Employer of Record in Turkey

Expanding into Turkey offers a strategic opportunity for businesses looking to access a diverse talent pool and a dynamic market. Navigating the country's specific employment laws and regulations is crucial for successful and compliant hiring. Companies aiming to employ individuals in Turkey have several primary options, each with distinct implications for legal compliance, operational complexity, and speed to market.

When considering hiring employees in Turkey, businesses typically explore these avenues:

• Establishing a Local Entity: This involves setting up a subsidiary or branch office, which requires significant time, capital, and administrative effort to register, open bank accounts, and comply with local corporate and tax laws.
• Utilizing an Employer of Record (EOR): Partnering with an EOR like Rivermate allows companies to legally employ staff in Turkey without establishing their own local legal entity. The EOR handles all employment-related responsibilities.
• Hiring Independent Contractors: Engaging individuals as independent contractors can offer flexibility, but it carries significant misclassification risks if the working relationship resembles employment under Turkish labor law, potentially leading to severe penalties.

How an EOR Works in Turkey

An Employer of Record simplifies the process of hiring in Turkey by acting as the legal employer for your workforce, while you retain full control over day-to-day management. In Turkey, an EOR takes on critical responsibilities, including:

• Payroll Processing: Managing local payroll, including salary disbursements, social security contributions, and income tax withholdings in compliance with Turkish regulations.
• Tax Compliance: Ensuring adherence to all local income tax and social security laws, filing necessary declarations, and remitting payments to the relevant authorities.
• Benefits Administration: Administering mandatory benefits such as social security, health insurance, and paid leave as required by Turkish labor law.
• Labor Law Compliance: Maintaining full compliance with the Turkish Labor Law, including employment contracts, working hours, termination procedures, and severance payments.
• HR Support: Providing guidance on local HR best practices, employee relations, and dispute resolution.

Benefits of Using an EOR in Turkey

For companies looking to hire talent in Turkey without the complexities of establishing a local entity, an EOR offers compelling advantages:

• Rapid Market Entry: Hire employees in weeks, not months, bypassing the lengthy and costly process of entity registration.
• Reduced Costs and Administration: Eliminate the expenses and administrative burden associated with setting up and maintaining a local legal entity.
• Assured Compliance: Mitigate the risks of non-compliance with Turkey's intricate labor laws, tax regulations, and social security requirements.
• Access to Top Talent: Expand your reach to Turkey's skilled workforce, regardless of your company's physical presence.
• Flexibility and Scalability: Easily onboard and offboard employees, allowing for agile expansion or contraction of your team as business needs evolve.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Turkey includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Turkey.

Turkey's tax system mandates employers to contribute to social security and unemployment insurance on behalf of employees, with rates ranging from 15% to 22.5% for employers and 10% to 15% for employees. Key contributions include SGK (13-20.5% employer share, 9-14% employee share) and unemployment insurance (2% employer, 1% employee). Employers are also responsible for withholding income tax based on progressive rates from 15% to 40%, depending on income brackets.

Employees benefit from deductions such as their social security and unemployment contributions, as well as allowances for disabilities, insurance premiums, education, health expenses, and charitable donations. Employers must adhere to monthly reporting deadlines: filing the Muhtasar Beyanname by the 23rd of the following month for income tax withheld, and paying social security premiums by month-end. Annual income tax returns are due in March for the previous year.

Foreign workers and companies face additional considerations, including double taxation treaties, tax residency rules (residing over six months generally implies tax residency), and transfer pricing regulations. VAT registration may be required for foreign entities selling in Turkey. Staying compliant with these obligations is essential to avoid penalties.

Turkey's salary landscape varies significantly by industry, role, and location, with Istanbul typically offering higher wages due to its economic prominence. Key roles such as Software Engineers earn between TRY 600,000 and TRY 1,200,000 annually, while Marketing Managers range from TRY 500,000 to TRY 1,000,000. Other roles like Sales Representatives and Customer Service Agents have lower ranges, reflecting industry and experience differences.

Employers must comply with the national minimum wage, currently around TRY 20,000 gross per month (TRY 17,000 net as of April 2025), and stay updated on periodic increases. Compensation packages often include bonuses, allowances (meal, transportation), and private health insurance. Salaries are paid monthly via bank transfer, with statutory deductions for social security, unemployment, and income tax. Inflation and skill shortages are key factors influencing salary trends, with recent adjustments driven by economic conditions and the rise of remote work.

Turkey's labor law mandates various leave types to protect employee rights and promote work-life balance. Employees with at least one year of service are entitled to annual paid leave, which varies by tenure: 14 days for 1-5 years, 20 days for 6-15 years, and 26 days for over 16 years. Employees under 18 or over 50 receive a minimum of 20 days, regardless of service length. Leave must generally be continuous, with at least one segment of no less than 10 days, and wages are paid during this period.

Public holidays in 2025 include national and religious observances such as New Year’s Day, Labour Day, Ramadan Feast (3 days), and Eid al-Adha (4 days). If these fall on weekends, no compensatory day off is typically provided. Sick leave is available upon medical certification, with benefits potentially covered by the Social Security Institution (SGK). Parental leave includes 16 weeks of maternity leave (with extensions for multiple pregnancies), 5 days of paternity leave, and 8 weeks of adoption leave. Other leave types include bereavement, marriage, and emergency leave, with specific durations and conditions depending on company policies or circumstances.

Turkey's employee benefits are governed by legal mandates and employer offerings. Mandatory benefits include social security contributions (employers contribute approximately 13-20.5%, employees 9-14%), unemployment insurance (employers 2%, employees 1%), severance pay, paid annual leave, public holidays, maternity/paternity leave, and sick leave. These ensure basic employee security and well-being.

Many employers enhance their packages with optional benefits such as private health insurance, life and accident insurance, meal and transportation allowances, company cars, performance bonuses, training, and flexible work arrangements. Private health insurance supplements the universal coverage provided by the Social Security Institution (SGK), which offers access to public healthcare, while private plans often cover private facilities with shorter wait times.

Retirement benefits include mandatory social security pensions and voluntary private pension plans (BES), with some employers contributing to these plans to attract talent. Benefit packages vary by sector and company size; large firms tend to offer comprehensive benefits, including private health and pension plans, while SMEs focus on core statutory benefits and basic perks.

Employment agreements in Turkey are vital for defining the rights and obligations of both employers and employees. Turkish law recognizes two main contract types: fixed-term, suitable for temporary or project-based roles, and indefinite-term, offering greater job security. Essential clauses include details on parties, job description, workplace, wages, working hours, start date, termination conditions, and applicable collective agreements.

Probation periods are capped at two months (or four months with collective agreement), during which employment can be terminated without notice or severance, but employees retain most rights. Confidentiality and non-compete clauses are common; non-compete durations generally cannot exceed two years and must be reasonable, with fair compensation required for enforcement.

Modifications and terminations must follow legal procedures: changes require written agreement; terminations need valid reasons and notice periods based on service length, with severance pay applicable if justified. The following table summarizes notice periods:

Employers must adhere to these rules to ensure legal compliance and maintain positive employment relationships.

Remote work in Turkey has become increasingly prevalent, driven by technological advancements and changing workplace expectations. The legal framework primarily relies on the Labor Law No. 4857, which recognizes employees' rights to perform remote work and mandates employer obligations such as ensuring occupational health and safety, data protection, and formalizing arrangements through written agreements. Employers must also comply with data protection laws like Law No. 6698, implementing security measures such as encryption, access controls, VPNs, and MFA, alongside providing employee training on privacy practices.

Flexible work options are expanding, including full remote, hybrid, flextime, compressed workweeks, and job sharing, allowing employers to attract talent and boost productivity. Effective remote work also requires clear policies on equipment provision and expense reimbursement, ensuring fairness and proper budgeting. A robust technological infrastructure—covering communication tools, cloud services, reliable internet, and cybersecurity measures—is essential for operational efficiency and security.

Terminating an employee in Turkey requires strict compliance with the Labor Law, including adherence to notice periods, severance pay obligations, and proper procedural steps. Employers must provide advance notice based on the employee's length of service, ranging from 2 weeks for less than 6 months to 8 weeks for over 3 years. Alternatively, they can pay in lieu of notice, covering the employee's wages for the notice period. Severance pay is due after at least one year of service, calculated at one month's gross salary per year, with a cap of 35,058.24 TRY as of April 2025. Severance components include base salary, bonuses, and allowances, and are subject to minimal stamp tax.

Turkish law distinguishes between termination with just cause (immediate, no notice or severance) and without just cause (requires valid reasons and procedural compliance). Just cause reasons include misconduct, breach of loyalty, or safety violations, while reasons for without cause include restructuring or poor performance. Proper documentation, written notices, opportunity for employee defense, and union notification are mandatory for lawful termination. Employees are protected against wrongful dismissal through potential reinstatement, compensation (4-8 months' salary), and legal recourse within one month of notice. Employers must ensure procedural correctness to avoid costly legal disputes.

Turkey's economy is increasingly integrating freelancing and independent contracting, driven by businesses' need for specialized skills and professionals' desire for autonomy. Understanding the legal framework is crucial for employers to ensure compliance. The distinction between employees and independent contractors is defined under Labor Law No. 4857 and the Code of Obligations No. 6098, respectively. Key factors include control, integration, dependency, working hours, remuneration, and risk. Misclassification can result in significant legal and financial repercussions.

A well-drafted contract is essential for engaging independent contractors, covering scope, deliverables, payment terms, confidentiality, intellectual property, and termination conditions. Intellectual property rights typically belong to the creator unless otherwise specified in the contract, with common approaches being assignment or licensing. Contractors are responsible for their own tax and social security obligations, including income tax and potentially VAT, and should maintain proper records. They often work across various sectors, such as technology, creative services, consulting, and education, reflecting the demand for flexibility and specialized skills.

Foreign workers in Turkey must obtain the appropriate work permit and visa to work legally. The main types include short-term permits (up to one year), long-term permits (after five years of continuous residence), independent work permits for self-employed individuals, and permits for highly qualified professionals. Certain categories may be exempt from permits based on bilateral agreements or specific professions.

The application process involves employer sponsorship and submission of documents such as employment contracts, educational credentials, and company registration details. Typical processing times range from 2 to 8 weeks, with fees varying by permit type. Key requirements include a valid passport, visa application form, educational qualifications, and supporting documents. Successful applicants may also qualify for permanent residency after five years of legal residence and employment.

Employers are responsible for ensuring valid permits and compliance with labor laws, while employees must maintain valid documentation and adhere to legal conditions. Family members can apply for dependent visas, provided they demonstrate relationship and financial support. The following table summarizes processing timelines and fees: