Turkish Labor Law
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As the new year is approaching finance departments of many companies are very busy with the hard task of preparing the next year’s annual budget which will be a guideline for the future spending and activities of the company.
What makes the upcoming year special is the %30 rise on the minimum wage and the uncertainties about the total labor cost of employer which comprises the substantial part of the expenditures.
In this article we are going to share our estimated calculation of the rise in the minimum wage and its inevitable additional cost on employers, and its impact on the next year’s parameters to help you to make correct predictions while preparing your personnel budgets.
Points and Items to Take into Consideration in Personnel Budgets
For achieving a consistent budget, and minimizing the variance between the estimated and realized figures, it is essential to include the following points and items.
– Correct legal parameters should be used on calculation of personnel expenses,
– Supplementary payments and fringe benefits/social aids made in addition to main wage,
– Benefits in Kind and Allowances,
– Wages that will be paid to personnel planned to be employed within the year,
– Severance Payments and potential Return-to-Work cases and compensations.
Minimum Wage and Its Cost to Employer in 2016
It is not clear yet whether net minimum wage will contain the Minimum Living Allowance (MLA) or not, however in the light of the pre-election comments we may say that the announced 1.300,00 TL is the amount that single employee will be receiving, and it consists of minimum wage plus MLA.
MLA for single employee is estimated as 123,43 TL and the wages and costs of employer calculated accordingly are as follows;
- Monthly Gross Minimum Wage: 1.645,75 TL
- Monthly Net Minimum Wage: 1.176,56 TL
- Minimum wage/MLA included: 1.300,00 TL
- Cost of Minimum Wage to Employer: 1.933,76 TL
- Employer’s Cost of Minimum Wage for Retired Personnel: 2.048,96 TL
Calculations are made on the assumption that %5 Treasury incentive granted by Law No. 5510 will be applied. In case some other incentives are involved the cost of employer may vary.
Cap of Monthly Earnings Subjected to Premium Deduction
Daily cap of earning subjected to premium are calculated as 6,5 times of daily minimum wage, and multiplying by 30 monthly cap is found which is estimated as 10.697,37 TL for the first half of 2016.
Taxable Gross Income Brackets And the Rates in 2016
Estimated taxable income brackets and the rates in 2016 are shown below:
|
TAX BRACKETS |
RATE |
|
Up to 13.700 TL |
15% |
|
For the 13.700 TL of 32.000 TL tax is 2.055 TL, in excess |
20% |
|
For the 32.000 TL of 115.000 TL tax is 5.715 TL, in excess |
27% |
|
For 115.000 TL tax is 28.125 TL, in excess |
35% |
