2021 Minimum Wage – Cost to the Employer

With the determination of the minimum wage, the 2021 labor costs of the employers have also emerged. Although the minimum wage is an important cost element for the employer, it often directly affects both the new year increase rates of employees and the incentives and support amounts provided by the state to employers. For this reason, employer cost is not only composed of SSI premiums calculated over the wage, but also other criteria we’ll mention in detail in this article.

We outlined the gross amount of the minimum wage out of the employer’s pocket and the net amount that goes into the worker’s pocket: 2021 Minimum Wage and All Related Details

This article will further cover the employee / employer costs incurred over these amounts.

What does the Minimum Wage Cost to the Employer?

With the minimum wage being set at 2.825,90 TRY net and 3.577,50 TRY gross, employers also started to calculate their own costs. The cost of the employer for a wage is the employer’s SSI shares calculated on behalf of the employee, together with all wages and benefits paid to the employee. The obligation to pay insurance premium is not only limited to the employee’s shares deducted from the wage of the employee, the employer also has to calculate his own insurance share on behalf of the employee. For this reason, it is necessary to calculate the employer’s share of the minimum wage first.

Employers pay a total of 20.5% premium for their employees, 2% to short-term insurance branches, 11% to long-term insurance branches, and 7.5% to the general health insurance. In addition, for the unemployment insurance, they pay 2% unemployment insurance share per employee under this insurance.

Employer cost of minimum wage employees without incentives:

Minimum Wage (Gross)	3.577,50
SGK Base	3.577,50
SGK Employer Share (20.5%) – No Incentive	733,39
Unemployment Employer Share (2%)	71,55
Employer Cost	4.382,44

However, many employers pay the SSI employer share at a discount. By providing a 5% treasury discount to the employers who regularly pay their premiums, the state reduces the employer SGK share to 15.5%.

Employer cost of minimum wage employees with incentives:

Minimum Wage (Gross)	3.577,50
SGK Base	3.577,50
SGK Employer Share (15.5%) – With Incentive	554,51
Unemployment Employer Share (2%)	71,55
Employer Cost	4.203,56

In order to benefit from the Treasury discount, it is necessary to meet the following conditions:

Employers need to:

• Submit their monthly premium and service documents within the legal period,
• Make timely and regular payments of accrued administrative fines, delay increases and premiums or
• If they defer their debts within the scope of amnesty and restructuring laws,

They are entitled to a premium discount of 5 points over the total amount of the insurance premium corresponding to the employer’s share.

There is no 5% discount for public enterprises, employees who are employed by a tender from the state, and retired employees.

Cost of the Minimum Wage Pensioner to the Employer

Social security premiums of retired people who continue their working life are calculated at different rates than other employees. The premium amount that the employer is obliged to pay is also different for retired employees. Therefore, employer cost also varies.

For the retired employee, the SSI employer’s share (SGDP Premium), which the employer is obliged to pay, is determined as 24.5%. No discounts or incentives are applied over this rate.

Minimum Wage (Gross)	3.577,50
	3.577,50
SGK Base
SGK Employer Share (%24,5)	876,49
Unemployment Employer Share (%0)	0
Employer Cost	4.453,99

Employer’s SGK Ceiling Cost

The minimum wage does not only concern the minimum wage earners. Since all parameters related to the minimum wage change with the new minimum wage, the maximum amount of premium shares to be paid for SSI also changes. For example, one of the parameters that change according to the minimum wage is regarding the employees whose sum of earnings based on premium exceeds the SGK ceiling base.

Together with the minimum wage for 2021, the SGK Base and Base Amounts are determined as follows:

	1 Day	30 Days
Pek Share Base	119,25	3.577,50
Pek Share Ceiling	894,38	26.831,40

The employer premium costs can be calculated as follows:

Without Incentive:

SGK Base	26.831,40
SGK Employer Share (20.5%) No incentive	5.500,44
Unemployment Employer Share (2%)	536,63

With Incentive:

SGK Base	26.831,40
SGK Employer Share (15.5%) With Incentive	4.158,88
Unemployment Employer Share (2%)	536,63

For the Retired Persons:

SGK Base	26.831,40
SGK Employer Share (24.5%)	6.573,70
Unemployment Employer Share (0%)	0