2019 Gross Monthly Wage has been determined as 2,558.40 TRY (net 2,020.91 for single employee) with a 26% wage hike.

Employees' net wages differ depending on their marital status, because of Minimum Living Allowance (MLA). Minimum Living Allowance (MLA/AGİ)  is calculated on the basis of annual minimum wage in accordance with the marital status and the number of the children of the employee, regardless of the total earning.

You can see the monthly net amounts for minimum wage earners below.

Retired Employees

Retired persons may continue to work and benefit from the MLA, however SSI premium contributions are different from the normal workers.

Table below shows the net minimum wage amounts of retired employees in accordance with their marital status.

Payroll breakdown of Minimum Wage Earner

You can find the payroll deduction from minimum wage earner (single/spouse working + no kid)

Daily and Hourly Wage

While wages are commonly calculated in monthly basis, they can also be calculated and paid in daily and hourly basis.

As we earlier informed you, 2019 monthly gross minimum wage has been determined as 2,558.40 Turkish Lira. This 26.05% wage hike is higher than the expected increase, and will considerably impact the labor cost of employer. Because minimum wage is a key determinant of many payroll parameters in Turkey, the wage hike will inevitably trigger increases in the other wages.

Minimum wage support, which has been provided during recent years, is expected to continue through the year. The support amount is estimated to be between 100 and 150 Turkish Liras. 

Employer Cost of Minimum Wage

5% Treasury support is applied to companies which fulfill the certain conditions. The tables below show the employer cost with and without the 5% incentive.

Cost of Maximum Wage Subject to Premium

There is not such an amount determined as maximum wage, but in Turkey's legislation there is a limit for earnings subject to premium. For the wages over this limit there will not be any additional SSI premium contribution both for employee and employer.

Monthly cap of earning subjected to premium is calculated as 7,5 times of monthly minimum wage, and it increased to 19.188 TRY for 2019.

Net earnings of employees whose wages are over the SSI cap will get slightly lower, because their share of SSI premium will be increased. On the other hand employer share of SSI premium will get slightly over together with their cost for wages over the cap limit.

Tables below show the employer's cost of maximum wage subject to premium with and without the Treasury incentives.

Minimum Wage 2019 has been announced as gross 2,558.40 TRY, net 2,020.91 TRY to be implemented all through the year.

Minister of Family, Labor and Social Services revealed the decision of Minimum Wage Fixing Board at a press conference that Turkey’s monthly gross minimum wage is increased from 2,029.50 to 2,558.40 with a monthly 26% wage hike (from net 1,603.12 to 2,020.91). President Erdogan pledged that the minimum wage support will continue in 2019.

You can find the 2019 “calculation of minimum wage” and “cost of employer” in the tables below.

COST OF EMPLOYER

Employer’s labor cost; Gross wage + employer share of SSI premiums (15.5% or 20.5%) + unemployment premium share of employer (2%).

• Cost of employer with incentive (in case 5% Treasury incentive granted by Law No. 5510 is applied)

* Government support will be applied for 2019 minimum wage, however the support amount is not clear yet.    

• Cost of employer without incentive (in case 5% Treasury incentive granted by Law No.5510 is not applied)

Electronic notification is a system enables entities to get their communication through e mails, text messages etc. instead of physical mails. In Turkey this system was started at 2016 for the income and corporate tax payers who are obligated to receive all the notifications sent by the tax offices.

Now the Ministry of Justice issued an "Electronic Notification Regulation" in the Official Gazette numbered 30617 dated 6 December 2018, intending to determine the principles and procedures regarding electronic notification.

Pursuant to above said Regulation that will enter into force as of 1 January 2019 following entities shall obtain an electronic notification address from the post offices until the 31 January 2019;

• Government bodies, municipalities, associations, unions
• Corporate entities (joint-stock and limited companies as well as commandite limited partnership divided into shares)
• Notary publics
• Lawyer who are registered in bar association
• Arbitrator who are recorded in registry of arbitrator
• Although it is not compulsory for non-corporate real and legal persons to get electronic notification address, they may apply to have one, and after they obtain it, they shall have their communication through this address.

HOW TO USE THE NOTIFICATION ADDRESS

• The address will be obtained from the post offices by applying until the end of January 2019. In order to get text messages phone numbers should be given.
• Entities can reach their notification address through e-Devlet or by using their electronic signature.
• Electronic notification is deemed to have been made at the end of the 5^th date following the date of notification. So the email accounts should be checked regularly not to miss any legal notification.
• Information submitted to post office should be exact and complete, and the changes must be notified on time.
• The address should not be shared with any other persons or companies.

Employees are provided with some benefits in many occasions such as New Year, feasts and other special days. Accounting treatment of these benefits may be different from the point of tax and social security contribution in comparison with the normal wage.

GIFT CHEQUES AND SSI PREMIUM CONTRIBUTION

As a rule benefits in kinds (payments in kind by employer provided for employees’ personal or social needs) are not subject social security.

As per Social Security And General Health Insurance Law No. 5510, Article 80; "benefits in kind and funeral, birth and marriage benefits, duty travel allowances, mobile duty compensation, severance pay, dismissal pay or collective payment in the form of severance pay, estimated cost, pay in lieu of notice or cash compensation, and food, child and family increments of which amount will be determined the Institution in years, private health insurance premiums and personal retirement contribution fees, not exceeding 30% of the monthly total minimum wage, paid by the employers to private health insurances and personal retirement system for insurance holders shall not be included in the earnings subject to premium."

However, it is important how and where to use such gift cheques, vouchers or coupons. If these are used for a certain good or service they are deemed as benefit in kind, but as it is seen in practice, gift cheques are used to buy various type of goods and services in the markets.

As a result, the gift cheques are not exempt from SSI premium and the amount of the cheque should be included in payroll as a wage.

FROM THE POINT OF TAX

Article 61 of Income Tax Law No. 193 defines the wage as “Wage is a benefit provided by cash or in kind in return of services performed by employees registered and subject to an employer.” So we may easily deduce from this description that payments under the different names such as indemnity allowance, premium, bonus and so on, whether in cash or in kind are deemed as part of the wages and should be taxed.

As per above definition the gift cheques are subject to income tax and should be included in payroll as wage.

NATIONAL LOTTERY TICKET

Some companies traditionally provide national lottery ticket for their employees. These lottery tickets are treated as in kind benefit, and

• Exempt from SSI premium contribution, but
• Subject to income tax.

Employment contracts concluded with seamen can be based on foreign currency.

As we informed before, a ban on usage of foreign currency in some transactions and contracts made between real persons or the legal entities settled in Turkey by the Presidential Decrees (No 32 and 85).

However, some exemptions had been introduced later on by Communiqué (2018-32/51) issued in Official Gazette numbered 30557, dated 6 October 2018, permitting that employment contracts concluded with the persons, who are resident in Turkey but do not have citizen-ship bond with the Republic of Turkey, can be arranged as foreign currency or indexed to foreign currency.

Now by the latest amending Communiqué published in the Official Gazette (16 November 2018, numbered 30597) the seamen has been included in the scope of exemptions, meaning that they can be paid in foreign currency.

The other main points as regard to employment and service contracts are as follow.

• Turkish settled companies can conclude employment and service contracts with foreign employees (working with work permit) based on foreign currency
• Foreigners working as consultant (by consultancy or montage contracts up to 3 months) can be paid in foreign currency.
• Branches of foreign based companies, liaison offices, and foreign companies directly has the partnership with 50% or over shares, as well as the ones in free trade zones may arrange their employment and service contracts as foreign currency.
• Service contracts related to activities performed abroad by Turkish settled companies are also exempt from obligation of using Turkish Lira.
• Transactions and contracts made with foreign based real persons or legal entities can be agreed in foreign currencies.
• Also, foreign currency earning bodies can be exempted under certain conditions.

CONTRACTS NOT IN THE SCOPE OF EXEMPTION WILL BE CONVERTED TO TRY

• Current contracts agreed on foreign currency (and not in the scope of exemption specified in above said Communiqué) will be converted into Turkish Liras within 30 days from 13 September 2018.
• Contracts made between Turkish nationals and Turkey settlet companies on foreign currency basis shall be converted to TRY.
• At first step parties may agree on the contract price between themselves.
• In case the parties cannot agreed on the TRY price, 2 January 208 effective exchange rate of Turkish Central Bank (USD: 3,77) will be taken as a base in the contracts concluded before that date. For the new contracts, monthly increases in producer price index (PPI/TÜFE) between 2 January and the date of new contracts will be reflected to price.
• In case of disagreement parties will apply to arbitration.