Business in Turkey

Change in the Taxable Income Brackets on the Way

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Starting from 2018, income tax rate that applied to 3rd taxable income bracket will be increased from 27% to 30%. 

In a press conference held for introducing Turkey’s “Medium Term Program,” Finance Minister Naci Ağbal announced some tax hikes and revision in income tax tariff to be applied within the next years.

Most significant proposed change from the point of wages and payroll calculation is the extra 3% change on the income tax rate applied to 3rd income section (bracket).  In practice, it seems that the amendment will affect the medium and comparatively high wages most.

What are the Conditions of Establishing Subcontractor Relation?

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Nature of works that can be permitted for subcontractors and conditions of establishing subcontractor relation is arranged in Labor Law 4857, Article 2/6-7) and Subcontractor Regulation.

Works permitted for subcontractors

 As a rule, the auxiliary works related to the production of goods and services or in a certain section of the main activity due to operational requirements or for reasons of technological expertise in the establishment of the main employer can be given to subcontractor.

What is Subcontractor Relation?

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Subcontractor can simply be defined as an individual or a firm who contracts (undertakes) to perform the part of another company’s work. The work that is undertaken by the subcontractor is generally an auxiliary task requiring technological skill, or the work meeting the operational requirements of a main employer.

Subcontractor relation is arranged in Article 2/6-7 of the Labor Law No. 4857 as;

“The connection between the subcontractor who undertakes to carry out work in auxiliary tasks related to the production of goods and services or in a certain section of the main activity due to operational requirements or for reasons of technological expertise in the establishment of the main employer (the principal employer) and who engages employees recruited for this purpose exclusively in the establishment of the main employer is called “the principal employer-subcontractor relationship”. The principal employer shall be jointly liable with the subcontractor for the obligations ensuing from this Labor Act, from employment contracts of subcontractor's employees or from the collective agreement to which the subcontractor has been signatory.”

When to Submit Leaver Declaration?

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When the employees who are working against wage under an employment contract leave the employment (termination of employment contract), SSI/SGK should be informed by filling the form online in its website within 10 days as of the leaving the date. (Social Insurance and General Health Insurance Law No. 5510, article 9/1-b)

This procedure is also called deregistration of leavers. A leaver declaration should be filled in SSI website; stating the date of termination of employment contract, reason of termination and occupation code. 

In case the last submission day of leaver declaration coincides with an official holiday, declaration can be submitted on the day following the official holiday.

Do You Have to Notify Workplace Shut Down to SSI?

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No!

No obligation of workplace shut down notification is specified in the Law. Also, there is no penal provision regarding the matter.

In case there is no mobility in SSI’s e declaration  system the Institution removes the workplace out of the scope of Law No 5510 (Social Insurance and General Health Insurance)  ex officio. 

However, it is preferable for the employer to inform the SSI with a certified mail, stating the workplace registry number, and notifying that workplace is no longer active and no employee is working. 

Employee's Consent For Overtime Can Be Taken When Needed

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Employer’s obligation to get the employee’s consent for over time at the beginning of each year is removed by the change on “Regulation on Overtime and Extra Hours”.

As is known it was necessary for the employer to obtain employee's overtime consent at the beginning of every year. In practice employer used to schedules their annual overtime and works at extra hour works in January each year and prepares consent documents and get them signed by employees, citing in the document the conditions determined by Law or the operational necessities. These documents should be kept in employee's personal file.

Changes in Paid Annual Leave Regulation

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According to the amendments on Paid Annual Leave Regulation issued in Official Journal No.30158, dated 18 August 2017;

  • Annual vacation periods may be used in segments by mutual consent, provided that one of the segments cannot be less than 10 days.

  •  For employees of subcontractor; in case the employee continues to work in the same workplace even after the subcontractor changed, their annual vacation period will be determined according to the time worked in this same workplace.

  • Primary employer is under the obligation of ensuring employees of subcontractor are let to use their entitled leave periods, and subcontractor has to submit one of the copies of vacation record book to the primary employer.

  • Vacation periods of employees working in underground work shall be applied by raising 4 days. 

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