As an amazing solution in Turkey and Europe, Payroll in Turkey offers a new perspective to companies and employees.
What is Payroll in Turkey ?
Payroll is an alternative to setting up a business in Turkey. It allows the self-employed to offer their services to clients by entrusting the administrative management to an Umbrella company in Turkey.
Payroll makes it possible to join the freedom of the business owner with the social protection of an employee. You can devote yourself fully to the performance of your services and the development of your professional activity.
This device attracts lot of professionals who want a simple, fast and secure solution to become freelance without the disadvantages.
In this article, we will try to answer all your questions about Payroll.
What are the advantages of Payroll in Turkey ?
Payroll in Turkey offers many advantages to payroll employees: Simplified management, social protection for the employee, a minimum salary paid monthly, reimbursement of professional expenses, plus support and access to a network of self-employed professionals. For the client company, Payroll in Turkey offers a clear legal framework.
Who can benefit from Payroll in Turkey ?
Payroll is open to anyone who has the qualifications to find their customers. It is intended for all non-regulated service traders. These are ones excluded from the Payroll system, trading (purchase and sale of goods) the regulated professions requiring an approval or the inscription with a professional order (lawyer, doctor, etc.) the trades of service to the person (childcare, cleaning, etc.).
What is a Payroll contract ?
A commercial service contract is signed between the payroll company and the client. An employment contract is signed between the payroll company and the employee.
What is the Payroll salary ?
At the end of each month, the payroll company transforms the turnover into net salary after deduction of its management costs, plus employer and employee contributions.
What is the social protection of a Payroll company ?
Any employee can take advantage of unemployment benefits in the event of termination of their employment contract. As an employee, you contribute to the same pension funds as any employee, and the Payroll in Turkey company guarantees the validation of your retirement funds.
Taxes and Breakdown
There are many taxes that employers must pay concerning payroll of their employees.
Companies must pay the TCE (total cost for employer) to the Payroll company.
This TCE is composed as below :
Gross Salary / Social Security Employee’s Part
Unemployment Employee’s Part / Income Revenue
Stamp / Tax Cumulative IR Tax Base
Net AGI included / Social Security Employer’s Part
Unemployment Employer’s Part / Total Cost for Employer
Each Payroll company based in Turkey applies management fees which cover:
- Preparation of the consultant’s file (payroll agreement)
- Preparation of job contract
- Establishment of the employment contract
- Managing invoices and recovering invoices from customers
- The preparation of pay slips
- Payment of compulsory contributions to the various organisations (sickness, old age, family allowances, supplementary retirement and provident insurance)
- Civil and professional liability insurance
Cost – An important but not decisive criterion
Payroll is a very competitive sector, and for good reason. The management rate applied by these companies can vary from 8% to 13%, with the ‘reasonable’ average being fixed at around 10%. Most of them apply a declining management rate based on the monthly amount.
However, when you choose a Payroll company, it is important not to decide solely based on the price but to identify the services included.
Beware also of companies with low management rates. They can hide costs or a multitude of options not included in the ‘basic package’.
In order to secure the system, all payroll companies must take out a financial guarantee with an establishment authorised to issue guarantees. This makes it possible to guarantee the payment of the sums due to the employee and social security contributions in the event of failure of the payroll company.
Payroll consultants have expenses relating to their activity.
There are two types of fees:
- Work expenses: These are costs such as travel, accommodation and meals …
- Non-billable costs (operating costs): These are costs related to the general activity of the consultant. They are not specific to the job, and include:
Costs related to various office supplies …
These costs do not appear on the invoice of the client company. They may however be taken into account by the Payroll company based in Turkey after validation of their eligibility.
Overtime earnings calculation in Turkey on holidays
Working time is 45 hours in Turkey. Working more than 45 hours is considered as overtime. Overtime working per hour is remunerated at one and a half times the normal hourly rate.
During the national and public holidays, employees don’t work and are paid full day’s. An other full day’s wage is paid if they work.
Holidays entitlement in Turkey
Regarding Article 53 (Turkish Labour Law), if an employee works for at least one year, he is entitled to paid annual leave. More informations on it are available on Turkish Labour Law.
1-5 years as an employee in the company = 14 days paid annual leave
5-15 years as an employee in the company = 20 days paid annual leave
+ 15 years as an employee in the company = 26 days paid annual leave
Through employment contracts these holidays can be modified.
New Year/1 January
National Sovereignty and Children’s Day (Ulusal Egemenlik ve Çocuk Bayramı) / 23 April
Labour Day (Emek ve Dayanışma Günü) / 1 May
Youth and Sports Day (Atatürk’ü Anma, Gençlik ve Spor Bayramı) / 19 May
Victory Day (Zafer Bayramı) / 30 August
Republic Day (Cumhuriyet Bayramı) / 29 October
Feast of Ramadan Aid al-Adha Ramazan ve Kurban Bayramı
Parental leave in Turkey
Employees who are working part-time work immediately after birth / adoption/
The insured employee who works after maternity leave or adoption leave (child under 3 years), may, if he / he has validated 600 days of contributions during 3 years before delivery / adoption, work part-time (50% of full time) for:
60 days for the 1st child,
120 days for the 2nd child,
180 days for the third and subsequent children.
The employee may, under certain conditions, be entitled to additional days:
30 days in case of multiple births,
360 days in case of disability of the child.
The subsidy is paid by unemployment insurance and corresponds to the daily amount of the gross minimum wage.
More informations on Payroll in Turkey and Turkish labour laws are available on our website.