the need for an in-house payroll department, reducing administrative costs and freeing up time for your HR and finance teams to focus on strategic initiatives.
B. Ensure Compliance with Complex Regulations
Payroll regulations in Turkey are intricate and subject to frequent updates. Outsourcing your payroll to experts ensures that your business complies with all relevant tax, labor, and social security laws, reducing the risk of fines or penalties due to non-compliance.
C. Accuracy and Efficiency
Professional payroll service providers use the latest technology and software to handle payroll calculations, ensuring accuracy and preventing errors. This minimizes the risk of incorrect payments or miscalculations in tax filings.
D. Data Security
Outsourcing payroll to a reputable provider ensures that sensitive employee data is handled securely, reducing the risk of data breaches or non-compliance with privacy regulations.
Why Choose Özmen Mali Müşavirlik for Payroll Outsourcing in Turkey?
At Özmen Mali Müşavirlik, we specialize in offering comprehensive payroll outsourcing services tailored to meet the needs of foreign and local businesses in Turkey. Here’s why you should trust us with your payroll management:
Expertise in Turkish Payroll Legislation: Our team of certified public accountants (mali müşavir) has extensive knowledge of Turkey’s payroll laws, ensuring that your business remains compliant at all times.
Customized Solutions: We offer personalized payroll services designed to fit your company’s size and needs, whether you’re a startup or a multinational corporation.
Transparent Pricing: We provide clear and competitive pricing with no hidden fees, ensuring that you get the best value for your investment.
Full-Service Offering: In addition to payroll management, we provide tax advisory, social security registration, and employee benefits management, offering a one-stop solution for all your accounting needs.
Get in Touch Today!
If you’re looking to simplify your payroll management and ensure compliance with Turkish regulations, outsourcing your payroll to Özmen Mali Müşavirlik is the smart choice. Let our experts handle the complexities of payroll so you can focus on growing your business.
Contact us today to learn more about our payroll outsourcing services and how we can support your business in Turkey!
