Turkish Labor Law
From new year’s onward, the net minimum wage has increased from 2,825.90 TL to 4,253.40 TL, with a 50% hike. A different exemption is also introduced this year: the exemption of minimum wage earners from income tax and stamp tax. There will be no income tax and stamp duty in the calculation of the new minimum wage from gross to net. Only the employee’s insurance premiums will be deducted over the minimum wage.
Gross to Net Minimum Wage Calculation
The minimum wage amount for the year 2022, which was determined by the suggestions of TÜİK, the demands of the labor unions, and the expectations by the employer, was 5,004.00 TL in gross.
Traditionally we have always talked about minimum wage in gross and net terms as insurance premiums and taxes were deducted from the wages. In other words, the minimum wage amounts determined in gross became clear after all necessary deductions were made. The amount that goes into the pocket of the worker is the amount after the minimum living allowance is added to this net amount. The calculation of the minimum wage that will go from gross to net without income tax and stamp duty in 2022 will be as follows:
Gross to Net Minimum Wage Calculation:
| Minimum Wage (Gross): | 5,004.00 |
| SSI Tax Base | 5,004.00 |
| SGK Worker Premium (14%) | 700.56 |
| Umeployment Worker Premium (1%) | 50.04 |
| Income Tax Base | 4,253.40 |
| Income Tax (15%) | 0 |
| Stamp Duty Base | 5,004.00 |
| Stamp Duty | 0 |
| Net Wage | 4,253.40 |
| AGİ (Minimum Living Allowance) | 0 |
| Net Wage | 4,253.40 |
The Cost of the Minimum Wage to the Employer
While the net amount of the minimum wage is the earnings of the employees, the gross amount is the amount out of the employer’s pocket. Since income tax and stamp duty will not be calculated on the minimum wage announced on the net amount this year, the increase rate of approximately 50% in the net amount will not reflect the same rate on the gross amount.
The cost of employers includes the insurance premiums for which the employer is responsible for that worker in addition to the worker’s gross wage. In other words, the cost of a minimum wage to the employer is not only the gross minimum wage but also the employer’s insurance shares.
Cost of Minimum Wage to the Employer (without incentive):
| Minimum Wage (Gross) | 5,004.00 |
| SSI Tax Base | 5,004.00 |
| SSI Employer Share (20,5%) – Without Incentive | 1,025.82 |
| Unemployment Employer Share (2%) | 100.08 |
| Employer Cost | 6,129.90 |
Cost of Minimum Wage to the Employer (with incentive):
| Minimum Wage (Gross) | 5,004.00 |
| SSI Tax Base | 5,004.00 |
| SSI Employer Share (%15,5) – With Incentive – | 775.62 |
| Unemployment Employer Share (2%) | 100.08 |
| Employer Cost | 5,879.70 |
Employer’s SSI Ceiling Cost
One of the parameters that change with the minimum wage is the amount of premiums calculated for people whose total earnings, subject to premium, exceed the SSI Ceiling Basis..
With the minimum wage for 2022, the SSI Base and Base Amounts are determined as follows:
| 1 Day | 30 Days | |
| SSI Base – Base Amount | 166.80 | 5,004 |
| SII Base – Ceiling Amount | 1,251.00 | 37,530 |
For base amount premiums, employers premium cost is calculated as follows:
Without Incentive:
| SSI Base | 37,530 |
| SSI Employer Share (20,5%) – Without Incentive – | 7,693.65 |
| Unemployment Employer Share (2%) | 750.60 |
With Incentive:
| SSI Base | 37,530 |
| SSI Employer Share (15,5%) – With Incentive – | 5,817.15 |
| Unemployment Employer Share (2%) | 750,60 |
