Türkiye, which changed its name from ‘Turkey’ in June 2022, attracts many visitors each year, and some countries’ nationals are Visa-exempt; others can apply for an online e-Visa, while those not eligible for the e-Visa can apply for a Visa stamp at a local embassy or consulate in their home country. These Visas allow visitors 90 days for holidays or some business activities. Costs vary according to the government for those who are not Visa-exempt. There may also be extra charges from the Visa company applied through.
Companies expanding into Türkiye and onboarding their employees from home or elsewhere overseas require work documentation and ensure their staff are legal and compliant. However, sometimes bureaucracy slows down implementation updates to immigration laws or new systems. Foreigners must have a work Visa and work permit with few exceptions. Both employer and employee take part in the work visa/permit process.
Many companies expanding into new territory look towards a Professional Employer Organisation (PEO) and Employer of Record (EOR), such as Bradford Jacobs, to set up their business, recruit staff and operate payroll to save time and money. This includes acquiring immigration and work documentation. After 20 years of working in this area, we are aware of potential problems and have the experience to solve them. Here are some guidelines to assist you.
The different types of Visas and Work Permits for Türkiye
As with most countries, Türkiye protects its borders and requires documentation to enter, stay, and work there. Applicants need to be aware of the procedures as these differ between tourist and business Visas compared to work and study Visas. Also, passports must be valid for 60 days beyond the Visa’s validity whether holders have a Visa from the embassy (or foreign representation), an e-Visa or are Visa-exempt.
Tourist/Business: 10 categories including Tourism; Transit; Business Meetings; Conference; Festivals; Sports; Art
Official Visa: 2 categories
Student/Education: 7 categories
Work Visa: 7 categories including Employment; Assigned – lecturers/sportspeople/artists/Free Zone workers/journalists.
AMS Visa for Assembly, Maintenance and Service: Short-term, multi-entry Visa for 90 days in 365 days without needing a work permit.
Other purposes: 8 categories, including medical, tour operators, and family reunification.
Foreigners wanting to work in Türkiye require:
Work Visa to enter for work purposes.
A Work Permit also serves as a Residence Permit if sponsored by an employer.
This is the permission for the company to employ a foreigner and for the employee to work in Türkiye. Employees apply for the Work Visa through an embassy or consulate (or foreign representation) in their home country when they have an employment contract. The employer is also the sponsor and deals with the Ministry of Labour and Social Security (MLSS) regarding documentation and application for the Work Permit.
When the work permit is approved, the Ministry notifies the embassy abroad and issues the Work Visa allowing the employee to enter the country. However, the Turkish MLSS finalizes the permit and posts the Work Permit Card to the employer.
Work Permits are available for the following:
Under International Protection Law
Under Temporary Protection
Foreigners Abroad with an Employment Contract and Letter of Invitation OR Assignment Letter. The employer/sponsor can apply for the work permit while the employee applies for the Work Visa.
Foreigners in Türkiye who enter with an e-Visa and have a Tourist Residence Permit with more than six months validity can look for work, and the employer can apply for the work permit without the employee needing to contact the consulate.
Turkuaz (Turquoise) Card. Some of the eligible persons who qualify:
Available to highly qualified people regarding educational qualifications and professional work experience.
Investors: determined by the size of investment or exports generated.
Science and research professionals.
Note: Check to see if this permit is fully operational, as some Visa and permit changes and legal updates have noticed a lack of guidance and slow implementation.
Three classifications of Work Permits
Temporary Work Permits: These are applied for by the employer (the sponsor) for workers with an employment contract, generally for one year initially. However, this can be determined by the Ministry of Labour and Social Security depending on which city or location the individual is employed, as some areas are closed for residency. This can be extended up to two years, providing the employee does the same job for the employer. After three years of working legally in Türkiye, it can be extended for a further three years for the same job but for any legal employer.
Permanent Work Permits: Granted to persons who have legally lived in the country for eight years consecutively or have worked up to six years.
Independent Work Permit: Available to foreigners upon five years of continuous residence if their activities benefit the economy.
For companies expanding into the country and onboarding their staff from abroad, the Foreigner Abroad Work Permit, a Temporary Work Permit, applies. However, certain conditions must be met by the employer and employee.
Residence Permit: Is required by people who wish to stay in Türkiye for longer than 90 days. People with an employment contract and sponsoring employer receiving a Work Permit do not require the Residence Permit.
How to apply for Visas and Work Permits for Türkiye?
There are different routes into the Turkish workplace, but many companies sponsor their employees when bringing them from abroad on an employment contract when the following documentation is required:
A Work Visa to enter for work purposes.
A Work Permit which negates the need for a Residence Permit, enables the worker to live and work in the country.
The process starts at embassies and consulates abroad, with the employee requesting an interview through their online portal to initiate the Work Visa procedure and submit documentation. The Embassy issues a 16-digit reference number for the employee to give to the employer, who then offers the rest of the documents to the Ministry of Labour and Social Security, MLSS) within ten days. The papers must have been translated as necessary and notarised. When approved, the MLSS contacts the Embassy abroad and notifies the employee to collect the Work Visa. The Foreigner Work Permit Card is issued by the MLSS and posted to the employer’s address.
The employee enters Türkiye, and the employer activates the Work Permit Card. They pay fees and register the worker with the Social Security Institution regarding healthcare, benefits, and entitlements. Before day 20 in Türkiye, applicants must give their home address to their employer to be registered with a local Directorate of Populations Registry (NVI).
Documents needed for the application process of work documentation:
From the Employer for Work Permit
Letter of Petition on letterhead paper requesting the Work Permit and the application form – scanned for online application and a signed hard copy addressed to the MLSS.
Personnel application printed out and signed by both parties. If not available, the signed employment contract with all details of employment, salary, duties, and duration of work.
The Turkish Trade Registry Gazette excerpt shows the company’s shareholding and capital structure.
Profit and loss statement and last approved balance sheet notarized by an auditor or chartered accountant.
Certificate of incorporation.
Copy of employee passport translated and notarised, plus photo.
Copies of all educational qualifications and work experience relevant to the job – translated and notarised. Check if degrees or diplomas require authorisation by any Turkish Institute of Higher Education.
Authorisation for individuals to complete the work permit process online (Visa electronic signature).
From Employee for Work Visa
A passport valid for at least 90 days over the expiration date of the Visa PLUS a translated and notarised copy and blank pages for the Visa.
Application form for Work Visa.
Passport-styled biometric photographs.
Copy of the signed employment contract.
All relevant qualifications, work experience (if necessary), and a translated and notarised copy.
Petition Letter on letter headed paper from the employer, signed by an authorised person to act on behalf of the company detailing employment details, duties, and duration.
Proof of residency in the country applying from.
A clean Police report from the home country, PLUS the country of residence, if applicable.
Health insurance (may depend on the Embassy) but recommended until covered by the Social Security Institution (SSI).
Non-refundable Fees need to be paid by the foreigner for processing the Work Visa, the Work Permit and Residency, which is part of the Work Permit. The Work Visa is stamped in the passport. The Work Permit is sent to the employer’s address. The employee enters Türkiye.
The procedures can take four to eight weeks, depending on all the correct documentation.
Bradford Jacobs is a global leader in recruitment, payroll and taxation. For more than 20 years, we have ensured our clients comply with every aspect of taxation legislation wherever they operate worldwide. Our combination of local ‘know-how’ and global experience is vital for foreign companies moving into the Republic of Türkiye, and dealing with tax in Türkiye while overseas can be tricky and pose complications that would demand expert guidance.
The admin workload can weigh heavily on your business operations. Türkiye’s corporate tax regime is fluid, with rates above the standard 20% rate until 2023. Employers operating payroll must also comply with strict regulations regarding employees’ taxes and social security contributions.
Bradford Jacobs’ dedicated specialists take the burden off your shoulders while you focus on establishing your business in this exciting – but demanding – new territory. From locating the brightest talent to running your payroll, our Professional Employer Organisation (PEO) and Employer of Record (EOR) specialists are with you at every step.
Overview of Tax in Türkiye
Personal Income Tax (PIT):
There are five tax bands on employment income, starting at 15% on income up to TRY 32,000 (€6,085, US$6,195) with a top rate of 40% on the excess over TRY 880,000 (€167,360, US$170,380). Additionally, there are two bands for tax on non-employment income of 27% for earnings up to TRY 170,000 (€32,330, US$32,910) and 35% for the excess over that. There is no special tax regime for expats.
Social Insurance Taxes:
Employers generally contribute 20.5% of employees’ payroll and deduct 14% from employees’ earnings to remit to the Social Security Institution (SSI).
Corporate Income Tax:
The standard rate of 20% was increased to 25% for returns on earnings in 2021 and 23% for income generated in 2022 before returning to 20% for 2023, depending on legislation. The standard rate for the financial sector is 25%.
The standard Value Added Tax (VAT) rate of 18% is reduced to 8% for basic foodstuffs, publications (excluding online categories), pharmaceutical products, and 1% for some agricultural products and services. Digital Services Tax (DST) is 7.5% but can be reduced to 1% or increased to 15% on individual cases. Special Consumption Tax (SCT) applies various rates to petroleum, vehicles and luxury goods.
Withholding Tax (WHT):
Resident individuals pay 15% on dividends and 20% on royalties and fees for technical services. Non-resident companies and individuals pay 15% on dividends, up to 10% on interest payments and 20% on royalties and technical services fees.
Married couples are generally not permitted to file joint returns.
Employees’ tax is usually withheld and deducted at the source by the employer.
Apart from taxes deducted at source from the pay-as-you-earn payroll, individual tax returns are due by February 28 for trade income and by March 31 for all other cases.
Any tax due in addition to payroll deductions is paid in equal amounts, half at the time of filing and the balance within four months.
Taxable income includes bonuses and commission, plus benefits in kind with a value, such as cost of living and housing allowances.
Employment income liable for taxation is deducted in progressive rates from 15% to 40%.
Aside from payroll deductions, tax is also due on professional and business income, agriculture income, plus income from shares and property, for example.
Individuals are tax residents if they reside in Türkiye or intend to settle. If residency is unclear, individuals continuously in Türkiye for six months in a calendar year are considered residents. Residents are liable for the entire taxation liability.
Limited tax liability can apply to individuals who have no legal residence and do not reside in the country for more than six months. Limited liability also applies to those on temporary assignments which are in Türkiye for more than six months.
Employer’s Social Insurance and Statutory Contributions in Türkiye
Employer’s contribution to the Social Security Institution (SSI) is generally 20.5% of payroll, although, in some circumstances, this can be reduced to 15.5% and is calculated based on employment categories. Employers also contribute 2% to unemployment insurance.
Foreign companies expanding operations can opt-in for a subsidiary entity set up in Türkiye and establish a foothold for ‘testing the market. This can be a risky move – costly both in time and money – with no guarantee that the effort and financial investment will bring success. Many international companies set their sights on the Republic of Türkiye, a nation at the crossroads of Europe and Asia with coastlines on the Black Sea and the Mediterranean – a prime location for further International Expansion.
The most popular choice for opening a subsidiary in the private sector is a limited liability company, which operates under the new Turkish Commercial Code (TCC). With the subsidiary in place – essential for hiring staff and managing payroll – the parent company can register employees with the Social Security Institution (Sosyal Güvenlik Kurumu, SSI or SGK) and the Turkish Revenue Administration (Gelir İdaresi Başkanliği GİB). Beware! If the move fails, companies face the added costs and hassle of closing their operation, selling property and paying off employees. These are unwanted distractions while you also concentrate on building business in the home territory. Expanding overseas is a significant step.
The sensible alternative is to use a Professional Employer Organisation (PEO) and Employer of Record (EOR), such as Bradford Jacobs, to locate the finest local talent and administer your payroll in Türkiye. Your company will be up-and-running in days rather than weeks or months without any risks.
How to Set Up a Turkish Subsidiary?
The first decision for foreign companies planning a move into the Turkish economy is which business structure best suits their plans. The typical choice in the private sector is to open a subsidiary as a limited liability company, signified by the suffix Ltd. Şti. which operates under the new Turkish Commercial Code (TCC).
Establishing a subsidiary is essential before hiring staff and running their payroll, and since implementing the new TCC, all registration has been handled through the Central Registration System (Merkezi Sicil Kayit Sistemi, MERSIS).
Registration and other procedures include:
Register with MERSIS and check the availability of a unique company name; obtain a tracking number for registration and compile the subsidiary’s Articles of Association according to the template from MERSIS.
Attend Trade Registry Office or public notary to have Articles signed by shareholders, witnessed and notarized. The founders’ declaration is to be signed by the founders, witnessed and notarized.
The minimum share capital is TRY 10,000 (€548, US$556). However, 0.04% of the share capital must be deposited into a bank account as a fee for the Turkish Competition Authority (anti-monopoly fee).
A corporate bank account is needed before starting the registration process.
Provide all required and notarized documents to the Trade Registry Office with the MERSIS tracking number, and with the Registry’s approval, the company becomes a legal entity.
Registration of business address with MERSIS and the formation of the company must be published in the Trade Register.
Signatures of individuals authorized to represent the company are to be verified by a public notary or the Turkish Consulate.
The company must register with the Social Security Institution (Sosyal Güvenlik Kurumu, SSI or SGK), which can be done through MERSIS.
Register with the Turkish Revenue Administration (Gelir İdaresi Başkanliği GİB) to obtain the Tax Identification Number, TIN (Vergi Numarasi).
Once the subsidiary is incorporated, the new company must follow other procedures before it can operate payroll for its staff. These include:
At the latest, employees must be registered with the SSI one day before the first day of employment. Newly-established companies have one month after incorporation to register employees.
Register employees with the Revenue to verify their TIN.
Foreigners in Türkiye for more than six months must obtain a TIN via MERSIS.
Benefits of Setting Up a Turkish Subsidiary
The benefits of setting up a subsidiary in Türkiye include having a separate legal identity from the parent company and being treated the same as a local operation. The parent company’s liability is generally restricted to the invested share capital; neither is it responsible for any debts or liabilities of the subsidiary. Partners or managers are generally liable only for the value of their contribution, although they can be liable for public debts that the company cannot pay.
Türkiye’s location at the crossroads of Europe and Asia is ideal for further expansion throughout the region – both east and west – adding to the attraction for foreign companies to establish subsidiaries. Additionally, the subsidiary can ‘test the market’ by following its business ideas and entering into different areas of operation for the owning company. The subsidiary can also draw up its contracts and agreements with clients.
Other benefits for a subsidiary entity set up in Egypt include the following:
Easier to obtain potential benefits and incentives and enter into contracts with other Turkish companies.
More impact with clients and suppliers, as subsidiaries imply more permanency than branches.
Employees feel there is more stability and job security than from being with a branch.
However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Türkiye. By working with Bradford Jacobs and using our global Professional Employer Organisation (PEO) networks, your staff can be sourced, placed in their roles and be up and running within days instead of months. All the payroll, taxation and compliance difficulties are under control thanks to our Employer of Record (EOR) services. Meanwhile, your employees are totally under your control.
Subsidiary Laws in Türkiye
Subsidiaries established in Türkiye operate under the new Turkish Commercial Code (TCC) of 2012, bringing corporate legislation more in line with the European Union, of which Türkiye is an associate member. Among changes, the new Code allows a board of directors to comprise one individual instead of the previous minimum of three.
Incorporation and registration procedures for a limited liability company are generally completed through the Central Registration System (Merkezi Sicil Kayit Sistemi, MERSIS), which has been operational since the new Code came into force.
Incorporation procedures include the following categories:
Registration and Documentation:
Online via MERSIS, check availability of unique name, obtain MERSIS tracking number for incorporation and produce Articles of Association by the MERSIS template
Attend Trade Registry Office or public notary to have Articles signed by shareholders and witnessed; founders’ declaration to be signed by founders
Please provide all required and notarized documents to the Trade Registry Office with MERSIS tracking number, and with their approval, the company becomes a legal entity
Register with the Turkish Revenue Administration (Gelir İdaresi Başkanliği GİB) to obtain the Tax Identification Number (Vergi Numarasi, TIN)
Signatures of individuals authorized to represent the company are to be verified by a public notary or the Turkish Consulate
Accounts and Taxation:
The minimum share capital is TRY 10,000 (€548, US$556). However, 0.04% of the share capital must be deposited into a bank account as a fee for the Turkish Competition Authority (anti-monopoly fee)
A corporate bank account is needed before starting the registration process
In 2018, Law 585 abolished the need for an LLC to deposit 25% of the minimum share capital into the bank account during the first 12 months. However, 100% of the money is required within the first 24 months of operation. The bank states how much has been deposited into the appropriate trade registry office account.
The standard liability for Corporate Tax is 20%. However, the rate on income was 25% in 2021 and 23% in 2022 before reverting to 20% in 2023, depending on the legislation
Returns must be filed monthly, quarterly and annually
Companies can have a board of directors with one member instead of three before the new TCC
It is mandatory to hold a general meeting within three months of the end of the financial year
Any shareholder can ask for an audit if they think it necessary
Directors’ meetings need only be held as required
Management must maintain a shares ledger and minutes of meetings.
The Republic of Türkiye, which officially changed its name from ‘Turkey’ in June 2022, lies at the crossroads of Europe and Asia as a bridge between the two continents, with a regional prominence that makes it an obvious target for International Expansion. The bulk of Türkiye’s landmass is in West Asia, with a Black Sea coastline and borders with Georgia, Armenia, Azerbaijan (just 13 kilometres), Iran, Iraq and Syria. In its northwest corner, Türkiye has European borders with Greece and Bulgaria in the Balkan Peninsula, while the southern coastline runs alongside the Mediterranean and Aegean Seas.
Türkiye is within three hours by air of most major European cities and logistically well-placed for expansion into West Asia and further east. It is an associate member of the European Union and a member of the European Customs Uni, and the G20 group, bringing together the world’s largest economies. International memberships include the United Nations, UNESCO, UNICEF, the World Bank, World Health Organisation, NATO and the Organisation for Economic Cooperation and Development. It also has a free trade agreement with the European Free Trade Association (EFTA). An Islamic nation, Türkiye’s memberships also include the Organisation of Islamic Cooperation and the Islamic Development Bank.
The World Bank identifies Türkiye as needing more Foreign Direct Investment (FDI) to improve global competitiveness and keep pace with other developing economies. Türkiye’s growth of 11% in 2021 was the highest among G20 nations, but the Lira was hit by depreciation, with the economy suffering inflation of over 60% for the year up to March 2022. Various sectors displayed growth, however. The banking sector expanded 24% year-on-year to the first quarter of 2022, and the ICT sector by 16%. The services sector is expected to see two-thirds of growth through 2022-23, fueled by increased tourism.
And there are a growing number of incentives. Türkiye provides cities with an ‘investment incentive’ environment for different sectors to encourage hi-tech investment, support business clusters and equalise regional differences. Incentives include VAT and customs duty exemption, tax incentives and interest, dividends, and insurance support.
Starting a business in Türkiye
Foreign companies planning to build on this potential for their international expansion plans can move by opening a subsidiary – which is essential for hiring staff in the country and running payroll. The popular choice is to open a limited liability company (Ltd.Şti.), which operates under the Turkish Commercial Code (TCC).
Since the TCC was implemented in 2012, registration has been handled through the Central Registration System (Merkezi Sicil Kayit Sistemi, MERSIS). Procedures and requirements include:
Obtain a tracking number from MERSIS.
Check the availability of the proposed company name with MERSIS and complete the Articles of Association to fit the MERSIS template.
Shareholders must sign the Articles of Association, witnessed and notarized, along with the founders’ declaration.
The minimum share capital of TRY 10,000 (€548, US$556), of which 0.04% must be deposited with the Turkish Competition Authority.
Supply completed and notarized documents, with MERSIS tracking number, to the Trade Registry Office for confirmation the company is now operational.
Publish company formation in the Trade Register
Provide notarized signatures of individuals authorised to represent the company and proof of registered business address.
Register with the Social Security Institution (Sosyal Güvenlik Kurumu, SSI or SGK), which can be done through MERSIS.
Expanding your business into Türkiye
Opening a business in any overseas territory brings issues. Moving staff across the world involves complications surrounding Visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination and severance? Drawing up an expansion blueprint is not enough. Your business plan will have to deal with all these issues.
Türkiye is an attractive target for foreign investment, but there are always considerations regarding compliance with relevant legislation. In Türkiye, this revolves around the Labour Code, which lays down the obligations of employers and the protected rights of their employees. There are other issues, too. Where will you find manufacturers, offices and distributors?
Around 58 countries will have a business presence in Türkiye in 2022, with the US numbering 600 companies and China more than 350. It has 22 “free trade agreements”. It is ideally located, 95% in Asia and 5% in Europe, bordering the Black, Aegean and Mediterranean Seas, giving it a consumer market ‘reachability’ of around one billion. It has a stable developing economy and a rising middle class, with 50% of the population under 30 offerings a qualified labour force.
Many companies are attracted to having one foot in the West and another in West Asia, primed for commerce. Most small and middle-sized enterprises (SMEs) choose the limited liability subsidiary (LLC), whereas larger corporations might take the Joint-Stock Company (JSC) option. Setting up the company can only be achieved with a ‘legal address’ in Türkiye, whether a physical office – rented or purchased – or a virtual office, as this is registered with the official database of the Trade Registry. Locating an office comes before registering your business, as the office address is a registering requirement. Renting an office requires a Tax ID number, and the rent, lease or purchasing payment for the office should be debited through the business bank account, not a private one. The following information may assist you:
Istanbul is the city of choice for professionals, the financial hub and the largest city, and boasts top-quality conference centres and hotels. It has a booming jobs market and is a dynamic city for exports and imports, the service and food sectors, and manufacturing. Expatriates tend to be found in larger towns and on the Aegean and Mediterranean coastline.
Ankara is the capital and administrative centre. As with Istanbul, it is designated to be in Region 1 for ‘investment incentive support’, which means a minimum of around TRY 1 million capital funding to receive VAT, tax, and customs duty benefits. The main areas for investment are real estate, tourism, and industry. The city has a modern outlook, a well-developed transportation system, infrastructure and an international airport. The attraction for residents is the proximity of educational, health and government organisations and sophisticated residential areas such as Çankaya.
Antalya shines in the agricultural sector and has excellent tourism potential.
Izmir is a favourite among tourists and is the eco-friendly focus for many investors with the instigation of the Blue Flag Coordination Unit.
Bursa has seven ports, 18 industrial zones, a Free Zone (FZ) and a Technology Development Zone and is the fourth city in Türkiye for economic growth with investment in automotive, metal working machinery and furniture with growth in the rail, aviation and defence systems.
Kocaeli is known for its crucial industrial sector but also sees investments in textiles, agriculture, food, animal husbandry and manufacturing factories which can produce just about anything.
Business Clusters in Türkiye include:
The industrial cluster, SAHA for Defense, Aerospace and Space, as of 2022, is the largest in Europe, with over 800 companies and 22 universities. New developments exist in electronic warfare, land vehicles, munitions, and naval platforms.
In 2022, Teknopark Istanbul, established in 2010, introduced a funding campaign to support start-ups in the technology sector under the auspices of the Defense Industry Enterprise (SSB) and Istanbul Chamber of Commerce (ITO). It hosts over 400 companies and has initiated more than 2,600 national projects.
Free Zones in Türkiye
There are more than 21 Free Zones in Türkiye hosting over 1,900 companies – 500 being foreign-owned.
Preferential tax, customs duty and VAT rates and government incentives.
Promote international trade and increase exports.
Reducing the red tape for a business-friendly and flexible climate.
Establish better distribution channels and flow of merchandise to make businesses more competitive.
Have access to a larger pool of labour with appropriate skills.
Maximise ideas, knowledge, research, and development opportunities.
Ideal surroundings for setting up a new company.
Some Turkish Facts
Capital – Ankara.
Population – 84.1 million.
Regions – Geographical regions are Marmara, Black Sea, Eastern Anatolia, Southeast Anatolia, Mediterranean, Central Anatolia, and Aegean.
Official language – Turkish.
Economy – US$810 billion (2021), 21st globally.
Leading sectors by GDP – (approx.) Services 60%, industry 32%, agriculture 7%.
Primary exports include – Vehicles, machinery, computers and electrical equipment, gems and precious metals, clothing and accessories, iron, steel, plastics, and mineral fuels, including oil.
Leading imports include – Mineral fuels, machinery, vehicles, organic chemicals, gems and precious metals, pharmaceuticals and aluminium.
Main trading partners – Germany, UK, Italy, Iraq, US, Russia and China.
Government – Unitary state and constitutional republic under a presidential representative democracy.
Currency – Turkish Lira (TRY).
Advantages and Challenges when entering the Turkish Market
The advantages of expanding into the Turkish market include the following:
Location: Bridging Asia and Europe, Türkiye is also a gateway to the Middle East, North Africa and Central Asia. The internal Sea of Marmara links the Black Sea to the Aegean and Mediterranean through the Bosphorus and Dardanelles Straits.
Logistics: Geographical location ideal for expansion into regional markets.
Business: The World Bank’s final ‘ease of doing business report in 2020 improved its rating to 33rd out of 190 nations.
Workforce: Well-educated and skilled, boosted annually by graduates from over 200 universities, with Europe’s second-largest workforce of 32 million and a younger population than any European nation.
Research and Development: Incentives have attracted multinationals such as Ford, Panasonic and Microsoft to establish R&D centres.
Challenges of expanding into the Turkish market include:
Bureaucracy: Inconsistent or contradictory approach to policies; lack of transparency in tenders; unpredictable legal framework. It can take nearly 18 months to enforce contracts and over three years to deal with insolvency issues in the courts.
Business Culture: Establishing working relationships can be more prolonged and unstructured compared with how Western businesspeople are used to operating.
Disparity: Regional variations in income, and spending power, with the best options in the country’s west.
Labour market: Employees with the best education and skill sets are concentrated in the three largest cities, Istanbul, Ankara and Izmir.
Construction: The World Bank rated Türkiye 142nd out of 190 nations for obtaining construction permits, which involves at least 20 procedures.
Taxation: Resident companies must make at least 15 payments yearly, and there are no unified reporting standards.
Companies extending their operations into Türkiye need a complete grasp of Turkish employment contracts. A successful business largely depends on its employees. By creating work contracts that include the right terms and benefits there will be no misconception and the perfect work-life balance can be created for your workforce.
Thanks to our Professional Employment Organisation (PEO) and Employer Of Record (EOR) services, we can provide compliant labour contracts for your employees in Türkiye, including local benefits. Our team keeps track of Turkish laws and regulations daily to be duly aware of updates that can be implemented in working contracts and to ensure a smooth entry for your business into the Turkish economy.
The different types of Turkish Employment Contracts
Under the Labour Code and Code of Obligations, a written contract is not mandatory except in specific instances. In the absence of a written contract, the employer must provide a written agreement within two months stipulating a description of the role, daily and weekly working hours, salary and payment schedule, and termination conditions.
Open-ended employment contracts: The Labour Code imposes no restrictions on the duration of indefinite-period contracts.
Written contracts must be provided in these instances:
Fixed-term contracts of at least one year, which can be renewed only once
Contracts with a non-compete clause
Contracts with foreigners
Contracts for on-call work, teleworking with the team leader of a team working group.
Temporary employment contract
Probation period employment contracts: Maximum two months but can be doubled by a Collective Bargaining Agreement (CBA).
Collective Bargaining Agreements: These must be complied with by employers and can be negotiated between trade unions, employers’ unions or individual employers and can improve the terms of statutory minimums. CBAs can apply to specific sectors, such as mining, steel production and agriculture. Where an individual contract exceeds the terms of a CBA, the contract’s terms take precedence.
Turkish Employment Contracts Requirements
When foreign companies plan to expand into the Turkish economy and employment market, the top of the ‘to-do’ list is deciding which business structure best suits their plans. The typical choice is to open a subsidiary as a limited liability company (Ltd. Stí.), which operates under the new Turkish Commercial Code (TCC). This company form generally offers protection against liability both for the parent company and its shareholders.
It is essential to open a subsidiary in Türkiye if companies intend to hire staff and operate their payroll. In addition to strict registration procedures via the Central Registration System (Merkezi Sicil Kayit Sistemi, MERSIS), employers face other considerations when hiring, including:
Written employment contracts are legally required in the case of employing foreigners; fixed-term contracts of at least one year’s duration; probation periods; those with a non-competition clause; on-call, teleworking and temporary workers
Where written contracts are not mandatory, employers must provide a written agreement within two months of starting work. The agreement must detail working conditions and hours, salary and payment schedule, and termination conditions.
Probation periods are generally for two months but can be extended to four months by CBAs.
Written contracts must be in Turkish if both sides are Turkish. Otherwise, they can be drafted in dual languages according to the nationality of either party. The Turkish version holds in case of disputes.
There is a more straightforward option. Once Bradford Jacobs’ PEO recruitment networks have located the best talent for your company, we step in to steer you through Turkish employment contracts.
Employee benefits in Türkiye come under the Labour Code, the Code of Obligations, and the Constitution. Various other Codes apply to specific areas of employment, including social insurance, health and safety and trade unions. Employment legislation applies equally to Turkish nationals and foreigners.
When expanding your company’s presence in a new country, you must ensure compliance with your employment contracts and benefit guarantees. Foreign companies hiring employees in Türkiye must operate within this complex framework of legislation and collective agreements that provide safeguards and guarantees for the workforce.
Foreign companies’ responsibilities reach beyond simply complying with tax, social security, and payroll regulations. Failure to comply with specific rules applying to benefits and entitlements runs the risk of fines and sanctions. Employers must have a firm grasp of what is guaranteed for their employees, which will affect the employer-employee relationship. This is where Bradford Jacobs points you in the right direction, drawing on over 20 years of experience as a Professional Employment Organisation (PEO) and Employer of Record (EOR).
What are the Compensation Laws in Türkiye?
The Constitution of Türkiye, the Labour Code and the Code of Obligations are the primary legislation covering the employer-employee relationship and workers’ rights to compensation, benefits and entitlements. Other Codes also affect specific employment areas. Statutory minimums can also be affected by trade unions and Collective Bargaining Agreements (CBAs). These agreements can improve statutory minimums but not reduce them.
National Minimum Wage (NMW): In July 2022, the NMW was raised for the second time in six months to combat inflation that had reached 74% in May and a 20% drop in the value of the lira since January. The new monthly minimum was TRY 5,500 (EUR 300, USD 306).
Sick Leave and Benefit: Employers are under no statutory obligation to pay sickness or injury pay to employees beyond the second day of incapacity, after which benefit is paid by the Social Security Institution (SSI or SGK) after a doctor has provided a medical certificate. Benefit usually equates to two-thirds or half of the daily gross wage, depending on the type of illness or injury.
Working Hours and Breaks: Under the Labour Code’s Working Time Regulations, regular working hours cannot exceed 45 a week. Hours are usually divided equally between working days unless agreed otherwise, in which case no single working day can exceed 11 hours. The Code stipulates minimum unpaid breaks: 15 minutes for working up to four hours, 30 minutes for between four and seven hours, and one hour for working over seven-and-a-half hours. Part-time, on-call and remote working are also covered by the Labour Code and Code of Obligations and operate by mutual agreement between employer and employee.
Overtime: Restricted to a maximum of 270 hours per year under the Overtime Regulations Code, overtime pay depends on the employee’s typical working week. Employees working 45 hours per week receive 50% above their regular hourly rate for extra hours. Those generally working fewer than 45 hours receive 25% above the standard hourly pay until they exceed 45 hours when the 50% extra applies.
Paid Vacations: Employees who have worked for more than one year, including any probationary period, qualify for the following entitlement:
One to five years – 14 days
Five to 15 years – 20 days
More than 15 years – 26 days
Employees under 18 years old or over 50 years must have a minimum of 20 days’ paid leave
Public Holidays: Paid vacation allowance does not include the recognized public holidays, which are extra paid days off for employees. Moon sightings determine Islamic holidays. The dates of two official holidays celebrated within Islam, Eid-al-Fitr and Eid-al-Adha, vary between years. Eid-al-Fitr marks the end of the month-long Ramadan, while Eid-al-Adha marks the end of the Hajj. The national holidays in Türkiye are:
New Year’s Day, January 1
National Sovereignty and Children’s Day, April 23
Labour Day, May 1
Youth and Sports Day, May 19
Democracy and Freedom Day, July 15
Victory Day, August 30
Republic Day, October 29
Maternity /Paternity / Leave and Benefit: Under Article 74 of the Labour Code, statutory maternity leave is 16 weeks, generally split equally before and after the due date. In multiple births, an extra two weeks is taken before the due date. When a doctor verifies the employee’s good health, they can work up to three weeks before the due date, with the unused leave added to the post-natal period. Employers are not legally required to pay benefits, with employees guaranteed two-thirds of their regular salary from the SSI. Multiple births entitle the mother to an extra six months’ unpaid leave, which the spouse can share. This also applies when adopting a child under three years old. Either parent can switch to part-time work up to two-thirds of standard working time until the child is three years old, but only one can take this option. Fathers receive five days of paid paternity leave from the SSI.
Discrimination: In the workplace, the Labour Code generally prohibits discrimination between male and female employees regarding wages, type of role, promotion, equal opportunities and qualifications. Employers also need verifiable justification for treating differently full- and part-time employees. Beyond this, the Labour Code bars discrimination based on language, race or ethnicity, political or philosophical opinions or beliefs, maternity, membership or non-membership of trade unions.
Termination / Severance / Redundancies: The Labour Code allows termination for cause under specific categories – long-term absence due to ill health; immoral, malicious and dishonourable conduct; force majeure; lack due to arrest or detention. Termination with a cause does not require notice. Still, the employee is entitled to any accrued rights from the employment contract, and severance may be due unless dismissed for immoral, malicious and dishonourable conduct. Under the Labour Code, different provisions apply regarding job security depending on whether companies employ more than 30 employees and whether the employee has more than six months of seniority. Employers and employees can terminate mutually with a settlement agreement.
Labour Code regulations regarding severance are complex but apply only if the employee has worked for more than one year with the employer. Where severance applies, employees receive one month’s salary for each year of work, capped at TRY 10,848 (€592, US603) for each month as of July 2022, with the rate amended twice annually. Fines apply for non-compliance.
In the case of collective redundancies, regulations apply in the following circumstances:
At least ten redundancies in the workforce between 20 and 100
10% of employees in a workforce between 101 and 300
at least 30 employees in a workforce of 301 or more
In these cases, the employer must notify the trade union, where applicable, the provincial directorate of the SSI and the Employment Agency at least 30 days before the due date of redundancies.
Notice Periods: There is no requirement for notice periods if termination is with just cause as defined by the Labour Code. In another case, the following minimum periods apply unless improved contractually or by CBAs:
Up to six months’ employment – two weeks
Six months to 18 months – four weeks
18 months to three years – six weeks
More than three years – eight weeks
Payment instead of notice is allowed.
Note: The social insurance system in Türkiye is managed by the Social Security Institution (Sosyal Güvenlik Kurumu, SSI or SGK), which operates under the Social Security and Health Insurance Law (GHI).
Guarantees and Restrictions on Employee Benefits in Türkiye
Employee benefits in Türkiye are guaranteed by a combination of the Labour Code, the Code of Obligations and various other Codes and statutes. Minimum mandatory benefits can be improved by contracts or Collective Bargaining Agreements (CBAs), but such arrangements cannot undercut statutory minimums. Guaranteed benefits include:
Maternity Leave and Benefit: Article 74 of the Labour Code guarantees a minimum of 16 weeks, generally split equally before and after the due date. Employees are guaranteed two-thirds of their salary from the Social Security Institution (Sosyal Güvenlik Kurumu, SSI or SGK), although employers have no legal requirement to pay benefits.
Working Hours and Breaks: The Labour Code’s Working Time Regulations restrict working hours to 45 a week, with a maximum of 11 hours in a single day if the hours are not spread equally between working days. The Code stipulates minimum unpaid breaks: 15 minutes for working up to four hours, 30 minutes for between four and seven hours, and one hour for working over seven-and-a-half hours.
Paid Vacations: Employees who have worked for more than one year, including any probationary period, are guaranteed the following entitlement: One to five years – 14 days; five to 15 years – 20 days; more than 15 years – 26 days; employees under 18 years old or over 50 years must have a minimum of 20 days’ paid leave.
Maternity Leave: The employee must have a doctor’s certificate confirming the anticipated due date and have paid at least 90 days of social security payments in the year preceding the due date.
Unemployment Benefit: Claimants must have had an employment contract for at least 120 days before termination; have paid unemployment premiums for a minimum of 600 days over the previous three years; have applied to the relevant ISKUR Unemployment Office within 30 days of termination, which must have been involuntary on the part of the employee.
Social Security in Türkiye
The Social Security Institution (Sosyal Güvenlik Kurumu, SSI or SGK) administrates the social insurance system in Türkiye and operates under the Social Security and Health Insurance Law (GHI). The health program provides reimbursement for such preventative, diagnostic and remedial procedures. The SSI also contributes to the cost of medicines and treatments.
The system is funded by contributions from employers, employees and federal funds at rates governed by employment categories. Employers generally contribute the equivalent of 20.5% of employees’ payroll. Employees contribute 14% of their salary, of which 9% goes to disability, retirement and life insurance, with 5% to general health insurance. In addition, employers contribute 2% to unemployment insurance and employees 1%. Generally, individuals must contribute for a minimum of 30 days to become eligible for the scheme.
Finding Top Talent and recruiting in Türkiye can bring potential tripwires for companies taking steps to build their international profile. International companies targeting Türkiye for expansion and needing to recruit top talent for their plans must unravel significant amounts of red tape and strictly-applied legislation protecting employees’ rights and entitlements.
In Türkiye, employment legislation is primarily covered by the Constitution and the Labour Code, with statutory laws applying equally to Turkish and foreign nationals. Additionally, the Code of Obligations came into force in 2012, and many Codes apply to other areas of employment law. These cover social insurance, foreigners’ work permits, collective bargaining and workplace health and safety, among different categories. Employers must know that legislation applies statutory minimums to their employees’ compensation and benefits. These can also be changed by trade unions and Collective Bargaining Agreements (CBAs), which can improve statutory minimums but not reduce them.
These complications highlight that recruiting in Türkiye is not straightforward, especially for foreign companies unfamiliar with the employment market. Employers must also employ five times as many Turkish workers as foreign workers (per location) unless they have applied for an exemption. This is where Bradford Jacobs’ global experience is vital for taking the smartest recruitment route into Türkiye. Bradford Jacobs’ platforms as a Professional Employer Organisation (PEO) have worldwide reach and include a total understanding of the complexities of the Turkish employment market. You can trust Bradford Jacobs to put the brightest talent in place for your company, preferably by recruiting from in-country.
Recruiting in Türkiye
Foreign companies finding their way through the recruitment process in Türkiye must cope with multi-layered bureaucracy and employment laws. These are weighted towards protecting the rights of employees – and are strictly applied by the authorities. Employment legislation is based on a mix of the Constitution of Türkiye (which officially changed its name from ‘Turkey’ in June 2022) and the Labour Code. A series of supplementary Codes apply to Work Permits for Foreigners, Collective Bargaining Agreements (CBAs) and Workplace Health and Safety, as examples.
The recruitment process is the first stage of making your company operational and competitive in Türkiye. However, complications surround moving staff in and obtaining residence permits and work visas. To avoid these issues, knowing where to locate the finest recruits for your company’s International Expansion is vital.
Once recruited and onboarded, employers must comply with various procedures to ensure employees can legally work in Türkiye. The recruitment and onboarding process continues with these responsibilities:
Registering employees with the Social Security Institution (Sosyal Güvenlik Kurumu, SSI or SGK) one day before the first day of employment at the latest. Newly-established companies have one month after incorporation to register employees.
Employees must be registered with the Turkish Revenue Administration (Gelir İdaresi Başkanliği GİB).
Verifying employees’ national identity number doubles as their Tax Identification Number (TIN). Foreigners in Türkiye for more than six months must obtain a TIN via the central taxpayer registry.
Employees’ Legal Checks in Türkiye
Pre-hire checks are not subject to any specific legislation. They are commonly undertaken, but the candidate must permit those relating to criminal, credit and health background, political beliefs or memberships or ’sensitive’ personal data. Non-sensitive data, such as educational and work experience, can generally be obtained without the applicant’s consent, as employers can rely on this being necessary to ascertain suitability for the role.
Basic Facts when Recruiting in Türkiye
The main elements of legislation governing employment law in Türkiye are the Constitution, the Labour Code and the Code of Obligations. In addition, other Codes cover specific areas such as social insurance, foreigners’ work permits and workplace health and safety.
Collective Bargaining Agreements (CBAs) and employment contracts can also improve statutory minimums under the law. Employers must take account of these basic facts on hiring when onboarding staff in Türkiye. They include the following:
Employees must be registered with the Social Security Institution (Sosyal Güvenlik Kurumu, SSI or SGK) one day before the first day of employment at the latest and with the Turkish Revenue Administration (Gelir İdaresi Başkanliği GİB).
Written employment contracts are legally required when employing foreign employees; fixed-term contracts of at least one year’s duration; probation periods; those with a non-competition clause; on-call, teleworking and temporary workers.
Where a written contract is not mandatory under the reasons above, employers must provide the employee with a written agreement within two months of starting work. It must detail working conditions and hours, salary and payment schedule, and termination conditions.
Probation periods are generally for two months but can be extended to four months by CBAs.
Written contracts must be in Turkish if both parties are Turkish. Otherwise, they can be drafted in dual languages according to the nationality of either party. The Turkish version prevails in case of disputes.
After hiring and onboarding, employers must comply with the requirements of the Labour Code, Code of Obligations and other applicable Codes. Statutory minimum standards include wages, sick leave, working hours, maternity allowances, paid vacations, termination and severance, notice periods and social insurance payments. All of the statutory minimums can be improved by contracts or CBAs. Examples include the following:
Working hours are restricted to 45 a week under the Labour Code’s Working Time Regulations. Hours are usually divided equally between five working days unless agreed otherwise, in which case no single working day can exceed 11 hours.
Employees working 45 hours each week receive 50% above their regular hourly rate for extra hours. Those working fewer than 45 receive 25% extra until they exceed 45 hours when the 50% extra applies. Overtime cannot exceed 270 hours in a year under the Overtime Regulations Code.
Statutory maternity leave is 16 weeks, usually split equally before and after the due date/birth. If the employee’s good health is medically certified, they can work up to three weeks before the due date, taking unused leave in the post-natal period.
The Turkish work culture is complex. The Republic of Türkiye officially changed its name from ‘Turkey’ in June 2022 (as now recognised by the United Nations), but that did not alter its prime geographical location at the crossroads of Europe and Asia. Its location is a massive bonus for international companies and a major attraction for foreigners wanting to experience job opportunities and the culture.
Türkiye is mainly located in Western Asia, with a small northwest area in the Balkan Peninsula across the inland Sea of Marmara bordering Bulgaria and Greece. Türkiye has a Black Sea north coast and a southern coastline on the Aegean and Mediterranean Seas. The nation’s east has borders with Georgia, Armenia, Azerbaijan and Iran; the southern borders are Iraq and Syria.
Türkiye is seen as a bridge between Europe and Asia, within three hours by air of most major European cities and logistically well-placed for expansion into West Asia and further east. Incoming expatriates – who need an employment contract and job offer to apply for work permits and visas – will be entering a nation proud of its history and heritage and virtually 100% Muslim. Three-quarters of the population is Turkish, close to 20% are Kurdish, with the remainder is a mixture of other minorities.
Foreigners also have to accept that the authorities are resistant to foreigners taking positions that could be filled by a national, so the typical employment routes for expatriates are teaching, tourism or with one of the many multi-nationals. Once past these barriers, foreigners will find Turks are friendly, welcoming, polite and hard-working.
The Basics of the Turkish Work Culture
Language: Turkish is the official language, and although English is becoming more common among younger generations, do not assume business meetings with senior managers will be in English. Research ahead, play safe and ask if an interpreter will be needed.
Punctuality: Be on time – it is expected. They may not be, so be patient.
Negotiations and Business Relationships: Turks generally like to feel relaxed with business acquaintances, building a trusting, long-term partnership. Let negotiations progress slowly, get to know the opposite number, exchange small talk and avoid rushing or applying pressure. Decisions are most likely to come from the senior and older members of the team. Even in business, bartering is still a feature of negotiations. Once a relationship is established, avoid sending replacements to subsequent meetings, as it may put you back to square one.
Greetings: Shake hands. Make eye contact when greeting and during conversations, which can be animated and feature hand gestures. The Turkish tend not to be precious about personal space and can stand quite close; it will seem unfriendly if you take a step back. Men should wait for female members of the other team to offer their hand first. Men can be greeted by their first name, followed by ‘Bey’; women by their first name, followed by ‘Hanim’. Titles such as Doctor, Professor or Lawyer are often used with the surname as a show of respect.
Gift Giving: Not a typical feature of Turkish business relationships.
Business Cards: Present business cards with a smile and show interest in reading those given to you as a sign of respect. Include educational or professional qualifications on your card.
Dress Code: Conservative and formal, suits and ties for men and smart, reserved combinations for female members of the team. Acceptable to leave jackets aside during the hottest summer months.
Out of Hours: Meals are a chance to relax and continue building personal relationships, so allow the host to lead the conversation in the business direction. The host pays … then you reciprocate with the next meal.
Avoid: Cultural taboos include pointing, showing the soles of your feet or shoes, standing with hands on hips or in pockets, or crossing your arms or, when seated, your legs. Avoid discussing sensitive political issues such as Cyprus and Armenia.
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