Legal News

ANNUAL VACATION PRINCIPLES IN TURKEY

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Principles of paid annual vacation are asset out in articles 53 and 62 of Labor Law, No. 4857, and in Regulation on Paid Annual Leave.

PLANNING ANNUAL VACATION IN THE WORKPLACE

In the establishments that have more than 100 employees planning must be done by “Annual Leave Committee” comprised of representatives of employers.

Employee should notify the employer at least one month before prior to the date employee want to start his/her vacation. Employer is not bounded with the start and end dates of the leave demanded by employee, and may determine different dates.

ENTITLEMENT

All employees who have worked for at least one year including the trail period are entitled to annual vacation. Vacation periods are as follows:

Length of Service                     Minimum Vacation Period

1 to 5 years (included)              14 working days

5 to 15 years                            20 working days

15 years (included) or longer    26 working days

  • Paid annual leave may not be less than 20 days for employees under the age of 18 or over the age of 50.
  • Employees are also allowed to take up to 4 (four) days' leave without pay, on the condition that the employee provides documentary evidence that s/he is spending his/her annual leave at a place other than where the work place is located.
  • Employees engaged in seasonal or other occupations which, owing to their nature, last less than one year are not entitled to paid annual leave.
  • Periods during which the employee has been employed in one or more workplaces of the same employer shall be considered jointly.
  • An employee neither can waive his right of vacation nor can s/he engage in gainful employment during this period. Otherwise they may be asked by their employer to reimburse the annual leave remuneration paid in advance.

PAYMENT

Employee's wage, pertaining to the period of annual leave, must be paid in advance or by raising an advance payment prior to commencement of the leave.

The annual leave remuneration of employees who are not paid daily, monthly or weekly but who are remunerated according to an indefinite period of time or amount of money, such as a piece-rate, commission, profit sharing or percentage, must be calculated on their average daily earnings by dividing the total wages earned during the previous year by the number of days actually worked during that year.

If the employee has been granted a raise in pay within the previous year, the annual leave remuneration shall be computed by dividing the total wages earned between the date of the month in which the employee uses his leave and the date when his pay was raised by the number of days worked within that period.

For employees working on a percentage basis, remuneration for annual leave must be paid by the employer in addition to any amount of money derived from current percentage earnings.

ARE NATIONAL HOLIDAYS, WEEKLY REST DAYS AND PUBLIC HOLIDAYS INCLUDED IN PAID ANNUAL LEAVE?

National holidays, weekly rest days and public holidays that coincide with the duration of paid annual leave may not be included in the annual leave period.

DIVIDING THE VACATION

According to latest amendment the leave periods may be divided by mutual consent, provided that one of the parts shall not be less than ten days. That means there will be no limitation as to the number of segments by which the leave can be used; employees will be allowed for more flexible use of their annual leave i.e. 10+1+2+1+1. That’s very handy to fill in the gaps between weekends and national holidays as seen in the above example.

CAN EMPLOYERS FORCE THEIR PERSONNEL TO TAKE ANNUAL LEAVE?

Yes, even though employee doesn't wish to use his entitled paid leave in the leave year, employer has the right to have the employee use the leave. Otherwise this will be infringement of Labor Law on behalf of Employer.

CAN AN EMPLOYER REFUSE HIS EMPLOYEE'S VACATION REQUEST?

Employer is not bounded with the start and end dates of the leave demanded by employee, and may determine different dates by taking into account the continuity and regularity of operations in general, order of precedence as regard to seniority, or the special issues pertaining to employer's workplace.

But that does not mean employee cannot take his/her paid annual leave in the relevant year.

In case the employer prevents the employee's right to use his annual leave within the leave year this will constitute a just cause for the employee to terminate employment contract.

CAN UNUSED VACATION CONVERT INTO WAGE?

As a rule annual leave should be used in the relevant leave year. However, in practice some employees, for some reasons, may prefer to carry forward their annual leave to coming years, and they can use it in the following years.

ANNUAL VACATION OF SEAMEN

Seamen who have worked under same employer or in the same ship, based on one or more employment contract, at least six months within a calendar year will be entitled to annual leave. Calendar year means 1st January to 31st December of the year.

Period of annual vacation:

Leave periods cannot be less than;

  • 15 days for the seamen whose length of service between six months and one year,
  • One month for the seamen whose length of service is one year or over.

How to use:

  • Vacation should be taken at the date approved by the employer,
  • Annual vacation right cannot be waived,
  • And cannot be converted into wage unless in case of termination of employment contract.
  • Due but not yet used vacation periods must be paid to seamen as wage. Gross salary should be taken as a base.
  • Seamen may require to take unpaid leave for travel up to seven days,
  • Seamen cannot be forced to use their annual leave in a foreign port or in other than a place where employment contract concluded,

One month vacation can be divided into two by mutual consent, provided that both parts should be used within the same year.

TAX EXEMPT TRAVEL ALLOWANCE 2018/2

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Daily Allowance is the money paid to employees in daily basis while they are working away from their workplace whether within the same country or abroad.

Tax exempt daily allowance amounts are determined by General Directorate of Budget and Fiscal Control in line with Travel Expense Law No. 6245 twice a year.

Exemption to be applied between 01.07.2018 – 31.12.2018 are announced as follows.

Exempt amounts are same as first half of the year but gross salary amounts are changed.

01.07.2018 – 31.12.2018 DOMESTIC TAX EXEMPT DAILY ALLOWANCE AMOUNTS
Gross Salary (TRY) Daily Allowance (TRY)
2.966,53 and over 61,50 TRY
2.945,30- 2.966,52 51,60 TRY
2.685,83- 2.945,29 48,15 TRY
2.355,60- 2.685,82 45,20 TRY
1.954, 02- 2.355,59 39,85 TRY
1.954,01 and less 38,75 TRY

The maximum daily allowances payable for business travel outside Turkey are as follows:

  (GROSS SALARY AMOUNTS TRY)
Countries and Currencies II. Column III. Column IV. Column V. Column VI Column VII. Column
  2.966,53 and over

2.945,30-

2.966,52

2.685,83-

2.945,29

2.355,60-

2.685,82

1.954,02-

2.355,59

1.954,01

and less

USD. (USD Dollar) 182 146 124 117 110 93
Germany (Euro) 164 131 111 105 99 83
Australia (Aud) 283 227 192 181 171 143
Austria (Euro) 166 132 112 106 100 84
Belgium (Euro) 161 128 109 103 97 81
Denmark (dkr) 1.238 988 838 791 746 627
Finland (Euro) 148 119 100 95 90 74
France (Euro) 160 127 108 102 96 81
Holland (Euro) 156 125 106 100 94 80
England (Pound) 115 91 78 74 69 59
Ireland (Euro) 155 124 105 99 94 78
Spain (Euro) 158 126 107 101 95 80
Swiss (sek) 1.359 1.085 919 867 819 687
Switzerland (chf) 283 226 192 181 171 143
Italy (Euro) 152 122 104 98 92 77
Japan (jpy) 31.405 25.127 21.325 20.118 18.901 15.914
Canada (cad) 244 195 165 156 147 125
Kuwait (kvd) 50 40 35 33 31 25
Luxemburg (Euro) 161 128 109 103 97 82
Norway (nok) 1.193 952 808 762 719 604
Portugal (Euro) 155 124 105 99 93 78
Saudi Arabia (Suudi A. riyal) 617 492 418 395 372 313
Greece (Euro) 158 126 107 101 95 80
Kosovo ( Euro) 123 98 83 78 74 63
Other EU Count. (Euro) 127 101 86 81 76 65
Other Countries (USD Dollar) 157 125 106 100 95 80

 

For travel allowances in the first half of the year please visit our website:

http://turkishlaborlaw.com/news/business-in-turkey/582-tax-exempt-daily-allowance-amounts-2018

WORKPLACES ENTERING INTO PRIVATE PENSION ON JULY 2018

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bes.pngWorkplaces employing 10 (Inc.) to 49 (Inc.) personnel will start to enter into contracts with pension companies and offer pension plans to the employees as of 1st July 2018.

As is known, auto enrolment Private Pension System, which is complementary to the mandatory state social security scheme in Turkey has been introduced by Law No. 6740 and entered into force as of 1st January 2017.

Turkish citizen employees who are under the 45 years of age and working against wage under a service contract (in the scope of Law No. 5510, articles 4/a, and 4/c) will be automatically enrolled in a pension plan arranged by employers. Participant employees may have the right of withdrawal from the system within two months.

For detailed information about auto-enrolment private pension please visit our website:

http://datassist.com/blog/130-gradual-implementation-in-turkish-private-pension

CHILD ALLOWANCE INCOME TAX EXEMPTION ANNOUNCED

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aile_çocuk.pngChild allowance income tax exemption for private sector employees is equal to the amount determined for public officers twice a year.

According to announcement the following amounts will be exempt from tax between 1 July 2018 and 31 December 2018.

The exemption is valid only two children.

CHILD ALLOWANCE EXCEPTION/INCOME TAX (over 6)     (Monthly)            29,49 TRY

CHILD ALLOWANCE EXCEPTION/INCOME TAX (ages 0-6) (Monthly)            59,47 TRY

 

In case the monthly payments made under the name of child allowance exceed the above amounts, exceeding part will be subject to income tax.

2018/2 SEVERANCE PAY LIMIT

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Severance pay upper limit is announced as 5.434,42 TRY/Year for the second half of the year. This limit will be applied within the period between 1 July 2018 and 31 December 2018. The monthly earnings exceeding this limit will not be taken into account in the calculation of total severance to be paid to entitled employee.

Many of the payroll parameters are derived from monthly gross minimum wage, however cap of severance pay is determined as equal to the amount received by highest public officer as severance .

As is known, qualified employee shall be paid a severance pay equal to last 30 days’ gross wages for each full year of employment. In calculation of the last 30 days’ wage, the wage paid and the some contractual and statutory benefits in kind provided by employer shall be taken into account. Also periodical (annually, quarterly etc.) payments such as premium and bonuses will be added in monthly basis.

In Turkey there is a cap for severance pay, however, this limit may be increased by provisions of employment contracts.

Also please note that there is no cap amount for severance pay for press employees.

2018 MINIMUM LIVING ALLOWANCE SUPPORT FOR MINIMUM WAGE

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Asgari Ücretliye AGİ İlavesi Nihayet Açıklandı

2018 monthly net minimum wage will not get lower than 1.603,12 TRY. Any decrease due to the shift on taxable income brackets will be compensated by an increase in Minimum Living Allowance (AGİ).

In Turkey, tax rates are applied by taken the cumulative income as a base. As a result the minimum wage shifts to second tax bracket after the first half of the year (from 15% to 20%) and get lower than 1.603,12 TRY.

It is stipulated in Law No. 703 that minimum living allowance support for employees will be permanent. Minimum wage will not be affected from the shift on taxable income brackets and will not get lower than the net amount determined for single employee. For minimum wage earners the difference between the net income and the minimum wage for single will be compensated by an increase in minimum living allowance equal to this difference.

Income Tax General Communique Serial Number 265 has provided some explanations and examples as regard to implementation.

BENEFITING CONDITIONS

  • Employees whose net wage goes down below 1.603,12 TRY (monthly net minimum wage for single) will be benefiting from the arrangement. This lower limit is also valid for employees married plus children.
  • Employees, whose net wage drops down below 1.603,12 TRY, just because leaving and starting their job, or unpaid leave and similar reasons cannot benefit.  
  • Employees, whose wages decreased but still above 1.603,12 TRY cannot benefit from the MLA support.

EXAMPLES:

Example 1:

Employee: Single and has no child.

January Net salary: 1.603,12 TRY

Because of the shift on the taxable income bracket employee will receive less in September. October, November and December. For compensating the difference the following amounts will be added to Minimum Living Allowance and paid to employee

For September: 1.603,12-1.566,84=36,28 TRY

For October/November/December: 1.603,12-1.516,87=) 86,25 TRY 

Example 2:

Employee: Married+3 Children + Spouse not working

January Net salary: 1.709,67 TRY

Because of the shift on the taxable income bracket employee will receive;

September: 1.673,39 TRY

October, November and December: 1.623,42 TRY

As his salary doesn’t go below 1.603,12 TRY he will not benefit from Minimum Living Allowance support.

2018 MINIMUM WAGE SUPPORT

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Asgari Ücret Desteği Genelgesi Yayımlandı

The daily amount of earnings subject to premium that will be taken as a base in the minimum wage support is increased from 110,00 TRY to 120,00 TRY. Also the base amount is increased from 164,70 TRY to 180,00 TRY in the unionized workplaces.

Also, as per SSI Circular 2018/20; the due support amounts related to January, February, March, April, which are not refunded yet, will be set off from the May premium debts of employer at one time. In case not all the support amount is setoff, the remaining will be set off from the next month’s debts.  

As is known, employers were receiving daily 3,33 TRY premium refund throughout 2017 for each worker whose wage (earnings subject to premium) were notified under daily gross 110,00 TRY (monthly gross 3.300,00 TL) in 2016, and for each personnel employed in new enterprises established / registered within 2017.

Now with the Cabinet Decree, 2018/11668, issued in the Official Gazette on 20th June 2018; between January and September 2018, employers will be receiving daily 3,33 TRY premium refund throughout 2018 for each worker whose wage (earnings subject to premium) were notified under daily gross 120,00 TRY (monthly gross 3.600,00 TRY) in 2017. The daily base amount for unionized workplaces will be 180,00 TRY (monthly 5.400,00 TRY).

  IN NON-UNIONIZED WORKPLACES IN UNIONIZED WORKPLACES
Daily Earning Upper Limit 120,00 180,00
Monthly Earning Upper Limit 3.600,00 5.400,00
Amount to be multiplied by Total Premium Covered Days 3,33 3,33

WHO CANNOT BENEFIT FROM THE SUPPORT?

A - 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 incentives.

EFFECTIVE DATE OF SOCIAL SECURITY AGREEMENT BETWEEN TURKEY AND HUNGARY

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Effective date of Social Security Agreement between Turkey and Hungary is determined as 1st April 2018.

As we informed you before, Social Security Agreement between Turkey and Hungary signed in Budapest on 24 February 2015 had been accepted in Parliament and the related Law No. 6961 had been published in the Official Gazette on 3 April 2017.

However, there was some confusion about its enactment date. Now with the Government Decree 2018/11543, issued on 5 June 2018, the effective date of above said agreement is announced as 1 April 2018.

SCOPE OF THE AGREEMENT

This agreement will apply to following legislation:

In relation to Turkey;

  • Invalidity, old age, survivors insurance
  • Work accidents and occupational diseases
  •  Sickness and maternity insurance in the scope of general health insurance
  • Unemployment insurance for employees working under an employment contract.

In relation to Hungary;

  • Insurance obligation and payment of social security contributions covering social insurance benefits; pension, health insurance and unemployment
  • Social insurance pension benefits
  • Health insurance benefits
  • Benefits for the persons whose working capacity is changed.

OUTLINES OF THE AGREEMENT

  • Equal treatment: Persons in the scope of this agreement will, with respect to social security, have the same rights and obligations, as provided or stipulated for a citizen of the contracting country
  •  As Regard to entitlement to social security benefits (retirement etc.) provided by contracting parties, the length of services acquired in both country will be combined
  • Healthcare benefits for insured and their families will be safeguarded by legislation of both countries
  • If a person transfers his residence to other country while receiving income, he will continue to receive this income in the country to which  he transferred his residence
  • Benefits in the scope of temporary incapacity will be provided by both contracting parties.

POSTING – SECONDMENT

Secondment/posting period is 24 calendar months.

  • Employed person: In case an employee is send by the employers to work temporarily on behalf of this employer in the other contracting country, that employee will continue to be subject to the legislation of sending country, on condition that posting period doesn’t exceed 24 calendar months and the posting doesn’t aimed at replacing a previously posted person.
  • Self-employed: In case a self-employed person temporarily transfers his business to other contracting country he will be subject to legislation of the first country, on condition that self-employed activity doesn’t exceed 24 calendar months.

In the above cases, 24 months period may be extended for once up to maximum 60 months by the mutual request of employee and employer, or by the personal request of self-employed person

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