Legal News

Cap of Severance Announced

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2019 Kıdem Tazminatı Tavanı Belli Oldu

Cap of severance pay (the upper limit) has been announced as 6.017,60 TRY/Year for the first half of the year. This limit will be applied within the period between 1 January 2019 and 30 June 2019.

Qualified employees are paid a severance pay equal to the last 30 days’ gross wage for each full year of employment. In Turkey, there is a cap for severance pay: the monthly earnings exceeding the above said amount will not be taken into account in the calculation of total severance to be paid to entitled employee.  However, this limit may be increased by provisions of employment contracts.

Cap of severance pay is determined as aqual to the amount received by highest public offices as severance.

As the salaries of state officials are arranged twice a year, according to collective agreement, severance cap amounts are determined for each half years.

In calculation of the last 30 days’ wage, the wage paid and  some contractual and statutory benefits in kind provided by employer shall be taken into account. Also periodical (annually, quarterly etc.) payments such as premiums and bonuses will be added in monthly basis.

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

Cap of Severance to be implemented between 01.01.2019 – 30.06.2019 is as follows.

CAP OF SEVERANCE PAY 1. Half of the Year 2. Half of the Year
01.01.2019 - 30.06.2019 01.07.2019 - 31.12.2019
₺6.017,60 TBD

For further information on severance payment please visit our website:

2019 SSI Premium Base Limits

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In Turkey, both employees and employers pay social security premiums as a percentage of the gross base salary plus some other benefits.

SSI base, also called “Earnings Subject to Premium,” has a lower and upper limit. In other words, the base cannot be lower or over these limits regardless of the total amount of earnings.

The lowest premium base is the daily or monthly minimum wage, and upper limit (cap of SSI base) is equal to 7.5 times of daily or monthly gross minimum wage. SSI contributions don’t change over this cap amount.


As monthly gross minimum wage is determined as 2,558.40 for 2019, we can calculate the limits as follows:

Daily SSI Premium Base/Minimum Limit

85.28 TRY

Monthly SSI Premium Base/Minimum Limit

2,558.40 TRY

Daily SSI Premium Base/ Maximum Limit (Daily Cap of SSI Premium Base)

639.60 TRY

Monthly SSI Premium Base/ Maximum Limit (Monthly Cap of SSI Premium Base)

19,188.00 TRY


It should be noted that SSI premium base is called as “earnings subject to premium” in the Law No. 5510. This means that SSI premium base does not only include the gross base wage but also some other vested benefits (subject to SSI premiums). However, the base limits will always be the same.

Income Tax Tariffs Announced

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In Turkey, income tax rates are applied progressively by taking into consideration the yearly cumulative income tax base. As a result, income tax rate may vary from month to month during the year.

There are 4 different income sections (tax brackets) to which different tax rates are applied. Also, these sections may be different for the wages (salaries) and other types of income.

As per Income Tax General Communique Serial No. 35 issued in Official Gazette on 31 January 2018 taxable income brackets and the rates are as below:

TAXABLE INCOME                                     TAX RATE

Up to 18,000                                                                            15%

For the 18,000 of 40,000, the tax is 2,700 TRY in excess                 20%

For the 40,000 of 148,000, the tax is 7,100,

(For the 40,000 of 98,000 in other incomes 7,100 in excess            27%

For the 148,000 of income over 148,000, the tax is 36,260,

(For the 98,000 TRY of income over 98,000, the tax is 22,760 in excess          35%


We can simply show the tax rates applied to employee’s income (salary) in the table below:

1st Income Bracket 15%

0 – 18,000

2nd Income Bracket 20%

18,000 – 40,000

3rd Income Bracket 27%

40,000 – 148,000

4th Income Bracket 35%




As the income tax rates are progressive and yearly cumulative income is taken as a base, after September, minimum wage earner’s net base monthly salary may get lower than the one announced as 2020,91,  due to the shift into the upper section (%20). In order to prevent this decrease, minimum wage earners will get ML (Minimum Living Allowance) support to maintain the net amount they are receiving.

An employee may have additional payments such as meal allowance, transportation pay, bonus etc. and their payments can be over 2020,91 (Base salary + Additional payments). In the application of MLA support additional payments are not taken into consideration and only the employees’ base salary (2020,91) is protected.  

2019 Minimum Living Allowance and Net Wages

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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.

Net Minimum Wage with MLA
NET MINIMUM WAGE (without MLA) 1,829.03
EMPLOYER COST (with 5% Treasury incentive) 3,006.12
Net Minimum Wage for Following Employees
Single/Spouse working + no kid   2,020.91
Single/Spouse working + 1 kid 2,049.69
Single/Spouse working + 2 kids 2,078.47
Single/Spouse working + 3 kids 2,116.85
Single/Spouse working + 4 kids 2,136.04
Single/Spouse working + 5 kids 2,155.23
Married+Non working Spouse+no kid 2,059.29
Married+Non working Spouse+1 kid     2,088.07
Married+Non working Spouse+2 kids 2,116.85
Married+Non working Spouse+3 kids 2,155.23


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.

Retired Employees Net Minimum Wage with MLA
NET MINIMUM WAGE (without MLA) 1,992.12
Net Minimum Wage for Following Employees
Single/Spouse working + 0 kid   2,184.00
Single/Spouse working + 1 kid 2,212.79
Single/Spouse working + 2 kids 2,241.57
Single/Spouse working + 3 kids 2,279.94
Single/Spouse working + 4 kids 2,299.13
Single/Spouse working + 5 kids 2,318.32
Married+Non working Spouse+0 kid 2,222.38
Married+Non working Spouse+1 kid     2,251.16
Married+Non working Spouse+2 kids 2,279.94
Married+Non working Spouse+3 kids 2,318.32

Payroll breakdown of Minimum Wage Earner

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

Gross Monthly Minimum Wage 2,558.40
SSI Premium Share 358.18
Unemployment Premium Share 25.58
Income Tax 326.20
Stamp Tax 19.42
AGİ 191.88
Net Wage 1,829.03
Net Wage Included MLA 2,020.91

Daily and Hourly Wage

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

Gross Minimum Wage / Monthly 2,558.40
Net Minimum Wage/ Monthly 1,829.03
Gross Minimum Wage / Daily 85.28
Net Minimum Wage / Daily 60.97
Gross Minimum Wage / Hourly 11.37
Net Minimum Wage / Hourly 8.13

Labor Cost of Employer in 2019

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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.

Gross Monthly Wage 2.558,40 ₺
Employer Cost (without incentive)
SSI Employer Share   20,5% 524,47 ₺
Employer Share of Unemployment Premium 2% 51,17 ₺
Total Employer Cost 3.134,04 ₺
Employer Cost (with incentive)
SSI Employer Share   15,5% 396,55 ₺
Employer Share of Unemployment Premium 2% 51,17 ₺
Total Employer Cost 3006,12 ₺
Employer Cost (for retired employees)
SSI Employer Share   24,5% 626,81 ₺
Employer Share of Unemployment Premium 0
Total Employer Cost 3.185,21 ₺

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.

Employer Cost (without incentive)
SSI Employer Share   20,5% 3.933,54 ₺
Employer Share of Unemployment Premium 2% 383,76 ₺
Total Employer Cost 23.505,30 ₺
Employer Cost (with incentive)
SSI Employer Share  15,5% 2.974,14 ₺
Employer Share of Unemployment Premium 2% 383,76 ₺
Total Employer Cost 22.545,90 ₺

2019 Minimum Wage Announced with 26% Hike

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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.

INCOME TAX BASE 2,174.64  
STAMP TAX 19.42  
MLA (Minimum Living Allowance) 191.88  
NET MINIMUM WAGE (Without Minimum Living Allowance) 1,829.03  
NET  MINIMUM WAGE (Minimum Living Allowance Included) 2,020.91  


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)

Cost of Minimum Wage to Employer / In case 100,00 TRY Government support is applied* 2,906.12

* 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)


Cost of Minimum Wage to Employer / In case 100,00 TRY Government support is applied* 3,034.04

Electronic Notification Obligation Begins in the New Year

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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.


  • 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 5th 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.

How the Gift Cheques and Lottery Tickets are Treated in Payroll?

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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.


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.


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.


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.

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