03/10/2023

Understanding Salary Components in Turkey

salary components turkey

Salaries and compensation packages vary from one country to another, reflecting unique economic conditions, labor laws, and cultural norms. In Turkey, understanding salary components in Turkey is essential for both employers and employees to ensure fair and compliant compensation practices.

This article provides an overview of the typical salary components in Turkey and explains their significance.

The basic (gross) salary in Turkey is the foundation of an employee’s compensation in Turkey. It is the fixed amount paid to the employee before any deductions or additional benefits. The basic salary is subject to income tax and social security contributions.

In Turkey, both employees and employers are required to make social security contributions. These contributions fund various social security programs, including health insurance, retirement, and unemployment benefits. The rates for these contributions are subject to change but are generally shared between the employer and the employee.

Income tax in Turkey is progressive, with higher income levels being taxed at higher rates. The income tax is deducted from an employee’s gross income, which includes the basic salary and other taxable allowances. The tax rates are adjusted annually, and employees are required to file annual tax returns to reconcile any overpayments or underpayments.

Allowances are additional payments made to employees to cover specific expenses or provide incentives. Common allowances in Turkey include:

    • Transportation Allowance (Ulaşım Yardımı): Provided to cover commuting expenses.
    • Food Allowance (Yemek Yardımı): Given to assist with daily meal costs.
    • Housing Allowance (Konut Yardımı): Offered to help with housing expenses, especially in high-cost areas.
    • Family Allowance (Aile Yardımı): Paid to employees with dependents.
    • Children’s Education Allowance (Çocuk Eğitim Yardımı): Provided to support the education of employees’ children.

Employers in Turkey often provide performance-based bonuses and incentives to motivate employees. These may include annual bonuses, profit-sharing schemes, or bonuses tied to achieving specific targets. These payments can vary significantly between industries and companies.

Overtime pay is compensation for work performed beyond the regular working hours. In Turkey, overtime pay is typically higher than regular hourly rates and is subject to specific regulations regarding maximum hours of work.

Severance pay is a significant consideration in Turkey. It is a lump-sum payment made to employees who have been terminated without just cause. The amount of severance pay is calculated based on the employee’s length of service and salary.

Additional benefits may include health insurance, retirement plans, and private pension schemes. Employers may offer these benefits as part of a total compensation package.

Understanding the various salary components in Turkey is crucial for both employers and employees. It ensures that compensation practices comply with Turkish labor laws and that employees receive a fair and competitive package. Employers should consult with legal and financial professionals to navigate the complexities of salary calculations and taxation in Turkey, while employees should review their employment contracts carefully to understand their compensation structure fully.

In Turkey’s dynamic employment landscape, staying informed about salary components is essential for both employers and employees to establish mutually beneficial working relationships.

Azkan Group can support you in your Employer of Record (EOR) and payroll requests (also called Umbrella Company) in Turkey. We can manage your HR requests even if you don’t have a legal entity in Turkey.