New Year's hot topic, the government support on %30 minimum wage hike and its method of administration is clarified by the SSI's Circular No. 2016/4 issued on 12, February.
You can get access to the full details of 2016 minimum wage support and full translation of related article in the recent write-ups issued in our website through the links below,
WHAT YOU NEED-TO-KNOW BRIEFLY?
This article is intended for the foreign readers and Turkey branches of foreign based companies who don't want to get confused by legislative jargon and have a clear vision on how they can be benefiting from the minimum wage support if they are employing staff in Turkey.
Q 1 - What the Related Law Says?
A 1 - Pursuant to Provisional Article 68, that has been appended to Social Security and General Health Insurance Law No. 5510; For the employers who employs insured that subject to long term insurance branches, the following amounts, after multiplied by 3,33 TL, will be deducted from employers' SSI premiums due in the current month and will be covered by the Treasury throughout 2016;
a) The amount of insured's total premium covered days declared in Monthly Premium And Service Documents which are submitted in the current month of 2016, on condition that not exceeding the total premium covered days of the insured whose earnings subject to premium were declared below daily 85 TL in the Monthly Premium And Service Document corresponding to same month of 2015.
b)The amount of declared total premium covered days of insured who are employed in the establishments registered (taken into scope of Law No. 5510) within 2016.
Q 2 - Which Employers Benefit from the Support and for which Employees?
A 2 - Employers who employ personnel, that subject to long term insurance branches (invalidity, old - age and survivors insurance), through an employment contract will be benefiting from the support for each personnel (including foreigners) dependently working against wage for the establishment. But said support is not applicable for the personnel who are not subject to long term insurance branches.
Q 3 - What will be the base and the amount of support?
A 3 - Regardless of the number of employees, only the total premium covered days of personnel as a whole will be taken as a base and will be multiplied 3,33 to calculate the amount of support.
But the calculation of premium covered days differ for the companies registered before 2016 and registered first time in 2016.
a) For the companies registered before 2016: each above stated worker whose wage (earnings subject to premium) were notified under daily gross 85 TL in the same month of 2015 will be taken as a base in calculation of premium covered days. And these premium covered days will be multiplied with 3.33 to find the amount of premium refund for the corresponding month of 2016.
Example: Company had 8 personnel and five personnel's earnings subject to premium were declared below daily 85 TL in January 2015, three personnel's earnings subject to premium were declared above this amount,
Only the premium covered days of five personnel, which would be 4*30=150 days if they had worked full in January 2015, will be taken as a base and the amount of premium to be refunded for January/2106 is: 150*3,33 TL=499,50 TL.
Company may have employed 5 new starters, and dismissed 3 personnel in January/2106, number of personnel doesn't affect the calculation, because regardless of who the personnel are, only the declared premium covered days are count.
b) For the companies registered first time in 2016: employees total premium covered days regardless of their earnings subject to premium will be multiplied 3.33 TL to find the amount to be refunded for the related month.
Example: Company is registered first time in 1 January 2016 and is employing 4 personnel who worked full hours during the month.
The amount to be refunded for January: 4*30*3,33=399,60 TL.
Q 4 - How long the support will be maintained?
A 4 - The support is intended only for the year 2016.
Q 5 - How the Premium Refund be Realized?
A 5 - The method of premium refund is arranged as follows:
a) How: The amount of support will be set-off from the premium debts,
b) When: The first premium set-off will be in March. In general practice, social security premiums belong to current month are accrued after being declared by submitting a monthly premium and service documents online at the following month, and should be paid to the Institution at the end of the following month latest. As the amount of support will be set-off from the premium debts are accrued in the following month, and are paid at the end of month the Treasury support granted for January/2016, will be set-off from the premium debts of February/2016. Thus, the set-off will be realized on March/2016. For December/2016 set-off will take place on February/2017.
c) Any requirement of application: Employers are not required to apply for benefiting from the support. Employers who satisfy the conditions will be benefiting from the provisions of the law without needing to take any extra action.
Q 6 - Who cannot benefit from the support/can it be collected back?
A 6 - Employers who;
- do not submit their Monthly Premium and Service Documents and do not pay the premiums in time,
- in the investigations and inspections performed by the officers authorized with audits and checks, are found to be not notified the employed personnel as insured or the notified insured is not working virtually,
- did not pay the premium, administrative fine and delay penalty debts to Institution (SSI), cannot be benefiting from the above incentives.
The amounts covered by Treasury will be collected back with delay fine and default interest from the establishments who are found out to be dealing with fictitious transaction, in order to benefit from the support. And provisions of above said article shall not be applied to such establishments.
Also, the provisions of above mentioned Provisional Article 68 shall not be applied for the personnel whose monthly premium and service documents submitted to Institution (SSI) with delays between the January and December 2016
Q 7 - What Happens If There Was no Declaration on the Same Month Of 2015?
A 7 - In the event of Monthly Premium and Service Document belong to same month of 2015 had not been submitted, following first month’s document will be taken as a base.
Example: Company is registered on April/2015. For the January/2016 set-off, April/2015 will be taken as a base.
Q 8 - What about the companies who do not employed any personnel during 2015?
A 8 - For the workplaces registered (taken into scope of Law No. 5510) before 2015 but not employed any personnel within 2015, the same support will be applied as the ones registered in 2016.
Q 9 - What happens if the premiums to be refunded exceed the premiums to be paid?
A 9 - In case the Employer's premiums to be paid are less than the calculated total premiums to be refunded, only the amount of employer's premium debt will be covered.
Example: On January/2015 the company were employing 10 personnel whose salary below daily 85.00 TL. The declared premium covered days are 10*30=300, and company is entitled 300*3,33=999.00 TL premium refund for January/2016. But the company is employing only one personnel on January/2016 and the premiums to be paid are only 500.00 TL. It will be granted an amount of 500.00 TL Treasury support for this month.
Q 10 - Application in mining establishments?
A 10 - In lignite and coal mining establishments, where the wage cannot be less than double the minimum wage, for calculation of premium covered days the employees whose earnings subject to premium are below 170.00 TL (85.00*2) will be taken as a base.