Turkish Labor Law
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In our recent article published in website http://turkishlaborlaw.com/news/legal-news/346-revision-is-expected-on-minimum-wage we informed you of the Government’s pre-election pledge that the monthly net minimum wage will be raised to 1.300 TL as of January 2016, from the current 1.000 TL. This 30% rise has caused a great concern for the private sector employers who will be facing with a highly increased labor costs, and varying calculations about the cost of employer are being announced from different sources. This variation in calculations arise from the uncertainty whether Minimum Living Allowance (MLA) or/and incentives will be included in the net amount of minimum wage or not. Now we are going to introduce our estimated calculation by taking the various parameters into account.
Labor Cost of Employer/Net Min. Wage 1.300,00 TL, Min. Living Allowance and Incentives Excluded
Net Wage: 1.300,00 TL
SSI Employee Contribution: 254,58 TL
SSI Employer Contribution: 372,77 TL
Unemployment Employee Contribution: 18,18 TL
Unemployment Employer Contribution: 36,37 TL
Income Tax: 231,85 TL
Stamp Tax: 13,80 TL
Gross Minimum Wage: 1.818,41 TL
Total Cost of Employer: 2.227,55
Note: In Above calculation: MLA and incentives are not taken into account; first bracket of income tax applied; Stamp tax rate applied as %07,59
Labor Cost of Employer/NMW 1.300,00 TL, Min. Living Allowance Included
In the application of new minimum wage, it is more probable that MLA will be included in the wage. MLA is expected to be 123,44 TL, and calculation is:
Minimum Net Wage 1.176,60 + MLA 123,44 = 1.300,04 TL
Table below shows the gross and net amount of minimum wage tax and SSI premium contribution and cost of employers.
|
01.01.2016-31.12.2016 |
MINIMUM WAGE |
|
DAILY MINIMUM WAGE |
54,86 |
|
MONTHLY MINIMUM WAGE /SSI PREMIUM BASE |
1.645,80 |
|
SSI PREMIUM BASE CAP |
10.697,70 |
|
UNEMPLOYMENT PREMIUM – EMPLOYEE ( % 1 ) |
16,46 |
|
SSI EMPLOYEE CONTRIBUTION (%14) |
230,41 |
|
INCOME TAX BASE |
1.398,93 |
|
MINIMUM LIVING ALLOWANCE (SINGLE) |
123,44 |
|
MINIMUM LIVING ALLOWANCE |
123,44 |
|
AMOUNT OF INCOME TAX |
209,84 |
|
AMOUNT OF INCOME TAX – MLA EXCLUDED |
86,40 |
|
STAMP TAX |
12,49 |
|
TOTAL DEDUCTIONS FROM MINIMUM WAGE |
469,20 |
|
TOTAL DEDUCTIONS FROM MINIMUM WAGE –MLV EXCLUDED |
345,77 |
|
NET AMOUNT TO BE PAİD |
1.176,60 |
|
NET AMOUNT- MLA INCLUDED |
1.300,03 |
|
SSI EMPLOYER CONTRIBUTION ( % 20.5) (SHORT TERM INSURANCE BRANCH PREMIUM ISTAKEN AS %2) |
337,39 |
|
TREASURY CONTRIBUTION ( % 5) |
82,29 |
|
UNEMPLOYMENT PREMIUM-EMPLOYER ( % 2 ) |
32,92 |
|
COST OF EMPLOYER |
2.016,11 |
|
COST OF EMPLOYER (%5 INCENTIVE APPLIED) |
1.933,82 |
Not: Amounts of Minimum Wage and MLA are approximate.
As a summary:
Expected Gross Amount of Minimum Wage is 1.648,80 TL and Gross Maximum Wage (SSI cap) is 10.697,70 TL.
Cost of Minimum Wage to Employer: 2.016,11 TL (and 1.933,82 TL when the %5 incentive applied).
Cost of Maximum Wage (SSI cap) to Employer: 12.570,00 TL.
