Key Takeaways

  1. Turkey has a young, skilled workforce, but it can be challenging to comply with its labor laws.
  2. A PEO lets you hire in Turkey without setting up a local entity or dealing with complex regulations.
  3. PEOs handle everything from payroll and tax filing to benefits and terminations. This protects you from potential compliance violations.
  4. RemotePeople.com connects you with experienced PEOs in Turkey and makes hiring fast and compliant.

As of December 2024, Turkey had a population of 85.7 million with a median age of 34.4 years, indicating a large youthful workforce. This workforce, in addition to relatively low labor costs and an ideal geographical location, makes Turkey a worthy country to consider expanding into.

Export Category Export Value (USD)
Automobiles $29.2 billion
Machinery (including engines, turbines, and pumps) $20.3 billion
Iron and Steel $18.4 billion
Textiles and Apparel $17.1 billion
Electrical Machinery and Equipment $14.9 billion

However, Turkish labor law can make hiring in Turkey difficult for foreign investors. If you’re not fully aware of the labor laws, your business could be at risk of fines and penalties. This is why many companies find collaborating with a Professional Employer Organization (PEO) a must.

A PEO makes the expansion easier and safer. PEOs allow companies to hire employees without setting up a local entity. They ensure full compliance with Turkish regulations while saving time and costs.

What Are PEOs in Turkey?

A PEO is a co-employer who takes legal responsibility for hiring employees on behalf of the business owner. The business owner remains responsible for managing employees’ daily work and business activities, while the PEO manages legal, administrative, and HR work.

The PEO is responsible for drafting the employment contract according to Turkish Labor Law No. 4857, registering the employee to the Turkish Social Security Institution (SGK), preparing and paying the employee’s payroll, calculating and withholding taxes, tracking the employee’s leave and ensuring that the company complies with Turkish regulations and reduce the risk of legal issues.

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Let us handle the complexities of hiring, compliance, and payroll in Turkey while you focus on growing your team.

  • Hire employees in Turkey with a Turkey EOR
  • No local entity is needed
  • Pricing starts at USD 199 per employee
  • Remote People can also help you find the best talent in Turkey
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Which Services Do PEOs Provide in Turkey?

PEOs in Turkey offer multiple useful services, including HR and legal services that support every stage of the hiring process.

Payroll Management

Turkish payroll is highly regulated and requires regular reporting and proper documentation. The employee’s share of social security and taxes is deducted from their gross salary, and the employer’s share of social security also has to be paid. The monthly minimum wage in Turkey is 28,075.50 TRY net ($655) and 33,030.00 TRY gross ($767) per month.

However, most workers earn a lot more than this. Let’s look at the following example to better understand the Turkish payroll: If the gross monthly salary of an employee is 40,000 lira, the employer has to deduct a 14 percent share of the social security contribution, which is 5,600 lira. The employee’s share of unemployment insurance contribution is also deducted, and it is about 1 percent of the gross salary. 

The income tax in Turkey is progressive and varies from 15 to 40 percent of the annual income. Stamp tax is calculated at 0.759 percent of the gross salary. If a company fails to comply with those regulations in Turkey, it may result in serious consequences, including business collapse.

Employee Benefits Administration

There are mandatory employee benefits that are required by the Turkish Labor Law, such as registering the employee with the SGK, health insurance, pension contributions, disability insurance, and unemployment insurance. Employees are entitled to 14 days of paid leave per year after one year of service, and more leave days are added after five, fifteen, and twenty years of service. Employers can provide additional benefits, such as private health insurance and transportation allowance, to attract top workers.

The PEO manages the mandatory and additional benefits. The PEO registers the employee with the SGK on time, manages leave entitlements, and manages benefit plans. This helps the employer remain compliant and helps to hire and retain the best talent.

Tax Compliance

Employers must be well aware of the Turkish Revenue Administration regulations when hiring an employee. Employers must calculate and pay monthly withholding tax, which covers income tax and stamp tax. Income tax is progressive and is calculated based on the employee’s annual income.

Additionally, the employer must submit a Withholding and Premium Service Declaration monthly to the tax office, listing all taxes and social security contributions. 

Companies can face legal problems if they fail to submit the declarations on time or if the amounts are incorrect. A PEO monitors the tax filing, calculates monthly payroll reports, and pays the correct amounts. Tax compliance is critical to building trust with the Turkish authorities and avoiding legal issues.

Recruitment and Onboarding

The process of hiring a new employee in Turkey is strictly regulated. The advertisement must not be discriminatory in any way, the interview must be fair, and the job offer must include all the necessary elements required by the Turkish Labor Law.

After the acceptance of the job offer, the employer must prepare a written employment contract and register the employee at the SGK prior to the first day of work. This can be done easily by the PEO, as they will screen the candidates, conduct the interview, prepare the job offer, and handle all the onboarding paperwork. They will also set up a bank account, submit forms to the SGK, and manage the tax and insurance registration.

Employment Contracts and Terminations

The contract must be signed before the employee begins work. It must detail the working title, tasks, salary, working hours, probation period, which is usually about two months, and annual leave entitlements. In addition, the employer must strictly adhere to termination rules.

Employees with at least six months of work are protected by the Turkish Labor Law and are entitled to receive severance pay equal to 30 days’ gross salary for each year of service. Notice period varies depending on the length of service and ranges from two to eight weeks.

The PEO deals with resignations, terminations, and retirements. They also calculate severance pay and send official notifications to the SGK.

Why Choose a PEO in Turkey?

Hiring employees in Turkey involves contracts following specific requirements and having clear terms regarding salary, duties, paid leave, and termination. Social Security contributions and taxes must be calculated correctly and reported on a monthly basis. Non-compliance can result in legal issues and damage businesses’ reputations. 

PEOs protect your business from those risks. They take care of all the legal and paperwork so that local regulations are met, contracts are compliant, taxes are calculated and paid accurately, and social security contributions are deducted.

Advantages of Using a PEO in Turkey

Collaborating with a PEO in Turkey provides several benefits for business owners looking to expand into the country quickly and operate in compliance with Turkish law.

Cost Savings

Establishing a legal entity in Turkey is expensive. You need to register the company with the Turkish trade registry, get a tax number, open a local office, and hire a local lawyer and accountant. Collaborating with a PEO will significantly reduce these costs. You pay them a monthly fee based on the number of employees, and in return, you get payroll, HR, and legal support without the need to hire a whole team.

Speed to Market

Hiring through a PEO allows businesses to work in Turkey within days instead of months. The company does not need to wait for business registration or approval. The PEO, through the local entity, can start the onboarding process once the right candidate is found.

Risk Mitigation

Turkish labor law has specific requirements for contracts, taxes, terminations, and benefits. A small violation can result in serious consequences. PEOs know all the regulations, and they take legal responsibility for employment and ensure every step is compliant with Turkish law. This reduces compliance risks that can damage the company’s reputation.

Focus on Core Business Activities

PEOs take on employment responsibilities and paperwork. It allows the company to focus on its core business activities. Instead of focusing on payroll calculations, legal paperwork, or HR issues, the company can dedicate time, energy, and resources to marketing and business growth.

How Remote People Facilitates PEO Services in Turkey

RemotePeople.com helps you work with top-tier PEOs in Turkey who can keep your business compliant with Turkish labor laws, tax regulations, and social security contributions. We can help you hire and manage employees in Turkey, so you don’t have to set up a legal entity.

We can help you from the selection of the right PEO partner to onboarding your new employees, to make your expansion into the Turkish market easy and smooth. Our partners are well aware of the Turkish Labor Law, SGK registration, income tax regulations, and termination rules. They also handle payroll, employment contracts, and benefits in compliance with Turkish regulations.

With Remote People, you get access to local expertise and support. That way, you can expand faster, avoid legal problems, and grow your business with peace of mind.

Steps to Engage a PEO in Turkey

Collaborating with a PEO in Turkey requires several steps to ensure a quick and compliant hire. These steps include the following:

1

Initial Consultation

In this step, you provide the PEO with your requirements, such as the number of employees, job descriptions, salary, and timelines. They review the requirements and create a cost estimate that covers gross salary, social security contributions, income tax, and service fees. 

They also inform you about the mandatory regulations under Turkish Labor Law, including SGK registration, required benefits, and the employment contract’s compliance with the law.

2

Service Agreement

Once the consultation is done, both the employer and the PEO sign a service agreement. This agreement specifies PEO’s responsibilities, price, payment terms, and payroll schedules. This ensures hiring is compliant with Turkish labor law. It also outlines how both the employer and the PEO will manage the employees.

3

Onboarding Process

When the service agreement is signed, PEOs start onboarding. First, they collect employees’ information needed to register them with SGK. Then they will draft a legally compliant employment contract for your employees.

Next, they set up the payroll and arrange for the employee’s tax and insurance contributions. PEOs also make sure the employees are informed of their rights and benefits under Turkish law as well. This entire process is usually done within a few business days.

The Difference Between PEO and EOR in Turkey

Although people might think that PEO and EOR are the same, they actually differ in structure. A PEO usually works as a co-employer, where both the client company and the PEO share employment responsibilities. PEO manages employment and legal compliance, while the original employer manages the employees’ daily work. On the other hand, an Employer of Record (EOR) takes on full employment responsibility.

Partner With a PEO in Turkey To Expand Your Business Successfully

Turkey presents excellent opportunities for companies looking to expand in Eurasia, thanks to its youthful workforce, strategic location, and growing economy. However, navigating its complex labor regulations can be challenging without local expertise. That’s where a PEO can help.

Not sure which PEO is right for your business in Turkey? Remote People can guide you toward the option that fits your needs. Our experienced team supports you with reliable PEO solutions that make hiring and compliance easier. Connect with us today to explore your best path forward.