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PayRoll

Payroll

In Turkey, the term “payroll,” commonly defined as “bordro,” refers to a list that records the payments an employer makes to their employees. This includes salaries or wages received by employees, deductions made (such as tax, insurance premiums, fund contributions, etc.), and the net payment amounts. Payroll management is a crucial function for ensuring accurate and timely payments to employees and is a legal requirement for employers in Turkey.

Payroll calculations in Turkey are subject to various legal and regulatory requirements. Employers must make appropriate deductions for Social Security Institution (SGK) premium payments, Income Tax, Stamp Tax, etc., and report them to the relevant government agencies. Additionally, factors such as working hours, overtime, holiday, and leave rights can also affect payroll calculations.

Payroll processes are typically conducted by accounting or human resources departments and require detailed and accurate record-keeping.

In Turkey, Employers face several key responsibilities during payroll management, including:

SOCIAL SECURITY INSTITUTION (SGK) RESPONSIBILITIES:

In Turkey, employers are obligated to regularly calculate and pay the social security premiums (SGK premiums) for their employees. These premiums consist of two parts: the employer’s share and the employee’s share, but the responsibility for calculating and paying all social security premiums lies with the employers.

  1. Timely and Accurate Payments: Premium payments to SGK must be made on time and accurately.

  2. Reporting of Insurance Registrations and Terminations: Employers are responsible for reporting the start and end of employees’ insurance to SGK.

  3. Employer’s Share of Social Security Premium: 20.5% (0.205 of the base)

  4. Employee’s Share of Social Security Premium: 14% (0.14 of the base)

  5. Discounts for Timely Payments: If the employer pays the social security premium on time, SGK offers a discount of 5% (0.05) on the premium base that is required to be paid by the employer.

  6. Ceiling Principle in Premium Calculation: The social security premium calculation is based on a ceiling principle. Regardless of the employee’s salary, the SGK Premium is calculated based on the maximum amount announced by the state.

Unemployment Insurance (İŞKUR) Responsibilities:

In Turkey, employers are required to pay unemployment insurance premiums to İŞKUR (Turkish Employment Agency). These premiums include a contribution paid on behalf of their employees.

  • Regular Payments:

Premium payments to İŞKUR must be made regularly. This is crucial to ensure that employees can benefit from unemployment insurance in case they lose their jobs.

The contribution rates for unemployment insurance are split between the employer, the employee, and the state. Here’s how they are typically distributed:

  • Employer’s Contribution: 2%
  • Employee’s Contribution: 1%

These contribution are calculated based on the employee’s grosssalary but are subject to a maximum earnings limit set by the government each year.

It’s important for employers to stay updated with these limit and ensure compliance with the payment schedules to avoid penalties and ensure their employees are protected under the unemployment insurance scheme. 

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